“Good times are on the way, stick with us,” Cabraal tells foreign firms

By Cheranka Mendis

Thanking the international partners who remained loyal to Sri Lanka during troubled times and continuing business despite safety and development threats, Central Bank Governor Ajith Nivard Cabraal last week paid tribute to 160 foreign companies at The Global Commerce Excellence Awards 2012.

Cabraal, who is also the architect of the awards, commended the companies for sticking by Sri Lanka and assured that “good times are on the way”.

“You have been there when we were facing the bad times. We now want you to be there for the good times as well,” he said. “A new era has now dawned and new ethics have been instilled in our work force. Efforts have been put in both by the Government as well as the private sector to ensure that the flag is flying high. We hope you will be there for these times as well.”

He invited the companies to stay with Sri Lanka to be part of the anticipated prosperity of the nation.

Times have changed from the days when the primary struggle was to get through the day, when inflation was double digit (27-28%), and Sri Lanka was at the lower levels of the Doing Business Index (currently holding the position of 80). “The problems seemed commonplace then. We let it get under our skin. It was so intense that we went through it almost mechanically,” Cabraal recalled.

However, the country “stuck it out” and with the efforts by both the public and private sector, managed to set a reasonable platform during the past three years. “What we see is an extraordinary transformation. Everyone has worked extremely hard.”

He reflected that President Mahinda Rajapaksa has been clear in his direction to create and portray an image as a hardworking and businesslike country, gearing towards development with passion. “We have done that. And you have played your part. We appreciate your efforts and here we pay tribute to those who have had faith in the country,” he said.

IMF Country Representative Koshy Mathai, also addressing the gathering, agreed with Cabraal, stating that his outlook of the country was fundamentally optimistic. He reflected that the economy of Sri Lanka managed to grow remarkably well during the three decades of war by 5-6% on a sustained basis.

While part of the credit goes to the Government for spending a lot of money on the war effort, credit also goes to companies such as those that were recognised, which had faith in the fundamentals of the economy and that there was good business despite the bad conditions.

However, the country cannot now rest on its laurels. There is much more to be done.

“We cannot rest on our laurels because Foreign Direct Investment is still quite low,” Mathai said. “We are talking of 1-2% of GDP from FDI, which could be 5-6%, or like Vietnam 8%. Coming up in the Doing Business Index has been a major focus of the Government and they deserve a lot of credit for that. There has been great improvement in the business climate measured on various dimensions. In fact Sri Lanka is the very best in South Asia in terms of the Doing Business Index.”

However, that is not necessarily the end of the road, he reminded. “You are still in the 80s range in the global rankings and other countries in South Asia, especially the big ones, have the advantage of larger domestic markets.” Therefore Sri Lanka has to do better than them to attract the same business since the country does not have a large domestic consumer market, unlike some other countries.

He noted that macroeconomic stability is absolutely essential to the growth and prosperity of the country and assured that the change to a flexible policy framework from the disruptions in managing the macro economy of Sri Lanka last year puts in place a base for continued economic stability and prosperity going forward. “There are many steps beyond that,” Mathai stressed.

There are issues in terms of the quality of labour force and there is a need for English skills, IT, university education, and vocational training development. He added that while physical infrastructure is being generated by the Government, that is more scope for private sector involvement.

“Trade liberalisation is key. Exports as a share of GDP, etc., have steadily trended down. We have to change that trend.” He expressed that from the total exports only 1% goes to China, 5% to India and a very few to other Asian countries whereas 56% goes to US and Europe, which are economies with slower growth.

This is something we need to change, he said. “We need to position Sri Lanka as a base for trade and exports for some of the other regional countries.” There are also issues in terms of governance, transparency, and sending the right signals, etc.

“There is a lot to do,” Mathai reiterated. “Thanks to your support we have an economy that has performed quite well even during three decades of war. And hopefully thanks to countries like you and many more to come, we look forward to much stronger growth in the future.”

The recipients of the awards were picked out from across the sectors from the nominations of specific industry/sector authorities. The recipients have been chosen by assessing criteria such as investment and export related investment, aviation and shipping, logistics, travel and tourism, education and energy, branding and accountability, and global brands, etc., Organising Committee Chairman Rohan Masakorala said. He acknowledged that the event was not an annual one despite the award presentation held last year. The Global Commerce Excellence Awards in 2011 recognised the support of local bodies for their contribution towards national building and economic development whereas Thursday’s event was to thank the foreign partners.

             Pix by Upul Abayasekara