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Oxford Business Group Asia Regional Editor Patrick Cook Moderate the Panel discussion. Others from left: First Capital Director and CEO Dilshan Wirasekara, Dialog Axiata Digital and Commerce Chief Dr. Nushan Perera, Colombo International Container Terminals CEO Jack Huang and Stax Inc Managing Director Ruwindhu Peiris are also present
By Uditha Jayasinghe
Policy consistency, an accommodative regulatory framework, better access to capital, and captive technology investment are some of the options Sri Lanka could target to enhance competitiveness and spur growth in the age of disruption, a group of top professionals said yesterday.
Speaking at a roundtable discussion organised by the Oxford Business Group (OBG) and First Capital Holdings on Tuesday, titled ‘How can Sri Lanka enhance competitiveness in the age of disruption?’ four business leaders debated several topical issues, including political disruption, disruption in the global trade environment, and technological disruption.
The panel, comprised of First Capital Holdings CEO Dilshan Wirasekera, Stax Inc. Managing Director Ruwindhu Peiris, Colombo International Container Terminals CEO Jack Huang, and Dialog Axiata Chief of Digital and Commerce Nushad Perera, shared their views on several aspects of the theme, while OBG Regional Editor for Asia Patrick Cooke moderated proceedings.
During the discussion the speakers highlighted the need for the Government to promote consistent policies, which they hoped would garner more attention from lawmakers in the next Government. They also pointed out that policymakers need to be more proactive on regulations, particularly those in the digital space, as it is a fast-evolving space that requires agile policymaking.
There was also consensus that policy implementation needs to be drastically improved and made more efficient by amalgamating key ministries, departments, and State institutions, to really improve effectiveness. One example given in this regard was agriculture, where Perera pointed out that Sri Lanka currently has over a dozen ministries and departments overseeing the sector, making it extremely difficult to have cohesive policies that are implemented competently. He advocated that each sector be streamlined under one Government framework, so that policies can be aligned more efficiently.
Better access to capital was also highlighted by the speakers, who were optimistic of attempts to reduce interest rates, but also encouraged investors to become directly involved in projects to promote innovation and growth.
“Having policies that give us fiscal consolidation is a must. But having those is obviously stifling growth. We are growing at 3%, but inflation is about 3%-4%, so are we really growing? The fundamental issue is debt, and debt servicing is a huge competent of Budgets. So we are caught in this catch-22 situation. I think the answer is to bring down interest rates. Sri Lanka probably has one of the highest real interest rates in the world, so there is room for interest rates to come down. When interest rates are high, businesses simply cannot invest,” Wirasekera said.
“So you cannot blame businesses, because the cost of capital is significantly higher than anywhere else in the world. When interest rates are brought down, people use credit for consumption purposes and not contribute to the growth of the economy. Rates are now coming down, but how do we make sure that credit is directed to the right sectors?”
Wirasekera proposed that banks and finance companies be incentivised to lend for investment, rather than consumption. Wirasekera also encouraged lending entities to change their mind-sets on how they lend, and understand the changing economic and industry trends that could provide them with new opportunities for business. Other panellists also acknowledged that despite the prevalence and growth of IT, digital, and data-related companies, many banks are still reluctant to lend to them, as they have less understanding about the business, how it runs, and how it can make profits.
“I think we really need to look beyond banking and see how financial disintermediation can happen in the country, where investors can go direct and lend to projects. Right now we have a financial landscape where people make deposits to banks, and banks keep a margin and lend to businesses they perceive to be risk-free, but not really contributing to the economy. How can we have a more robust capital market structure that actually gives investors the opportunity to go directly into businesses? This is important.”
Colombo International Container Terminals (CICT) CEO Jack Huang outlined the potential Sri Lanka has in using its port to push economic expansion. He pointed out that many people are still unaware that both Colombo Port and Hambantota Port are free ports whose potential remains largely untapped. He also called for more facilities to support the Colombo Port, including fast-tracking the East Container Terminal (ECT), which has been delayed for several years, and establishing an international trading centre, as well as an international distribution centre, as has been done in Singapore.
The panellists also supported Free Trade Agreements (FTAs), insisting they would increase economic opportunities for Sri Lankan companies, and calling on the private sector to view them in a positive light. Stax Inc. Managing Director Ruwindhu Peiris noted that it was imperative for local companies, including startups, to focus on going global, as this presented the best opportunities for growth. He also drew several examples from local companies such as Virtusa or Spa Ceylon, which have gone global by tapping into the heritage and inherent advantages provided by Sri Lanka. He also supported local companies reaching out and doing business with mid-sized global companies, as Sri Lankan businesses possessed intrinsic advantages that could be used to provide bespoke business solutions.
He provided a positive outlook on political challenges Sri Lanka had faced in the recent past, indicating that the country’s democratic credentials had managed to remain undimmed during the constitutional crisis that took place late last year.
“If I was an investor looking at Sri Lanka from outside, I would have gained confidence of this country in terms of its commitment to true democracy. It could have gone either way. It is fair to say during the last four years, there was a lot of disappointments, a lot of expectations were unfulfilled. But there was a testament that no matter what, democracy must hold. The opportunity for all of us is that there is a lot of untapped potential in our sphere of influence we can still harness. I personally gained a lot more conviction of the future of Sri Lanka, because we as a society demanded proper democracy.”
-Pix by Lasantha Kumara
