Sunday World Business News

Lanka’s tourist arrivals fall 9.3pc Agence France-Presse . Colombo
Sri Lanka attracted fewer holidaymakers in June, the island’s main tourism promotion authority said Friday, blaming the drop in the number of visitors on the country’s ongoing ethnic conflict. Arrivals in June fell 9.3 per cent to 27,960 from 30,810 reported a year earlier and totalled 224,363 in the first half of 2008, down 0.2 per cent from the same period a year earlier, Sri Lanka Tourism said. The number of visitors from Britain and Germany — both key markets — fell five per cent each in June to 5,304 and 1,317 respectively over the same period a year earlier. The number of leisure travellers from neighbouring India declined 28.8 per cent in June to 5,664, as against the same period last year. ‘It’s the conflict that is keeping tourists away. There are frequent bomb attacks and it is natural they would be cautious to travel here,’ an official from the tourism authority said. Many countries in the west have cautioned their nationals against travelling to Sri Lanka, where fighting between government troops and Tamil Tiger rebels has escalated since the start of the year. The rebels, who are fighting for a separate homeland for minority Tamils, have been blamed for a string of bomb attacks in and around the capital, where most of the country’s upmarket hotels are situated. Despite the threat of terrorism, the state-run tourism promotion agency is aiming to attract 600,000 foreign visitors this year, officials said. Tourism is the fourth biggest revenue generator for Sri Lanka’s 27-billion-dollar economy, behind remittances from expatriate workers, clothing and tea exports.
Kosovo donors pledge over a billion for development Agence France-Presse . Brussels
International donors pledged 1.2 billion euros ($1.9b) Friday to help build Kosovo’s battered economy, surpassing their target, but tied their offers to action against corruption. Almost two thirds of the money was donated by the European Union, with Saudi Arabia, Turkey and Switzerland making big contributions, five months after Kosovo — one of Europe’s poorest regions — broke away from Serbia. ‘This is an extraordinary success for the prospect of Kosovo as a safe, democratic and multi-ethnic state,’ said Kosovo prime minister Hashim Thaci as the day-long donors conference in Brussels wrapped up. Thaci pledged that his government would put the funds to good use. ‘The government of Kosovo pledges to continue good governance,’ he said. ‘We will never disappoint you.’ Kosovo, almost half of whose population lives in poverty and where the unemployment rate is around 40 per cent, declared independence from Serbia on February 17. The region, recognised by around 40 nations but not by Serbia nor its UN veto-wielding ally Russia, is desperate for funds to build its fledgling institutions and economy and to help draw investment. But it is also notorious for corruption. ‘Our pledge today is an expression of our trust. But implementation remains an outstanding issue. We are waiting to see the results,’ EU Enlargement Commission Olli Rehn said as he announced a 500 million euro commission pledge. ‘I am sure that the Kosovo authorities know that they have to make the promises materialise for all people in Kosovo ensuring that every euro spent is accounted for and put to good use.’ Thaci pledged that his government would remain accountable. ‘We believe in openness and transparency, and we will ensure that development funds are never wasted nor leaked into the wrong hands,’ he vowed. He said that his government’s priorities are economic growth, success in implementing its new independent status, good governance and rule of law, and to increase social stability. Of the EU donors, Germany gave most with around 100 million euros. Most big states pledged more than 10 million euros. France, which currently holds the EU’s rotating presidency, offered 2.2 million, an EU official said. Significantly, none of the seven EU nations that do not recognise Kosovo pledged any aid, but none objected to vast amounts of the bloc’s funds being used for the cause. But despite the amount raised beating expectations, the money — for use over the next three years — only scratches the surface of the financial support Kosovo will need in the future, and funds will be needed to ensure stability. Kosovo has proved a particular powder-keg in the highly volatile Balkans region. The territory has been run by the United Nations since 1999, after a NATO launched an aerial bombing campaign against former Serbian strongman Slobodan Milosevic’s forces to stop the ethnic cleansing of Albanian separatists.
Minimum-wage gains rattle US businesses Associated Press . New York
If the law of averages really worked, then the upcoming hike in the minimum wage would help offset consumers’ surging food and fuel costs. A good balance, right? Don’t count on it. Just ask Phyllis Tampling why. She’s an owner of Jim’s Restaurant in Prattville, Ala., a 50-year-old family owned dining spot that hasn’t raised the prices on its menu recently even though what it pays for supplies soars by the day. Her cost for a case of potatoes jumped $12 in one week’s time last month to $28. Green tomatoes went from about $17 to $29 a case. Then there’s the higher expenses for everything from milk to meat to macaroni. Still, a weeknight dinner at Jim’s — old fashion pot roast with three vegetables and coffee or iced tea — hasn’t budged from $7.73 a meal. Same goes for the fried chicken livers, the chopped sirloin and dozens of other menu items. Tampling hasn’t passed along the higher costs to her customers because she knows that she has lots of competition nearby — 10 new restaurants have recently opened within five miles of her spot, which is just outside Alabama’s state capital of Montgomery. She also knows her customers feel strapped every time they hit the gas station or the supermarket checkout. ‘I keep hoping that prices will stabilize and then start going down. I want to ride this out,’ said Tampling, who said the restaurant is lucky to own the property it is on so it isn’t saddled with the additional burden of having to pay rent. But that doesn’t mean she can continue to watch her profits evaporate, which is why her prices could start creeping up later this summer. Come July 24, the national minimum wage will go up, from $5.85 an hour to $6.55 an hour, and although Tampling’s staff of about 15 dishwashers and cooks makes more than that an hour, she will have to give them a raise because the minimum is going up. She might also have to boost the wages of her wait staff if the combination of their salaries and tips don’t exceed the minimum wage. Do the math to see the potential impact: If she just bumps up each of their salaries by 70 cents an hour — the size of the minimum wage raise — and they work a 9-hour shift, that would eat about $190 a day out of her already crimped earnings. ‘Once the minimum wage goes up in a few weeks, that may make it hard to not raise my prices because now everything is cutting into my profits,’ she said. If Tampling raises her prices, that will cut into the disposable income of the patrons who eat her homestyle food. Then they might spend less at the local movie theater, the clothing store or the grocery store_ and that ultimately will offset the gain in wages seen by her own workers. The result: The economy doesn’t get any help. Don’t read this as indictment of the rise in the minimum wage. Instead, the point is to illustrate the vicious cycle that consumers and businesses are stuck in now. We’ve all heard about the woes of corporate giants like General Motors and Starbucks; their businesses face the double whammy of a weakening economy matched with soaring costs. Meanwhile, many big companies say they lack pricing power because of competition, which puts their profits under intense pressure. Now bring those issues down to the local level. All those factors coming together at once are a toxic combination for almost everyone living and working in those communities. The findings of the just-released monthly survey from the National Federation of Independent Businesses reflect that struggle. It showed 20 per cent of small business owners cite inflation as their No. 1 problem — the highest reading since 1982 and well above the 3 per cent average seen over the last 20 years. Forty-one per cent of 703 respondents reported raising prices, but they didn’t boost them enough to stem the decline in earnings. Compared with the previous three months, 47 per cent reported lower earnings and of those with profit drops, 41 per cent cited weaker sales and 28 per cent cited higher materials costs. ‘Every time the owners open the ‘back door’ for supplies, new inventory, etc., prices and charges are higher,’ said William Dunkelberg, chief economist at the NFIB, a Washington-based trade group. ‘Those that are raising prices still aren’t pushing them up enough given what the trend in profits is right now.’ And now, small businesses will have to contend with the added burden of a rise in the minimum wage. For many like Tampling, the weight of it all might be too much.