AMARAVATI: An economic crisis in Sri Lanka has pushed chilli exporters from India into deep trouble the importers in the island nation are unable to clear dues. Chilli importers in Sri Lanka have reportedly not paid dues to Indian traders for the past several months, leading to a crisis in the chill market in India. Sources said exporters have been struggling to collect over 250-300 crore from their Sri Lankan business partners. However, no exporter is willing to lodge a complaint against the defaulters as they fear it might complicate debt collection.
Sri Lanka is one of the biggest importers of Indian chilli stocks, mainly from Andhra Pradesh. According to trade analysts, AP farmers produced over three crore bags of dry red chilli during the last crop season. This is equivalent to nearly 1.4 crore quintals of production and considered to be the highest production in the past decade. The country’s total chilli production is around six crore bags or nearly three crore quintals.
Guntur, Krishna and Prakasam contribute over 70-80 per cent of the state’s total chilli production. Thanks to the presence of the biggest agriculture market yard, big merchants, including exporters, handle business transactions from Guntur.
Riding on a bumper crop and huge demand, merchants from AP exported over one crore quintal of stock to different nations during 2020-21, of which over 30 per cent went to Sri Lanka. “Sri Lanka, Bangladesh and China are the biggest importers of chilli from AP. Each nation picks up at least 25-30 lakh quintals of stock every year. However, prices offered by the Sri Lanka traders are higher compared to prices by China merchants,” said a leading chilli exporter Ch Venkateswara Rao.
Experts said Sri Lanka’s economic crisis was the result of poor tourism activity since the outbreak of Covid-19 in 2020. The island nation’s decision to make a sudden shift to organic farming practices is said to have further crippled its economy. Many big business houses in the country are said to be struggling to overcome the crisis, resulting in payment delays to importers of agricultural produce.
Sources said big chilli exporters from AP are waiting to get around 300 crore from their business partners. This is said to have led to many exporters failing to clear their dues to bankers and small merchants who offered stocks to them. “We are hopeful of finding a solution to the crisis through mutual negotiations. We will seek support from the external affairs ministry, if needed,” said an exporter.
The number of wild elephants killed in the elephant-human conflict in 2021 surged, similar to that of their rivals.
In 2020, 112 people were killed in the elephant-human conflict and the figure grew up to 141 in 2021, according to Wildlife Department reports.
In 2020, 327 wild elephants were killed in the conflict and the figure grew up to 369 in 2021, losing at least one creature per day.
Many of the elephant deaths last year were due to ‘Hakkapatas’ explosives, killing 68 creatures, while 65 creatures were killed by electrocution, 45 by gunfire and 04 by toxic chemicals.
Pointing out that the majority of wild elephant deaths were due to human activities, the Wildlife Department stressed that these deaths are increasing yearly. Wildlife habitats are declining as a result of gradual population growth, driving wild elephants to constantly invade human habitats, it noted.
In the country’s inability to find a definite solution to this elephant-human conflict, the elephant resource of Sri Lanka is rapidly depleting, showing signs of extinction.
Leader of the United National Party (UNP) Ranil Wickremesinghe would be ready to accept the post of Prime Minister if a national government is formed by uniting all the parties representing Parliament, said Deputy Leader of the Party Ruwan Wijewardena.
Mr. Wickremesinghe, otherwise, has no intention of saving the government from the crises befallen the country by plugging himself into it, Wijewardena pointed out, responding to the reporters on the occasion of opening the Gampaha District UNP Office.
An exclusive interview with the World Renowned Management
Accounting Guru Professor Robert Kaplan of Harvard Business School. Professor Kaplan is a world renowned accounting academic, and Emeritus Professor of Leadership Development at Harvard University, he is known as the co-creator of the Balanced Scorecard and Activity Based Accounting together with David Norton. He was educated at Massachusetts Institute of Technology (MIT) and Cornell University USA
Interview done in Colombo Sri Lanka in 1998 by Dinesh Weerakkody (reproduced)
Q: This being your first visit to Sri Lanka, what are your impressions of Sri Lanka?
A: I have not seen much of your country. However, I noticed that Colombo is a very busy area, very crowded and lots of traffic.
Q: In what areas do you teach, consult and research?
A: My research, teaching and consulting focuses on new cost and performance measurement systems, mainly Activity Based Costing (ABC) and balance scorecard. Also, I teach at Harvard Business School and have authored and co-authored many books and papers.
Q: Was it you who pioneered the Activity Based Costing model?
A: Yes, myself and Professor Robin Cooper at Harvard Business School. We are the people who developed the theory and made it accessible to business people. The actual development was done independently at different organizations. We studied those organizations, wrote cases and then wrote papers on those experiences. We are still actively involved in promoting activity based costing in both manufacturing and service organizations. We are finding a lot of financial institutions, banks, investment companies, mutual funds, etc. making efforts to understand the true costs for their different products and services, also to find what their customers actually cost to their businesses.
Q: You addressed 84 of our business leaders, what did you tell them?
A: I talked of the new corporate management system that we developed at Harvard, the balanced scorecard and how it complemented the traditional financial measurement system to include the drivers of long term financial performance, which focuses not just on financial measures but on customers, internal processes, people and systems.
Q: What was your topic for the CIMA 10th anniversary lecture?
A: I covered this area but I also discussed activity based costing, another management accounting technique that I helped to develop over the last 15 years. The main purpose of activity based costing is to give you a more accurate cost model to make business decisions.
Q: How different is Activity Based Costing (ABC) model from the traditional costing models?
A: Well, the main difference is the way it deals with indirect support expenses that traditional cost systems call -overheads. Traditional costing systems only do a very good job at capturing and measuring the cost of direct labour and material, the overheads are just allocated arbitrarily. For companies today, what traditional costing defines as overheads has become a huge cost that has been increasing rapidly and often these overheads are a very large component of the products and services they offer to the consumers. So ABC in effect dissects this overhead pool to understand the real drivers of costs within that overhead cost pool, then it is possible to drive those cost down to individual products and individual customers.
Q: In a business world where customer has many choices, pricing becomes key to competitive success. In this context, how beneficial would the ABC model be, to a company?
A: In two ways. Benefits will come if its overheads costs, indirect cost and indirect support expenses are big, relative to direct labour and material. Secondly if the company is doing a variety of different things that is, it has a diversity of products and diversity of customers. Our experience is that when you have high variety of products they make very different demand on the limited organizational resources. Traditional costing systems average the indirect overhead costs among products regardless of their complexity. So the companies with significant amount of overheads or indirect supporting expenses and high diversity in the type of products it produces and types of customers it serves would benefit by having actual cost data for their pricing decisions and managing key channels.
Q: So what you are saying is that the traditional costing systems have lost its relevance?
A: ABC sprung from the realization that traditional costing systems had lost much of their relevance and could produce misleading data. Traditional costing systems emphasized simplicity; due to lack of sophisticated IT. That is now changing with the use of technology.
Q: By adopting the ABC model, can companies identify the real drivers of costs and price effectively?
A: ABC can be used by managers to identify the areas in their businesses where improvements are likely to have the greatest financial pay off. So, as ABC is used to direct their improvement efforts, they must be prepared to take action to translate improvements into profits. So we are talking of either reducing the spend on resources or increased output. Only then would profits flow.
Q: So what are you saying is the ABC model provides many variations for cost data to be presented and analyzed for better and improved business decisions?
A: Yes, that is the purpose.
Q: How popular is activity based costing in the UK and USA?
A: It is being used throughout Europe and US and other parts of the world. Australian companies have been using it very widely. The problem is that companies are still struggling with the right kind of software to implement this system. Currently ABC is being implemented on standard software that sits on a personal computer, now they are developing software on ABC that can work with the new enterprise resource planning systems.
Q: You have also developed the ground breaking balanced scorecard. Can you explain what it is?
A: Well, a balanced scorecard is the balance between the financial and the non-financial indicators and we go on the basis that you can’t use financial measures by themselves. You can think about a pilot of an airplane. He would not want to use one type of instrument; he would need multiple instruments to guide the plane’s journey. So companies also need a multiple kind of instruments to guide their journey through competitive spaces. So the idea is to retain finances, but be prepared to use finances to ultimately measure how well you do in your revenue and the economy of your expenses. For that also you need to look at the drivers of your costs. Then, what do you have to do to generate good financial results in the future? So that introduces measures about customers, who are our customers, what do they value and how do we create value to them? Based on that understanding, we can decide where we want to go as a firm. Then we can identify our most critical internal business processes. Once that is identified we have to develop measures for those, if the processes include normal production processes and normal operating processes. It can also include innovation, developing entirely new products and services and developing new markets. Innovation is very important for creating that. So once a balance scorecard is developed it must be used as strategy to achieve the end goals of the business.
Q: So is ABC complementary to your Balanced Scorecard concept?
A: Yes, if ABC tells you about the cost structures in your business, then the balanced scorecard tells you what generates revenue for your business.
Q: Has the Balanced Scorecard been successfully implemented in companies in the US?
A: Yes, in companies like Mobil and Chemical bank. Mobil, which was one of the least profitable petroleum, companies in the US, after the balance scorecard was initiated with the company, it became the most profitable petroleum company for three years in a row.
Q: What is your involvement with CIMA, UK?
A: I am not an active member of the United States branch, neither am I an accountant, but I won a medal from CIMA, UK in ’94 for my research and contributions to management accounting. In fact, CIMA invited me to give this anniversary lecture. I have not been to this part of the world before. So, I am glad that I got this opportunity to visit this beautiful country.
Q: There is an argument that management accounting has lost its relevance? Please comment.
A: That is wrong. A manager needs to have good information that the management accountant can provide, you have to understand your cost structures, your performance measures which include aspects of quality, aspects of cyclical items to see whether improvements in operations and quality is being translated into financial performance. Many companies that try to ignore their financial information and have pursued issues of quality and cycle time reduction have not translated that into increased revenue and ultimately into profits.
Q: So what you are saying is that the management accountant has an important strategic role?
A: Yes, but we must move away from being a score keeper of the past to providing guidance and inputs to a firms strategy and then also help the business to pro actively take decisions.
Q: How popular is the Harvard MBA? People are saying that the MBA curriculum is now outdated.
A: We continue to see strong demands for our MBA programmes. I think an MBA gives powerful theories and framework on how business should operate. As business gets more and more complex you need even better frameworks to understand the impact of global competition and in managing global enterprises. Increasingly, we find that we are training students to become entrepreneurs. So we have more entrepreneurs graduating from Harvard Business School today than we had 20 or 30 years ago. The MBA is a great course because our students say that it is very helpful to them to run their businesses.
Q: How do you see businesses operating in the next millennium as competition extends beyond borders?
A: The financial crisis in East Asia, which is spreading to other parts of the world undoubtedly, indicates big challenges. I think one of the major challenges to all companies would be how they deal with capacity. We seem to be having all the capacity in the world in a lot of areas. So I think people need to be cautious about this, consumers are getting more demanding. So I think market research is necessary to tailor their products and services to suit different markets. Certainly, IT will become more and more increasingly important. We also see a lot of businesses shifting to the east, shifting away from normal types of retail outlets even into direct selling and Internet selling. The Internet is going to have a profound effect on world business.
Business therefore is going to be very different to what we see today.
State Minister Dilum Amunugama responding to reporters yesterday (09) stated that the government’s biggest mistake was protecting former President Maithripala Sirisena and that President Gotabaya Rajapaksa, therefore, will be taking an action soon.
Q: The Chairman of the Sri Lanka Freedom Party is severely criticising the government
“The biggest mistake was protecting him. Therefore, the number of people who become mad with us is large. Were the necessary steps taken, it will be over. The President, I think, will be taking an action soon.”
Q: Will it be affecting the existence of the government?
“No, how will it affect the existence of the government? After those who wished to leave left, we formed a new party, gained a two-thirds majority, made Mr. Mahinda Rajapaksa the Prime Minister and made his brother the President. So do we need these people to do the rest? It would have been easier if they left.”
Former President and Leader of the Sri Lanka Freedom Party (SLFP) MP Maithripala Sirisena speaking to the District SLFP Conference in Matara yesterday (09) stated that the country has faced a crisis unlike ever before in history under the current regime.
“The entire country is vulnerable, a mess. Even those who have no knowledge on the slightest go on saying that there are queues and no food like back in the Lady’s Rule. I was a supply officer at SATHOSA supplying items during the Lady’s time. There was no such crisis during that time. Nobody back then uttered cuss words at the government in their queues.
Do not think that a leader can rule a country single-handed. He should be having a good team. I ruled a government alone for five years. There was not even a MP to talk on behalf of me in Parliament, not in the government, nor in the Opposition. Without the Prime Minister, the Board of Ministers, a power in Parliament, I did not throw the country into a crisis. In our time the price of goods was lower than it was before 2015.”
When the price of fuel was soared by two Rupees with great difficulty, the leaders of the Pohottu Party rode bicycles from Fort to Parliament. In the meantime, you may remember how they mocked on public stage by showing coconuts and onions – ‘Den Sepada, Sandeepada..‘ they asked. Now the entire country is sick.
You may not know the value given by the Sri Lanka Podujana Peramuna to the Sri Lanka Freedom Party before the Presidential Election. My God! How many did the Pohottu Leader meet me? The trio – One, Two and Three – met me separately at the Presidential Secretariat. Those who begged and said that they cannot win without the SLFP violated the Alliance Compact on the first week after the Presidential Election itself. None of the clauses of the Alliance Compact – to this day – was ever fulfilled by the Pohottu Leaders. The same as the Tale of Karapincha.
A presidential election will not be coming soon. The next national election will definitely be the parliamentary election. Some of you are talking about a referendum, like how J.R. Jayawardena did. Do not be prepared to prolong the government by holding a referendum, it will never be done. “
Archbishop of Colombo His Eminence Malcolm Cardinal Ranjith speaking to an awareness program for Sri Lankans living in Europe about the Easter Sunday Massacre via Zoom stated that it is becoming gradually clearer that there had been a large conspiracy behind the Attack than what is demonstrated from the outside.
“Now it is becoming clearer on and on that there had been a large conspiracy behind it than what they want us to see. DIG Nalaka De Silva was arrested days before he was about to arrest Zahran Hashim with a warrant he had obtained. This is the warrant (shows). The Parliament Select Committee states, ‘It is the Select Committee’s observation that further investigations should be carried out to rule out the possibility whether actions were not taken based on intelligence deliberately on the motive of creating fear, an instability and an unrest in the country aiming the Presidential Election due at the end of the year, on the interest of a separate group of people.‘
It is true that this was prepared by a group of Islam Extremists. But this is making clear that the intelligence was concealed and the attack was allowed to happen aiming the Election, on the motive of collecting the votes of the people. Therefore, 60 per cent of the responsibility of this attack should be on those officials and politicians. Those administering the regime are attempting to cover this up. They do not want this to come out via an investigation. These political leaders have blasted the Rule of Law in this country. Therefore, the simple man cannot expect that they are secured and that they can get justice from the system. Because, the whole system has been corrupt.”
The Central Bank of Sri Lanka (CBSL) has directed licensed banks to strictly adhere to the rules stipulated by the CBSL with regard to the conversion of foreign exchange proceeds of customers.
Issuing a statement today, the bank said that recent rules issued by the CBSL in respect of repatriation and conversion of export proceeds to Sri Lanka Rupees (LKR) have been misinterpreted by certain parties with vested interests.
In particular, it said that unfounded speculation has been mischievously spread that the CBSL rules require converting the entirety of workers’ remittances forcibly into LKR upon the receipt of such foreign exchange funds by the Licensed Banks.
“Rules on conversion of export proceeds DO NOT apply to workers’ remittances. Migrant workers who channel their earnings through Licensed Banks and other formal channels may hold such funds in foreign exchange at any commercial bank. Accordingly, it is NOT mandatory for Sri Lankans working abroad to convert their remittances into LKR,” the bank said.
However, the bank said that those who wish to convert those earnings into LKR would be eligible to do so while those who do so under the “Incentive Scheme on Inward Workers’ Remittances” announced by the CBSL, would receive an additional incentive of Rs. 10.00 per US dollar until 31 January 2022.
Proceeds from “services exports” are foreign exchange earnings of resident Sri Lankans who provide tourism, professional services etc. to non-residents. These services exports would be subject to the rules on conversion of the residual export proceeds after adjusting for the permitted deductions.
“In this background, it would be clear that the recent rules in respect of repatriation and conversion of export proceeds into LKR are applicable only to “exporters of goods and services” from Sri Lanka, and that the new rules require exporters to convert only the residual balance of the export proceeds into LKR after deducting the permitted payments specified in the rules.
In fact, such permitted payments cover outward remittances in respect of current transactions, withdrawal of foreign exchange as permitted, debt servicing expenses, purchases of goods and services, and investments in Sri Lanka Development Bonds (SLDBs).
It must also be stated that similar repatriation and conversion rules for services export proceeds are applicable in other regional countries, including India, Bangladesh, Pakistan, and Thailand, as well,” the CBSL said.
The CBSL reiterates that it would continue to facilitate the enhancement of workers’ remittances in collaboration with the Government by incentivising funds remitted through formal channels, as previously announced, while taking stern legal action against all persons (those remitting and receiving) who indulge in illegal fund transfers.
Accordingly, the general public is requested to remain vigilant and not be misled by false information and promises.
