China edges out Japan in apparel machinery and spare parts production

Sri Lankan delegation visits Shanghai for reconnaissance

The monopoly held by Japan in apparel machinery and spare parts decreased considerably when just two weeks ago, China opened the Shanghai Garment Machinery Zone together with a large scale exhibition and trade fair, SIGMA 2006 in Jinshan Shanghai. The fair showcased machinery and spare parts with the ‘Made in China’ tag on a one stop shop concept, aimed at making it the Asian hub for apparel machinery and spare parts. Sri Lanka was represented via the Sri Lanka Apparel Exporters Association at the inauguration of the fair and the opening of the one million square foot Shanghai Garment Machinery Zone and Fashion Centre, on an invitation extended by the China National Garment Association. The 40 member strong delegation, led by Chairman of the SLAEA, A Sukumaran was privy not only to the extensive array of machinery, machinery accessories and spare parts but was also given an insight into the workings of the Asian region at a workshop held in concurrence with the inauguration. Sri Lanka’s country presentation made by Hirdaramani CEO Tony Nadarajah and Brandix College Resource Person Chaminda Mirando presented facts and figures on machinery requirements and strategy employed, to delegates from Asian countries including India, Bangladesh, Turkey, Laos, Mexico, Macau, Cambodia, Pakistan and Nepal.

The Shanghai Garment Machinery Zone (SGMZ) intends to house all relevant garment machinery, accessories and spare parts under one roof enabling buyers from the entirety of the Asian region to source their needs from China instead of Japan, which currently supplies the bulk of the industry’s requirements and can be relatively expensive. “Given that Asia will soon become the largest apparel manufacturer in the world, China mooted the forming of a common body from the Asian region to improve and develop the regional aspect of the industry,” explained Sukumaran, who also mentioned that last year, Sri Lanka signed a Joint Declaration with the China National Garment Association to map out a strategy for the way forward for the apparel industry in the Asian region. “Sri Lanka also has a country booth at this SGMZ which will enable members from our apparel industry to visit Jinshan, source their machinery and spare parts and order it immediately on line at very competitive prices. This is the very first time that a garment industry association has ventured outside our country as a collective body and been represented in an investment zone.” Sukumaran, while acknowledging that China is a giant in the global apparel industry and has the power to swallow smaller nations like Sri Lanka, says however that if the entire region unifies and speaks with one voice, there is a greater chance of joint strategies and a wider scope of negotiations with buyers. “This will also open doors to more bi-lateral negotiations and allow countries to leverage on each other’s strengths giving us lots of opportunities. We may even see China invest in Sri Lanka given that we have the GSP plus advantage.”

Just one hour out of Shanghai, the SGMZ is an initiative of the Shanghai Municipal Government working on the strategy of rejuvenating the traditional manufacturing industry and integrates the functions of production, commerce, an exhibition area, information collation and dissemination, training, R&D and the trading of second hand goods. While the first phase of development in the SGMZ has renowned local Chinese enterprises from within the industry, the second phase will see the entry of international brands, which Chinese officials hope will then make the SGMZ the ‘NASDAQ’ of the world’s textile and garment industry and the barometer of the international market. In addition, the Shanghai Fashion Center, a US $200,000 investment of 400,000 square meters will house 4,403 shops poised to become the largest base of centralized brands under one roof. Adopting a differentiation strategy, the state of the art Fashion Center will combine clothing production, trade, logistics and R&D, while creating the holistic ideal of ‘centralization-co-ordination-integration’. (SR)

-Financial Times

De-merger of NE unconstitutional -S. P. Thamilselvan

LTTE Political Wing Leader S. P. Thamilselvan in his opening address in Geneva on Saturday declared that the recent Supreme Court declaration that the merger of the Eastern Province with the Northern Province under the Indo-Lanka Accord of July 29 1987 was invalid, null and void is unconstitutional. He accused the judiciary of facilitating the government strategy.

 

Thamilselvan said, “Five years ago, on 24 December 2001, we unilaterally declared a one-month long cease-fire. The government remained indifferent to our peace gestures. The Norwegian facilitators made a concerted effort that resulted in the drafting of the CFA. It was the only agreement signed by the two parties with the full backing of the international community. We hoped that this agreement which was based on the balance of power between the parties would bring an end to the ethnic conflict.”

 

“Six sessions of direct talks were held during which many proposals were made to bring normalcy to the lives of the people in the Tamil homeland. In order to enable the fruits of the CFA reach our people, we asked for an interim administration. Citing the Constitution, that was opposed. Then the promised Sub-committee for Immediate Rehabilitation of Northeast (SIHRN) as the main body for creating normalcy was made ineffective. The actions of the government were focused on disturbing the existing balance of power. The hope for reduction in the militarization of the Tamil homeland and normalcy in people’s lives remain elusive.”

 

Following the failure of SIHRN and the stalling of the peace talks, mindful of the urgent need for improving living conditions in the war torn Tamil homeland, we formulated and submitted the Interim Self Governing Authority (ISGA) proposal. To prevent the resumption of the peace talks based on this ISGA proposal, Parliament was dissolved by the then president. Elections were called. Tamil people voted in 22 representatives from the Tamil homeland, who contested the election seeking a mandate for the ISGA proposal. This represents more than 9 per cent of the Tamil people in our homeland. But the government, rejecting the voice

MMBL in strategic alliance with Aitken Spence Group

MMBL private equity model combines global brands with local blue chips

The private equity and investment banking boutique, Mercantile Merchant Bank (Ltd.) (MMBL), has formed a new strategic alliance with the Aitken Spence Group by selling them a fifty percent stake in its subsidiary, MMBL Money Transfer (Pvt) Ltd.

MMBL Money Transfer is a principal representative in Sri Lanka for the US-based, Western Union Money Transfer, and has a local network of over 400 sub-representatives. The alliance is expected to help double its coverage over the next three years and draw on Aitken Spence’s management expertise.

In 2006, MMBL Money Transfer will handle inward remittances in excess of US$70 million. This deal will bring substantial benefits to Sri Lankans living at home and their relatives abroad as well as bringing much needed foreign currency into the country from across the globe.

MMBL is no stranger to arranging transactions across a wide range of sectors including financial services, property development, business logistics, information technology, trading and distribution as well as a number of other important sectors of the Sri Lankan economy.

The MMBL Group has developed a reputation for creating enhanced value for its partners in joint ventures by identifying and developing reputed global brands then later bringing in a local blue chip to create a superior investment opportunity for all concerned.

MMBL selects its target investments in a number of ways, such as the traditional management buy-out, or the purchase of companies where the owner is seeking to sell their business in part or full to a private investor. Management buy-ins are becoming more popular where the current management are allowed the opportunity to buy into the equity ownership of their company. In the past, MMBL has also provided capital infusions to potentially high growth companies, hence allowing them to gain market share more quickly, to develop new products or improve their competitive position.

Another successful venture in the MMBL portfolio is the group company which is the Global Service Partner (GSP) in Sri Lanka for the US Fortune 500 company, Federal Express (FedEx). After building up a substantial market share in Sri Lanka for this well known brand, the MMBL portfolio company established a strategic alliance with the Hayley’s Group last year, on the basis of a 50/50 joint venture.

MMBL has also shown an innovative approach in their strategic partnership with Capital Maharaja. Here they operate the Sri Lankan franchise for NIIT, India’s leading information technology and BPO training company and one of the primary software development companies in India. With seven training centres across the island, it has brought the opportunity for large numbers of young Sri Lankans to improve their IT skills and hence improve their chances of employment in this fast growing global industry.

Further examples of investments undertaken by MMBL have included the taking up of a forty percent stake in a local subsidiary of a multinational company that specialises in quality assurance and the testing of petroleum and other commodities. Smaller holdings and board positions are held in companies such as DFCC-Vardhana bank and the local subsidiary of US battery producer, Energizer. In other cases it has sold off its entire interest in its ventures when it made good business sense, such as it has done with its investments in the stock-broking and produce broking sectors.

MMBL is a joint venture between the Pathfinder Group and Denmar Associates of the United States, both of which are controlled by high net-worth shareholders. This has given MMBL access to a wide range of institutions and high net-worth individuals across the world. Drawing upon the resources of its shareholders, has brought it huge advantages both in evaluating strategic options and supporting management initiatives, as well as assisting in the structuring of finance arrangements.

Along with its high net-worth shareholders, MMBL carefully selects strategic partners based on their know-how, industry specific knowledge, and management talent.

The success of MMBL lies in its ability to successfully build new businesses and to acquire and build companies with good potential for equity appreciation, as well as its capacity to build win-win relationships with its global and local strategic partners.

Through the expertise of its professional staff, MMBL identifies investments and acquisitions where opportunities exist to enhance the business value of a company. Its team has comprehensive expertise in private equity, investment banking, accounting, brand and franchise management, legal, general management and management consulting.

As a “financial boutique”, MMBL displays a number of unique advantages over similar institutions. Primarily, its management has a broad base of experience, having completed a large number of investments, new venture promotions and leveraged acquisitions across most industry sectors. MMBL also devises creative and innovative transaction structuring, including multi-tiered capital structures. Identifying funding sources for the development of their businesses and the restructuring of new acquisitions has helped MMBL support growth and to maximise equity value. In addition, its successful track record has helped it obtain exceptional financing, and superior terms and rates, which enables it to obtain all of the capital required to close a transaction. Offering strong strategic and operational support, excellent corporate relations and a rapid-response capability has allowed MMBL to gain its competitive advantage and achieve substantial returns to help supplement the target firm’s own resources.

At first sight it might look like MMBL is a Sri Lankan institution wishing to search out opportunities across the world, but as the latest deal with Aitken Spence and Western Union Money Transfer shows, it is also a world class company seeking to bring the best of the world to Sri Lanka to help ordinary Sri Lankans. In addition, MMBL prides itself on its responsible corporate citizenship, working with a network of local and international NGOs on a number of socio-economic and cultural initiatives. -Financial Times

Geneva failure calls for new negotiation approach

By Jehan Perera

The failure of the Sri Lanka government and LTTE delegations to agree to anything, or to even meet again, comes as a very big blow to the expectations that people were having for peace, especially in the north east. The high cost of the military approaches of the two sides in recent times made the Geneva talks important as the quickest way to a less costly option of conflict resolution and easing the sufferings of the people. But unfortunately the inflexibility of the two sides scuttled that hope. Perhaps due to their mistrust, perhaps due to their insistence on sticking to their positions, they failed to deal with the main issue for which they should have been meeting, which was the interest of the people.

At the opening of the talks, Norwegian facilitator Erik Solheim correctly summarized the three main issues facing the parties. He said these were the humanitarian issues concerning the people, stopping violence and a political solution. But at the talks the LTTE stuck rigidly to their position that the A9 highway to Jaffna had to be opened as the way to ensure humanitarian access to the people of the north and this was the only issue they wished to talk about. They did not wish to discuss any other issue other than that of the re-opening of the highway. On the other hand, the government took the position that the core issues relating to the political solution needed to be discussed at the talks.

With both parties taking up strong positions, and refusing to budge from their positions, the most important issues of humanitarian assistance to the conflict-affected people and ending the violence were not discussed. There are alternatives to the A9 highway in getting humanitarian assistance to the people of the north. Even if not as satisfactory as the land route, the government did supply the north with food and essential supplies by sea during the period 1995-2001 when the A9 highway was closed by the LTTE. The opening of the A9 highway would do little or nothing to ease the plight of the conflict-affected people in the east, which is far from the A9 highway. Addressing the issue of humanitarian welfare also includes upholding the Ceasefire Agreement in all its aspects.

It is also puzzling why the two parties could not agree to discuss the issue of the re-opening of the A9 highway, humanitarian assistance, the upholding of the Ceasefire Agreement and core issues as one package when they were meeting for two whole days. For instance, the government and LTTE could have agreed to talk about each of these issues for two hours each. If they could not satisfactorily conclude their discussions, they would have had a strong motivation to meet at an early date to take up the unfinished business. If problem solving was the real need, there was no need to get stuck on insisting on a one item meeting.

Political framework

There is no question that talks that are meant to be successful should be within a framework, and not open ended. When talks are open ended with no agreed destination, the journey can go round in a circle. One of the reasons for the failure of the Ceasefire Agreement was because it was not located within an agreed political framework. Norwegian facilitator Erik Solheim’s proposal at the outset of the talks, that they should be within the framework of the previous six rounds of talks held by the government and LTTE during the period of the UNP government and also within the framework of the last round of Geneva talks in February was in accordance with this reality.

At present there is little or no trust between the government and LTTE and other relevant parties, such as other Tamil parties and Muslim parties. Compounding this lack of trust is the political vacuum that exists in terms of an agreed political framework within which the ethnic conflict will be resolved. The lack of trust and lack of a political framework both explains and leads to the continuing efforts to obtain a position of strength vis a vis the others.

It is highly unlikely that there will be full adherence to the Ceasefire and Geneva Agreements until the government and LTTE agree on a broad political framework. The political framework agreement would set out the scope for economic development and political control. In other words, an end to the deadlock in political talks is necessary.

The government-UNP alliance may hold the answer to the need for a new approach to the peace process, to identify a satisfactory power sharing framework and to dealing with the LTTE’s approach to the peace talks. There is a need for the government to draw upon the expertise of UNP members, such as Prof. G.L. Peiris in fashioning a workable approach to negotiations with the LTTE that builds upon shared interests rather than on divisive positions.

It is also evident that the absence of the LTTE’s former chief negotiator, Dr Anton Balasinham from these talks contributed to the rigidity of the LTTE stance. Amongst the LTTE negotiators only Dr Balasingham would have had the breadth of vision to realize that peace talks cannot be sustainable outside of a political framework. It was during his stewardship of the LTTE negotiating team that the greatest breakthrough to a mutually acceptable political framework was obtained in the oft quoted Oslo Declaration of December 2002 that called for a federal solution that accepted the right of internal self determination in the north east of the country.

New approach

It was unrealistic to expect a breakthrough at the Geneva talks. But it was reasonable to expect the two sides to agree to dates to meet again after putting across their different points of view on this occasion. But even this did not happen, making clar the fact that the two sides have a great deal of work to do to regain any measure of goodwill and trust in one another. In this regard the abiding memory of a successful charting of a new beginning would be the first round of talks that took place in Sattahip, Thailand in September 2002. Prof. G.L. Peiris led the government delegation and Dr Anton Balasingham led the LTTE delegation.

In their public statements to the media these two chief negotiators at the 2002 peace talks addressed the shared future they hoped to bring about through their meeting, rather than lay emphasis on the bitter and bloody past that divided them. When they faced a barrage of questions by skeptical journalists, they appeared to even defend each other. By way of contrast on this occasion the government and LTTE delegations appeared to follow the model that they had practiced at the last round of Geneva talks in February 2006. Both sides recounted the wrongs they perceived in the other side, while remaining silent about their own side’s misdeeds.

Unfortunately the government’s new alliance with the opposition UNP did not seem to have made any significant impact on the negotiating approach or spirit of the government team. But President Mahinda Rajapaksa’s decision to invite the UNP to join his government was born out of his recognition for a new approach to resolving the ethnic conflict. The President did not invite the UNP to join because he was feeling politically weak. On the contrary the President invited the UNP and signed the bipartisan agreement with them at a time he was, and remains, politically very popular amongst the majority of the electorate. The rationale for the President’s invitation to the UNP to solve the ethnic conflict now needs to be changed into action.

There is a case to be made for the UNP to become a formal partner in a power sharing arrangement with the government for a temporary period, until the framework of a political solution with the LTTE is agreed upon. There is a need for a new vision of partnership and goodwill in the peace process. There is a need for local and international pressure that would make the government give more sincere attention to pressing humanitarian issues and the LTTE to address core political issues instead to seeking to dodge them by making various excuses. -Daily Mirror

The national question and connected critical issues

By Dr. A. C. Visvalingam  President. (CIMOGG)

The Citizens’ Movement for Good Governance (CIMOGG) is greatly relieved to learn from the media that our two largest political parties, the UNP and the SLFP, with a view to helping resolve the so-called National Question, have agreed on a common approach in respect of six or seven subjects, the scope of which will, no doubt, be elaborated over a period of time. We fervently hope that all the other parties in Parliament will also soften whatever extreme views that they may have held in the past in the interest of making every Sri Lankan feel that his future prosperity lies in a united Sri Lanka where he is ensured the same rights as any other citizen, irrespective of race, caste, religion, class, gender, occupation, political affiliation or other divisive classification.

It is CIMOGG’s view that there are some critical issues which must be addressed and agreed by an appropriate majority in Parliament if the National Question is to be resolved properly without creating further problems. Just as much as a building needs a sound, properly-designed foundation, if the superstructure is to remain intact, the politico-economic structures created to solve the National Problem must be underpinned by firmly strengthening the Rule of Law. We believe that some relatively small changes to a few articles of the Constitution and a small number of related laws would help greatly to remove certain particularly grave shortcomings which have surfaced over the years during which the present Constitution has been in force. In other words, there are some important issues on which joint action must be taken in Parliament if whatever is proposed as a solution to the National Question is not to end in failure during implementation. It is urged most strongly, therefore, that immediate action should be taken to prepare and pass certain straightforward amendments to the Constitution and other laws, In respect of the subjects referred to below, so as to ensure that whatever consensus is achieved on the National Question will not be negated by other factors.

Presidential Immunity — An amendment should be made to the Constitution stating that, notwithstanding anything to the contrary in the Constitution, every Presidential act of commission or omission shall be in strict conformity with the Constitution and shall be justiciable. The President shall necessarily continue to be personally immune from facing legal action while he is in office. He shall, however, be bound to conform rigorously to decisions given by the courts where his acts are challenged. Constitutional Council (CC) — An amendment should be passed to the effect that the President shall appoint within a period of two weeks any member who has been duly selected to be a member of the CC by the relevant party or parties in Parliament. If he does not do so, the Speaker shall declare forthwith that such member has been duly appointed. It shall be the responsibility of the Speaker, with the assistance of the Secretary-General of Parliament and the Secretary to the CC, to anticipate at least three months ahead the vacancies which are likely to arise in the CC and to activate the parties involved to make their choices well in time so that the President could make the required appointments without leaving things to drift Into limbo as in the past. If there should be a dispute about the filling of the vacancy by the minority parties, the Speaker should be empowered to hold a secret ballot of the members of all minority parties in Parliament (that is, other than those belonging to the main party in government and the main party in the opposition), to decide who should be the person to be recommended to the President for appointment. One or more vacancies in the CC shall not be a bar to the CC meeting and taking any decisions within its purview as long as a quorum is available.

Independent Commissions — The present "Independent" commissions should be dissolved and reconstituted as provided for in the. 17th Amendment. There should be no bar to any of the present members being considered for reappointment provided that the CC is satisfied that they are distinguished persons of uncompromised integrity.

All independent Commissions covered by the 17th Amendment shall be put in place by 31 January 2007, at the latest.

Appointments to be made Forthwith — All appointments recommended by the CC shall be made by the President within two weeks unless he furnishes reasons acceptable to the CC that any of their recommendations should be reconsidered.

Code of Conduct for judicial Officers — The Law should be amended so as to make it incumbent upon all judicial officers to conform to the provisions of the BANGALORE PRINCIPLES OF JUDICIAL CONDUCT.

Judicial Services Commission (JSC) – The membership of the JSC should be expanded to seven. The Chief Justice and the two most senior Supreme Court Judges, together with four persons distinguished in the field of law and appointed by the CC, shall form the full JSC. The quorum shall be five.

Promotion to Chief justice — Promotion to the position of Chief Justice shall automatically devolve on the most senior member of the Supreme Court who has at least 18 months of service left before retirement. The Attorney General shall also be entitled to be considered for the post of Chief Justice subject to his seniority being counted from the date of his appointment as the AG.

Media Freedom — Urgent steps should be taken to reduce the insecurity felt by the media in reporting news which those in power would prefer to hide. Parliament must help to loosen the secret grip on the media that is complained of by many commentators and the media themselves: There should be equity in the allocation of government advertisements so that all shades of opinion may be disseminated without fear of losing income or being closed down under emergency or business acquisition laws. As a corollary, any false allegations by newspapers should be challenged forcefully in the courts but under non-criminal libel laws.

Incitement to Hatred — All attempts to foment hatred between those belonging to different groups of citizens should be dealt with rigorously. UK laws on this subject would be a good model to in fortifying our existing laws in this area.

International Covenants — An amendment should be introduced, to the effect that all international instruments signed by the President shall be considered to have been signed by him as the properly delegated representative of the sovereign people of Sri Lanka. If the necessary legislation is not passed by Parliament within 12 months of such signing, all the provisions of such instruments should be deemed, by default, to have become part and parcel of Sri Lankan law. The justification for doing so is that, just as much as the people delegate some of their sovereignty to the legislature, the executive and the judiciary, without alienating their own sovereignty, the people may, through the agency of their delegated representatives, delegate yet another part of that sovereignty to the relevant international bodies. As laymen, we do not put it beyond the genius of our numerous constitutional experts to find a way whereby the legal concepts of dualism and nanism may be considered to operate without conflict for the purposes of this exercise.

Funding of CC and Independent Commissions — Parliament, and not the Treasury, shall have the power to determine the funding required by the CC, the Independent Commissions and all other bodies which are required to act as monitors of good governance.

Conclusion — The actions recommended above appear to be among the most critical in the short term and the minimum required to ensure that the solution proposed for the National Question does not fall on account of a lack of a good foundation. Once the Rule of Law and good governance are enhanced by the government taking the above steps, and the public gains confidence in their access to the truth and to apolitical public and police services, the mood of despair which envelopes the country may be confidently expected to disperse rapidly. The long retarded acceleration of the economy and the attack on poverty will follow with much less direct effort on the part of the government and more from those outside government. -The Island