Sri Lanka expecting bank margins to tighten- CB Governor

Sri Lanka expecting bank margins to tighten: CB Governor

Oct 12, 2010 (LBO) - The efficiency in Sri Lanka's banking system can be improved with interest margin tightening at least 150 basis points over the next nine months to 5.0 percent with banks remaining profitable, Central Bank Governor Nivard Cabraal said.

Profits are needed to build capital to buffer deposits."About a year ago the overall intermediation cost was as high as 10 percent, one of the highest in the world," Cabraal told the annual sessions of Sri Lanka's Institute of Certified Professional Managers.
"Now it is down to about 6.5 percent. But we believe there is even more space to tighten that further. If we see a level of around 5.0 percent in the next few months I think that would be the rate we would be looking at."
Structural
In countries with high reserve ratios - which is the portion of deposits that has to be kept in the central bank - margins can be be high, as the cost of holding non-interest bearing reserves is passed onto depositors or borrowers.
Sri Lanka's reserve ratio was lowered to 7.0 percent from 10.0 percent in a series of cuts from October 2008 to February 2009 as the banking system ran out of liquidity in a balance of payments crisis.
A government that gets printed money from a central bank uses high reserve ratios to try and block its effects on inflation, a phenomenon known as the 'reserve tax'.

But lower reserve ratios make the system efficient and allow banks to survive with smaller margins. Under a currency board regime, which Sri Lanka had before a central bank was started in 1950, reserves are typically about 2.0 percent.

Sri Lanka will join Tsunami drill

Sri  Lanka  Join  tsunami  drill-13th  Oct 

Sri  Lanka  will  join  several other  countries   and   conduct  a  tsunami   drill  13th  October   to  mark  the  International Disaster  Management   Day. The  drill  would  take  place  at  3 PM.  13th  October Director  Gena rel of  Disaster  Management  Centre Major  General  Gamini  Hettiarachchi  says.

Chinese Regional Approach

Chinese Regional Approach

By Alam Rind

                 

China has adopted a very cautious approach in responding to the regional developments.

Her security interests are best achieved by having a stable and moderate Afghanistan that is also free of NATO's military presence. China is very keen that the militant Islamic ideology of extremist elements such as Taliban must be prevented from spilling across to the Xinjiang Uighur Autonomous Region (XUAR). To check such a possibility Beijing sealed off Wakhan Corridor a 90 km border strip in 2001. Uighur riots of July 2009 must have forced them to reinvigorate their efforts to check spread of militant Islam in their Muslim majority area bordering Afghanistan.

Instead of taking a myopic view of the incident and opting to fight the symptoms they decided to address the root cause, which stems from illiteracy and poverty. Their government has redoubled its effort to boost the economy of western provinces. Development in these areas has been placed at priority in China's Five - Year Plan, which will run from 2011 to 2015. China has also
embarked upon the development of infrastructure in Wakhan Corridor the only direct border crossing between Afghanistan and China. In the area they are constructing a new road, supply depots, and mobile communication centers that will facilitate greater movement and trade across the border.

During President Hamid Karzai's March 2010 visit to China agreements on economic cooperation, technical training and preferential tariffs for Afghan exports were signed with Chinese leaders. Chinese interest in Afghanistan was also highlighted by her $3.5 billion investment in the Aynak copper field in Logar province. It happens to be the largest single direct investment ever made by any country in Afghanistan. As part of the deal signed in May 2008,

China will also build a 400-megawatt coal-fired power plant, a freight railway running from the

XUAR through Tajikistan to Afghanistan, a hospital and a mosque. It is evident that China views

present US deployment in Afghanistan as temporary and hopes that the phenomena of

Talibanisation will subside with the exit of foreign troops from the country. Afghan society will

gradually revert to normalcy, as the economic activities will pick up, China seems to be gearing

up to be able to support Afghan reconstruction. That will also help her achieve her long-term

objectives in the region.

China in order to improve the prosperity of her people and to be the leading economy of

the world has to maintain her present growth rate. That is only possible if there is continues flow

of energy and mineral resources from assured sources. Afghanistan provides a key in terms of her

own untapped mineral and possibly hydrocarbon resources. In any case, it is a gateway to the

resource rich Central Asian Republics (CAR's), having estimated oil and gas reserves of 23

billion tons of oil and 3,000 billion cubic meters of gas respectively. Control over these resources

will truly qualify China to be a super power. Chinese are moving surely but slowly towards the

fulfillment of this objective.

On the other hand, Indian and Chinese efforts to have ingress into Afghanistan are also

motivated by their military and strategic objectives in the region. According to a Chinese military

journal, India's forays into Afghanistan and the Central Asia arena are "designed to achieve four

objectives: contain Pakistan; enhance energy security; combat terrorism; and pin down Chinese

development". On the contrary some Indian analysts feel that China is engaged in "creeping - encirclement" of their country. The concept is based on the fact that China has been able to

develop good relations with India's immediate neighbors' to include Pakistan, Afghanistan and

Iran in the west of India and Bangladesh and Burma in its east. Their observation can't be totally

ruled out. But the fact is that her immediate neighbors' feel intimidated due to her hegemonic

posture and pursuits, whereas, in case of Chinese there is no such fear in spite of her economic

and military might. China is building relationships based on "win-win" propositions while India

is not willing to share benefits and tries to enforce "win-loose" situation on her neighbors. This

attitude is evident from her dealing with Nepal, Bangladesh, Sri Lanka and resolution of disputes

with Pakistan. The covert objective of Indian buildup in Afghanistan has been fully exposed to

the world. During London conference global leaders endorsed Pakistani viewpoint and pressure

was exerted on India to windup her consulates and refrain from terrorist activities aimed at

destabilizing Pakistan. For Pakistan increasing Chinese influence in Afghanistan will be of great

benefit, as on the western front Pakistan will have a friendly and supporting neighbor. India

instead of antagonizing her neighbor's would be better off if she reviews her security

paradigm and restructures it to have friendly neighbors,

Rent a Child

Rent a Child

By Chandana Wijekoon

As with many developing countries, one of Sri Lanka’s main problems is poverty. While one segment of society leads a luxurious life, another segment of society goes to bed hungry. With those in power unable to find solutions to socio-economic and political problems, the societal cancer called poverty started spreading, and the gap between the rich and poor has been growing.

As a result, there is a segment of society that depends and believes in daily handouts and has chosen to beg on the streets. The way some of these people make ends meet will no doubt horrify and shock anyone. Their home is the sidewalk or a makeshift home in the congested shanty town in the heart of Colombo.

Many beggars in Sri Lanka who have made the city sidewalks their homes will engage in selling heroin or sex, pick-pocketing commuters or even mutilating and disfiguring themselves to gain sympathy from passersby. Some of these individuals perform strange feats such as swallowing sharp knives and eating light bulbs to collect money from horrified onlookers.

This is one aspect of the problem. The other is a horrible dependency on children – even infants – who are rented out by their own parents or guardians in exchange for money to support their drug addictions.

“Where is your mother and father,” I asked a boy sleeping on the sidewalk near the courts complex at Aluth Kade. He seemed to be about 10 years old, and I later learned his name was Suresh. He stared at me for a while and then started to play a flute very loudly. After a few minutes, two older beggars came and stood near me, possibly because I was a stranger in the area.

“Why sir, what do you want,” one asked while the other observed me. “He doesn’t have a father – he ran away with another woman,” said the older beggar, explaining the child’s background. “The boy is dumb. His mother is begging at Borella. This flute is his protection. His mother returns here at night. Usually he goes with her too. But today he hasn’t gone. He’ll just sit here playing the flute.”

Parents of many street children likely grew up in a similar environment. Most children do not have birth certificates. The fathers may be visitors to the city or even another street-dweller. The only source of income for mothers living on city sidewalks with infants is to beg from commuters or sell drugs on the sly.

“I have been working in Colombo for over 10 years now, and I have a good knowledge about the street-dweller community,” said Officer in Charge (OIC) of the Fort police station. “The street sidewalk we see during the day isn’t what it is at night. One cannot even write to the newspapers about what goes on Colombo streets at night. Even the law cannot stop these activities. People’s values should be changed, because a completely different culture exists among these communities.”

The OIC said normal societal standards simply don’t apply to the streets.

“These people will do anything to earn a living,” he said. “There’s no age barrier. There are child sex workers. The mother and daughter will engage in the same trade. There are instances where the mother sells the daughter. There are many takers. We take legal action without any hesitation, but that alone isn’t enough to change this situation.”

According to the OIC, the nature of the problem makes it difficult to gather accurate statistics about the number of street children.

“To confirm their identity we don’t have enough evidence,” he said. “Some are there during the day, and at night they return to shanty towns, and those that stay in during the day come out from the shanties at night. This is the reality.”

Thirty-five-year-old “Nandhini” was arrested six months ago for possessing 100 grams of heroin. The courts fined her Rs. 1,500. Since she was unable to pay, she was put in prison. Nandhini, now back on the streets, says losing her child while begging led her to drugs. We met her around 9:30 p.m.

“I had many problems Sir,” Nandhini said. “When I went to jail, my child was five years old. The child’s father is a drug user. When the child had fever, this man took the child to go beg on the streets. The fever increased, and my child died. After that, I couldn’t cope with it, and I too started using drugs, trying to live any way we can.”

As we spoke, Nandhini kept looking around, very conscious of her surroundings. I stopped the interview when I started sensing that she was getting uncomfortable. Just as I prepared to leave the area, a three-wheeler sped up to her, and she said, “I’ll see you again sir,” as she left in that taxi.    

Adult beggars who don’t have children find other street kids to rent and earn a living. The children are often rented for a daily rate of Rs. 200. Those who rent the children take them to crowded places like Borella, Nugegoda and Dehiwala and have them beg from commuters. Some are sent to bus stops to beg from passengers all day long. On the bus, the adults with rented children tell passengers elaborate tear-jerker stories to wring out every last rupee. The stories usually revolve around being abandoned by partners, serious heart ailments and the inability to hold down a job. At dusk, the person in charge of the children will arrive. They will give a small percentage of the daily earning to each child and take the rest. After a full day’s work, the child will, at most, get a cup of plain tea.

In the vicinity of the Kochchikade Kovil, a woman named Baby Nona is in charge. Groups of beggars, both children and adults, give a part of their day’s earnings to Baby Nona who frequents the taverns in the area.  She takes 12% of these earnings when the depositors come back for their money. She lends the money she takes as interest and works as a broker to sell and trade children.

Sunil Fernando, a driver of a bus that shuttles between Colombo and Moratuwa, said at least 10 beggars with children will board his bus daily.

“These beggars are actually con artists,” Fernando said. “They play out the passengers. The passengers feel sorry and give what they can. However much we say no, they still board these buses. There are laws stating that we cannot allow beggars to board, but they still get on anyway. Everyone tells the same story – that is they have no way of feeding their children, or they have no money to buy what the doctor prescribed. They say such things, show the children and beg for money the whole day. If it’s a crippled man, then that’s fine, but these people take these children around and beg when they are physically fit. More than being victims of circumstances, this begging is a trade.”

Colombo serves as the hub for beggars from around the country. People from rural villages with no income come to Colombo with their children to beg for a living. Kusum Dissanayake, Child Rehabilitation Project Officer of World Vision, said even the children of mothers who work abroad end up on the streets. According to her, nearly 100 boys whose mothers are abroad live and work on city streets without the protection of their fathers. These children are often sold for cash so that the buyer can rent them out per day.

Dissanayake also recounted a story about two 10-year-old children without their mothers who disappeared from the streets. Investigations revealed that wealthy people from outside of Colombo abducted these children to be retained as servants in their homes – another instance of child exploitation.

Many youth living in the streets today have at one time or another lived in child rehabilitation and detention camps. Some have been released while others have run away. Many have also been inmates at the Welikada Prison for petty thievery or drug possession and selling. Others have been repeatedly jailed and released for vagrancy.

Nihal, a youth from Elpitiya, was jailed for several months at the Welikada Prison. Today, his job is to transport boxes of apples to shops. He says he makes enough to live but still sleeps on the city sidewalks. Nihal described his life on the streets.

“I was about 10 years old (when I came to Pettah),” Nihal said. “I lived on what people gave me. A lady called Susila taught me how to beg. I was like a son to her. We told people about our poverty and begged for a living. Since then until today, I sleep on the Pettah pavement. After a while, Susila rejected me and one day when I was sleeping, the police came and took me away to the Welikada Prison without me committing any crime.”

                

If politicians, decision-makers and organizations take greater interest in the future of these individuals and work towards rehabilitating them and giving them vocational training, they may be able to give up their life of dependency and contribute towards the nation’s development. It may be one of the most crucial steps in eradicating poverty.

increase in foreign employment

 increase in foreign employment 

Despite the global economic down turn last year, Sri Lanka recorded a sharp 15 percent increase of foreign employment an official from Foreign employment Bureau said. A record number of 134,670 Sri Lanka employees went overseas in the first six months of this year which is a 17, 669 increase as against the first six months of the previous year.

Sri Lanka had fielded the highest number of Employees to Qatar which shows a 54 percent increase.

Lankan employees to South Korea have increased by 43 percent, Kuwait 18 and UAE to 11 percent. Over 2,000 Sri Lankans ventured to South Korea in the first six months of this year and under new agreements the Bureau expects this number to increase by 12 percent.

Meanwhile Sri Lanka also expects a high quota employment opportunities from Malaysia, Libya and BahrainForeign remittance to Sri Lanka has increased by 11 percent to US 1820 million in the second quarter of the year. This was at 1602 in the corresponding period last year.

Foreign remittance is Sri Lanka’s number one foreign exchange earner and the government hopes to achieve a record US $ 4 million target this year.  This was at US 3.3 billion last year.

The future of South Asia---Special Feature Article

Special  feature   Article

VIEW: The future of South Asia -by Mohammad Jamil

So far, SAARC has been little more than a talk-shop since its inception in 1985, where
speeches are delivered and leaders express their determination to convert the region into a South Asian Union

Prime Minister Yousuf Raza Gilani and Indian Prime Minister Manmohan Singh held their first
meeting in nine months on Thursday on the sidelines of the SAARC summit, with a view to
ending the diplomatic stalemate lingering since the 2008 Mumbai attacks. According to a local TV report, both sides have decided, in principle, to resume the Composite Dialogue. According to Pakistan's foreign minister, he and his Indian counterpart have been tasked with the homework for resumption of the dialogue. Though no date has been fixed for the meeting between the two foreign ministers, Shah Mehmood Qureshi, an incorrigible optimist, has called the meeting
between the two prime ministers very positive. There is pressure on India and Pakistan from the
smaller member countries to resolve their differences so that all can work in unison for the
progress of their countries and prosperity of their people. During the two-day 16th SAARC summit in Bhutan, the leaders signed an agreement on the environment, encouraging the exchange of ceo-friendly technologies and knowledge about climate change and wildlife conservation. Another agreement on trade covered services in areas like health, hospitality, communications, computers and air transport.

The future of South Asia, inhabited by more than 1.6 billion people, depends on the leaderships
of the countries of the region. So far, SAARC has been little more than a talk-shop since its
inception in 1985, where speeches are delivered and leaders express their determination to convert the region into a South Asian Union. But these ideas have not gone beyond noble
sentiments. After three years of a free trade regime, the trade between SAARC countries reached only $ 688 million in 2009. It, however, goes without saying that India, being an industrially
developed country in SAARC, stands to gain the most if it normalises relations with its neighbours by resolving all outstanding issues. In case some progress is made on the Kashmir
dispute or if India shows a sincere desire to resolve the core issue, Pakistan could allow India to trade with the Central Asian Republics through its land route.

There was indeed a common .desire of the countries to open a new chapter of Asian prosperity. Where millions live below the poverty line, South Asia could benefit from the proposed economic partnership, and also improve the living standards of its people. Secondly, by trading
with each other they can, in addition to saving the cost of freight, save a lot of foreign exchange because imports from the US and European (EU) countries are expensive. If SAARC countries
can convert the forum into an economic union, all of them will gain. So, far as the South Asia Free Trade Agreement's (SA FTA's) implementation is concerned, it delayed because some
members had expressed reservations over the list of sensitive products rules of origin and compensation mechanism for the least developed countries.

On January 6, 2004, the leaders of the seven SAARC countries reached a landmark decision at
the closing session of the 12th SAARC summit when they adopted Additional Protocol to the SAARC Regional Convention on Suppression of Terrorism and SAFTA. The Additional Protocol envisaged declaring the provision, collection or acquisition of funds for terrorist activities as illegal, and taking further measures to prevent and suppress financing of such acts. On April 6, 2005, the representatives of 26 Asian countries participating in the 4th Asia Cooperation
Dialogue (ACD) ministerial meeting in Islamabad on 'Economic Cooperation in Asia' had stressed the need for introducing a common currency, constituting a monetary fund and
liberalizing the Asian bonds market and trade. In other continents - Africa, Europe and the US - such associations and institutions have been effective, but Asia is lagging behind.

Asian leaders, therefore, should rise to the occasion and give a practical demonstration of their
will to resolve all political disputes infesting the continent. It is, however, an irrefutable fact that
no progress can be made unless major irritants like the Kashmir dispute between India and Pakistan are removed. India and Pakistan have held many rounds of talks in the past and the
question remains what they have to discuss when the Composite Dialogue is resumed. Naturally, these issues are Sir Creek, Siachin and the Kashmir dispute. There have been three wars between India and Pakistan over Kashmir. War is not an option for two nuclear states, but that does not mean that there is no need for the resolution of conflicts between
them. Members of SAARC often talk of emulating the EU. EU came about due to the efforts and joint vision of the then French President Charles De Gaulle and German Chancellor Konrad Adenauer, which united the European nations that had a history full of wars, in addition to two World Wars.
It was the building of such a sound foundation that even East European countries have become
part of the EU. It, however, took more than 50 years to reach the present stage. Even today, at
least four countries from the original IS-member European Union (now 27) have not accepted the
single currency. The idea of an Asian Union may sound premature, but in the interest of peace and
prosperity in the region, India and Pakistan should resolve all disputes and pave the way for establishment of, at least, the South Asian Union to start with. The benefits to India and the
countries of the region would be enormous.

The writer is afreelance columnist. He can be reached at mjami11938@hotmail.com