Lanka should broaden tax structure

Shirajiv SIRIMANE

[PROFILE ]

Vernon Manilal Fernando :

Vernon Manilal having had his early education at Tissa Central College, Kalutara he moved on to Ananda College, Colombo and to Law College. Having passed out as an Attorney-At-Law he started practising in his home town from 1972 to date, and was the Secretary of the Bar Association Kalutara, for many years.

He is currently the Chairman of Holcim (Lanka) Ltd, Shipping and Cargo Logistics (Pvt) Ltd., Hyundai Lanka (Pvt) Ltd., Stallion Plantations (Pvt) Ltd., and Dynamic AV Technologies (Pvt) Ltd. He is also a Director of Piarus (Pvt) Ltd., Ceylon Investment Plc., Ceylon Guardian Investment Trust Plc., Aitken Spence and Co. Plc., and Sri Lankan Airlines Ltd. In addition he is also a Trustee of - Joseph Fraser Memorial Hospital.

Having represented his schools in Football, Cricket, Volleyball and Rugby he entered Sports Administration in the year 1976. Since then he has been the President of the Local League, Past President of the Football Federation of Sri Lanka from 1979 to 1999.

At present he is a Member of the FIFA and AFC Executive Committee, Asian Cup Organizing Committee, and Chairman Competitions Committee AFC. In addition to this he is also a Member of the Players Status Committee of FIFA, and the FIFA Development Officer for South and Central Asian Countries., as well as the Vice President of the National Olympic Committee of Sri Lanka from 1990 to date.

A lawyer by profession he is dubbed as the 'guardian' of football, having been associated with the game for almost three decades. Through football he rose to fame moving up the ladder from the local administration to the world governing body FIFA and in the process he also consolidated himself as a versatile business magnate of the country.

Generous and though sometimes creating controversy in the sporting arena he has set benchmarks for others to follow and the Daily News Business took time off his busy schedule to be interviewed for this column.

Q: What is the true story behind the cement controversy?

A: The 30-year old war had a major negative impact on the construction industry and two years of peace has paved the way for a construction boom which the cement suppliers cannot cope with. The monsoon has put a check on the 15 percent imports which the country heavily depends on. This has further aggravated the situation.

Q: What is the way out of the situation?

A: There are several types of company players in the market. One segment is Holcim and Tokyo cement companies which manufactures 99 percent of the cement in Sri Lanka. There is another segment which imports raw materials grind them in Lanka and release to the local market with around 35 percent value addition. The third sector gets the cement powder and bags them and sells.

The value addition here is around 10 percent. The fourth sector is the direct cement bag importer in whom there is also a high dependency.

With the monsoon the exports have reduced increasing the demand.

Construction industry in Pakistan which is now facing unrest is on a negative trend and hence they have excess cement. What has happened is that cement had been imported in a hurry to meet the demand compromising quality. The government should encourage more players to manufacture cement in Sri Lanka so that customers would be assured of a quality product.

Q: Why is the Holcim Mahagedara concept now fading away?

A: The Mahagedara concept was created to provide all the building materials under one roof in Holcim centres. This was very successful from a point of a customer as they could buy everything from a nail to cement from our Mahagedara outlets.

However we received several requests from hardware merchants that their business is being affected and we decided to play down our one-stop-shop concept.

Q: What are your expansion plans?

A: We are looking at investing around US $ 350 million in the next three years to increase capacity in Galle, Trincomalee and Puttalam. We are also looking at introducing other raw material for the manufacture of cement to further increase value addition. Research is successfully being carried out in this regard.

Q: What about environmental constraints and how responsible is the company in this regard?

A: We are strictly adhering to the norms set up by the Central Environmental Authority. Holcim is 20 percent greener than others and we have invested heavily in this area as well.

Q: How would you review the tax structure in Sri Lanka?

A: I think Sri Lanka should broadbase it and follow the Singapore model. They should be consistent and should not be like the motor vehicle sector taxes that are changed a few months after they are implemented.

Q: It was the Sri Lanka football coaches that taught football to the Maldives and today Sri Lanka can hardly beat Male?

A: Sometimes this happens. One reason for the success of the Maldivian soccer is that they are professional players attached to clubs who pay high salaries. Unfortunately Sri Lanka soccer clubs are not professional and we are in the process of changing this concept with the assistance of the government as well as the private sector.

Q: Tell us something about your family?

A: I am married to Manori Moonesinghe of Panadura and is blessed with two sons namely Dr. Manil Fernando and Malik Fernando, a Bachelor of Arts in Accounting with a Masters Degree in Management.