Asia Capital ventures into carbon trading

First of its kind in the country, with much future potential

By Indika Sakalasooriya
Asia Capital PLC has ventured into emissions trading through its newly established subsidiary, Carbon Asia. The company is one of the first in the country to engage in greenhouse gas reduction project development and consultancy, and carbon trading.
Carbon Asia is a USD 3 million joint venture between Asia Capital PLC and Sindicatum Carbon Capital, a UK based developer of climate change-related projects. Asia Capital currently has a 80 percent stake in the subsidiary.

“We see a lot of potential in Sri Lanka in reducing and controlling greenhouse gas emissions. We help our clients to assess their emissions and introduce new working practices or clean technologies to cut their carbon ‘footprint’. In doing so, we create revenue streams through carbon credits, providing a market solution to climate change,” Carbon Asia’s Co-Founder and CEO Suranjan.J.Cooray told The Nation Economist.

Under the Kyoto Protocol, which is linked to the United Nations Framework Convention on Climate Change, developed countries must reduce their greenhouse gas emissions by an overall target of five percent by 2012. National targets have been set at varying levels. For example, the European Union (EU-15) must make an eight percent cut, while Australia is permitted an eight percent rise.

Those countries that are unlikely to meet their targets are allowed to buy credits called Certified Emissions Reduction (CER) certificates through a facility called the Clean Development Mechanism (CDM) to make up the shortfall. One CER represents one tonne of the greenhouse gas CO2 (or equivalent amount of another greenhouse gas) being prevented from entering the atmosphere. The mechanism enables developing nations, such as Sri Lanka, to generate CERs through greenhouse gas reducing projects.

Once generated, CERS can be sold as a commodity through various carbon exchanges around the world. As several developed nations seem likely to miss their Kyoto targets, there are plentiful opportunities for developing nations to create and sell credits, without encountering the usual trade barriers imposed by the West.

Cooray explained the company has two operating wings: project development and consultancy. Carbon Asia’s Project Development Division acquires, finances and implements projects that deliver cuts in greenhouse gas emissions and create CERs.
Projects might include developing wind farms to create renewable energy or putting in place new technologies to capture the methane, a strong greenhouse gas, from landfill sites. Taking a project from the conceptual stage through implementation to receiving credits is a complex process that is strictly regulated by UNFCCC validating bodies.

Carbon Asia’s Consultancy Services Team audits the greenhouse gas footprints of public and private sector organisations and develop integrated strategic business plans and energy policies for them according to internationally recognised standards. The aim is to help them prosper in a carbon-constrained world.

“We either charge a fee or offer a share of credits for our project development and consultancy services. We also buy and sell credits,” Carbon Asia’s other Co-Founder and CFO, Eshan Perera said.
He also added that already there are six local companies who have sought Carbon Asia’s assistance on project development and carbon trading related operations, while there are several others in the pipeline.

Carbon Asia also expects to open subsidiaries in the countries in the region by partnering with companies in those countries. “A subsidiary of Carbon Asia will be opened in Indonesia in the near future as a joint venture with a large Indonesian company” he disclosed.

According to Perera, Carbon Asia is a significant investment by Asia Capital and in the long run it would be a very lucrative business to the group as it has capability to produce large returns, given increasing regulatory pressure and the greater green consciousness of consumers worldwide.

Six Sri Lankan projects are already cashing in on their greenhouse gas savings, made by running environmentally friendly hydropower, wind power plants, biomass and biofuel projects. Among Sri Lanka’s top companies that have initiated emissions reduction programmes are conglomerate Hayleys, Tokyo Cement and clusters of mini-hydro power developers. The Sri Lankan government in 2006 has also established a Carbon Trading Fund worth of Rs.100 million.

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Aspic Group to build the largest office complex in Colombo

Aspic Corporation (Pvt) Ltd, one of the thriving privately owned businesses presently in Sri Lanka, expects to construct the largest office complex in the country.
“We are planning to build 28 story office complex in the heart of Colombo, in Kollupitiya, investing Rs.5 billion” Aspic Chairman, Deepthi Perera told The Nation Economist.

He said that the Aspic Group would in the very near future purchase a half built building located on a prime land in the Kollupitiya area, of which the company has already come to terms with the seller. However he was reluctant to give the exact location of the building.

“We will construct this half built building to a state-of –the-art office complex, equipped with all the modern facilities like Wifi, copper cable connections, elevators, escalators, vaults, etc” Perera said.
“We also have planned a 6 story car park for the building and the building is expected to be completed within two year’s time” he added.

When asked about the way in which the investment was being financed, he said that 75 percent of it was internally financed and the rest would be financed with bank borrowings.
The Group also expects to start a housing project costing Rs 1.6 billion, on a 15 acre land in the Homagama area. “The initial designs of it have already been finalised” Perera said.

He also revealed that the Group has plans to strengthen its plantation business by acquiring the controlling stake in a major plantation company listed in the Colombo Stock Exchange. Aspic presently owns a several tea and rubber estates in the Dereniyagala area.

Through its fully owned subsidiary, Aspic Micro Finance, the Group plans to invest Rs.500 million on agricultural finance, this year. Aspic Micro Finance also hopes to increase its presence in the paddy cultivating areas in the country, by setting up ten new branches. (IS)

Responding to a query, as to whether the company is contemplating listing in the Colombo Bourse, Perera said that they will probably consider it an option in about five years time.
Aspic Corporation (Pvt) Ltd. Sri Lanka is an extension of Aspic Investments Pty Australia founded in 1999 by Deepthi Perera. Aspic Group has 16 fully owned subsidiaries under its umbrella in 12 sectors varying from finance, asset management, plantation, transport, real estate to ornamental fish exports. Apart from its offices in Sri Lanka it also has branch offices in India and Thailand, while the headquarters are in Australia.

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SAFTA needs radical overhaul

By Samantha Whybrow
The South Asian Free Trade Agreement (SAFTA) cannot go forward without a radical overhaul according to a group of regional economic experts who were speaking at the first South Asia Economic Summit in Colombo on Thursday.
“SAFTA has no role in its current form,” said Dushni Weerakoon, Deputy Director of the Institute of Policy Studies (IPS), which co-organised the summit.

SAFTA, and its predecessor SAPTA (South Asian Preferential Trading Arrangement), have long been criticised for failing to deliver on the promise of deeper economic integration in the region despite over a decade of existence.

The failures of the early SAPTA arrangement are one of the major reasons bilateral agreements have proliferated in the region, with South Asian countries showing more willingness to enter into free trade deals on an individual rather than group basis.
And experts from the region are now coming together to call for a major policy rethink, to determine how economic connectivity in the region can move forward, which includes questioning the future of SAFTA.

According to Weerakoon, there are two policy alternatives for the future. The first is to overhaul SAFTA, and the second is to continue with the status quo in terms of bilateral and external regional agreements.
Overhauling SAFTA would mean a radical re-think of the current agenda.
A panel of experts pointed out that, alongside a binding agreement to remove non-tariff barriers, SAFTA countries need to reduce the number of items on sensitive lists, re-think controversial rules of origin criteria, and include investment and services in the SAFTA agenda.

In its current format, SAFTA is more restrictive on these issues than other bilateral agreements such as the Indo-Lanka Free Trade Agreement (ILFTA).
“The time frame for tariff liberalisation under SAFTA is7 years, but under ILFTA it was just 3,” said Weerakoon, highlighting one of the shortcomings of SAFTA.

Panellist Macky Hashim, Past President of the Federation of Chambers of Commerce and Industry in Sri Lanka, pointed out that it was India that needed to make a lot of changes if SAFTA had any chance of progressing, particularly with regards to non-tariff barriers.
“I am not optimistic about whether or not SAFTA can do much good by 2016,” said Hashim echoing the sentiments of other panellists.

Although, like the others, he did not seem ready to give up on the idea of SAFTA yet, pointing out that countries like Sri Lanka could benefit enormously if countries like India and Pakistan were to make greater investments on the island.
“We must promote investment from India and Pakistan. Their money and technology can come in and, with out labour, we can manufacture goods to export outside the region,” said Hashim.
“It is a win-win situation and can make profits for us all.”

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FTZ General Services Union employees issue ultimatum to JAAF

Employees of the Free Trade Zone and General Services Union gave an ultimatum to the Joint Apparel Association Forum Sri Lanka (JAAF) to respond to the allegation made by International Trade Union Confederation (ITUC) that the apparel industry in the country has the most number of labour rights violations in the country.

Free Trade Zone and General Services Union, General Secretary, Anton Marcus said the union had given an ultimatum to its employers to respond to the allegations, as otherwise, the garment industry in the country would be adversely affected.

“If the JAAFSL does not respond to the allegation, we as the workers would be forced to tell our grievances to the European Union which might be disadvantageous to the country to obtain GSP plus.”
He noted that the government also should inform to ITUC whether it is was willing to accept the benchmarks given by the international trade union, which requires the Government to establish law and order in the country and to give the workers in both private and public sectors, their legal labour rights.

“We have tried our best to convince the Government of the importance of accepting ITUC benchmarks, as they would be handing over a report about the freedom of association situation in the country to the International Labour Organisation (ILO) which would be handed over to the EU subequently,” he explained.

Marcus said that the government had requested for time for it to discuss the issue with JAAFSL, but so far both JAAFSL and the Government had not responded to the appeal made by the employees. (AE)

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Productivity increase the key in troubled times: Deputy Governor

By Aisha Edris
Developing countries need to increase their productivity levels to face the sky rocketing inflation stressed the Deputy Governor of Central Bank, W. A. Wijewardena at the John Exter Memorial Oration held last week.
“Economies have to adjust themselves to face the skyrocketing inflations prevailing in the international markets. The only thing they could do is to increase their local productivity to face a better tomorrow,” he suggested.

Wijewardena noted that presently the world was facing an inflationary pressure due to the soaring fuel prices and food crisis and the government needed to adjust their monetary policy to curb the problem and to reduce the demand for fuel.

He also added that, when governments gave subsidies to the people, it could not control inflation, which in turn would affect the long term growth of a country. He also noted that, the governments should not borrow from banks to pay for subsidies, because as a result, the monetary expansion would threaten the future stability of a country.

Wijewardena explained that the central banks were forced to adjust the domestic prices to match the international prices to fight long term inflation.

Meanwhile, he noted that when the economies are hit by terrorist activities, governments needed to use all the available resources to fight it, as it would affect the economy on the whole.
“Governments do not have a choice but to use all the available resources to fight terrorism. Economists would not dispute this thesis, but we have to find out what sort of measures we should take.”

He noted that a country should always have a stable base before it fights terrorism, quoting John Exter the first governor of CBSL he said, “the best asset of all whether in inflation or deflation, will be gold at the base of the pyramid. Accumulate what you can of it, either above ground, like coin or billion or in the ground, like hedged mining shares.”

He noted that Central Bankers should not be tempted to use monetary policy to create more employment and output because normal instruments like monetary policy cannot bring about real outcomes.
During the session, hostility arose between Governor Ajith Nivard Cabral and a leading economist in the country, Dr. Harsha De Silva, who is considered a vociferous critic on the present CBSL operations.

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Harry J given time to file objections

By Stanley Samarasinghe
Colombo Commercial High Court Judge Rohini Walgama gave business tycoon Harry Jayawardena, time till October 15th to file objections to two cases instituted against him by his business partners.
When these two cases were taken up before High Court, S. A. Parthalingam PC, Nihal Fernando PC with N. R. Sivendran Attoryney-at-Law appeared for Jayawardena and moved for time to file objections.

R. K. Obeysekera of No. 833, of Sirimavo Bandaranaike Mavatha Colombo 14, and also No. 284, Nawala Road Nawala, Zaki Alif of No. 833, Sirimavo Bandaranaike Mawatha Colombo 14 and V. P. Vittachchi filed two cases in respect of Milford Export (Ceylon Ltd.) and Stassen Export Limited of No. 833, Sirimavo Bandaranaike Mawatha, Colombo 14, Harry Jayawardana of No. 833, Sirimavo Bandaranaike Mawatha, Colombo 14 and also of No. 82, Main Street Ja-Ela.

Mrs. Sonia Weiman, No. 17, Alfred Place Colombo 3, Secretaries and Registrars (Pvt) Ltd of Sir Mohamed Macan Markar Mawatha of Colombo 3 are respondents in both cases, while Dr. N. M. A. Ghaffar of No. 833, Sriimavo Bandaranaike Mawatha Colombo 14 is respondent only for case of Stassen Export Ltd.
Petitioners in their petitions stated that they met Jayawardena while they were working in Sri Lanka State Trading (Consolidated Exports) Corporation.

On September 7, 1977 Petitioners and Jayawardena jointly formed a company Stassen Exports and commenced operation on a very small scales, and 3rd Petitioner V. P. Vittachchi as the Chairman of the company provided critical guidance. All the decisions of the company were taken in mutual consultation and agreement with each other.

Petitioners further stated in 1978 another company was formed, called that Milford Exports Ceylon Ltd, with Jayawardena, for the purpose of trading in Green Tea. In eleven years time, the company purchased share holdings in Hatton National Bank Ltd for a sum of approximately Rs. 77.7 million.

Thereafter the company invested money in Lanka Milk Foods, Distilleries Company, Madulsima Plantations Ltd., Balangoda Plantations Ltd., Brown Beach Hotel Ltd., Sampath Bank Ltd. Milfords Holdings Ltd, through those companies, procured substantial controlling interests of Ambewella Farm, Pattipola Farm, and Sri Lanka Insurance Corporations Ltd.

According to Petitioners they noticed gradual change in the 2nd respondent Jayawardena’s attitude towards them, and the manner in which he conducted his affairs in relation to the Company, when he was appointed to various positions in Government and Corporations, including his appointment as Senior Advisor to the President.

Petitioners stated that Jayawardena ignored or flouted any decision of the Board of Directors of the Company, and conducted the affairs of the Company as he wished, irrespective of the wishes and decisions of the Board of Directors or Petitioners. As a result they have lost all confidence in Jayawardena.
In the circumstances, Petitioners prayed for court to declare that Jayawardena conducted company management in a manner oppressive to the Petitioners.

The Petitioners prayed Court to make an order directing Jayawardena to purchase the shares of the Petitioners or to sell Jayawardena’s shares to Petitioners.
Romesh de Silva PC with Chanaka de Silva, Sugath Caldera, Aruna Samarajeeva, Shanaka Cooray and Eraj de Silva appeared for Petitioners instructed by G. G. Arulpragasam.

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