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Friday, 10 October 2014 01:33 - - {{hitsCtrl.values.hits}}
By Shabiya Ali Ahlam
A seemingly-upbeat Government yesterday wooed global investors, promising a prosperous future and outlining goals as far as 2040, with an emphasis that Sri Lanka offers the best growth opportunities based on post-war resurgence so far.
The platform from which the emphatic message was conveyed was the mega Capital Market Conference 2014 attended by 70 international fund managers from UK, US, Switzerland, India, Singapore, Pakistan, Hong Kong, Netherlands, Dubai and Bahrain.
Signifying the importance of the opportunity, 
President Mahinda Rajapaksa officiated as the Chief Guest and rang the Colombo Stock Exchange’s old bell used prior to the commencement of the automated trading.
Presentations by the top officials focused on the post-war rebound in Sri Lanka both from a macro economic perspective and private sector growth.
Finance Ministry Secretary Dr. P.B. Jayasundera who spoke on Sri Lanka’s future vision and Central Bank Governor Nivard Cabraal who gave participants the future economic outlook as well as conference co-hosts Securities and Exchange Commission Chairman Dr. Nalaka Godahewa and Colombo Stock Exchange Chairman Vajira Kulatilaka referred to the resurgence in all spheres of Sri Lanka following the end of the conflict, noting that the country was a case study for post-conflict progress.
“The presence of President Mahinda Rajapaksa demonstrates the importance the Government is placing on the capital market as a key contributor for the development of the economy. I would say the capital market has been great beneficiary of the post-war development,” SEC Chief Godahewa said.
With stock markets considered the barometers of economic development, Dr. Godahewa said: “There is exceptional performance in the stock market, which is symbolic for the post-conflict economic progress of Sri Lanka.”
Dr. Jayasundera, who themed his speech ‘Takeoff to a High Altitude – The Transformation of the Economic Landscape in Sri Lanka,’ said the country had entered a true new wave of development with a promising economic outlook to move rapidly towards a higher income economy over the next decade.
Blending with the topic of his speech, he said: “We have taken off towards a high altitude, but it is a long-haul flight, which needs to be managed skilfully and cautiously. The pilot should be experienced and we are privileged to have a President and Finance Minister who is well experienced to navigate. Further, the co-pilots and the crew should remain sensitive to all aspects and be alert at all times to make the journey a success. It is only then that the passengers will enjoy the flight, in reaching the destination.”
The Finance Secretary also took the attention of participants both foreign and local to a new plateau when he shared the Government’s goals for as far as 2035. Going even further ahead, the Central Bank Chief in his presentation shared some goals up to 2040. Both emphasised that Sri Lanka is certainly serious about steering long-term growth.
Articulating the underlying national vision for economic advancement in Sri Lanka, Dr. Jayasundera referred to the country’s aspirations towards the realisation of 2020/2035 economic milestones – specifically, surpassing $ 7,000 per capita by 2020 and graduating to the transition towards an advanced economy by 2035.
In relation to the Capital Market Conference, the Finance Secretary said: “There is no doubt that we need a strong financial system and capital market, among many other building blocks, having to get into the proper context to be able to raise investments in excess of 40% of GDP. There will also have to be a high-skilled work force within a strong regulatory and institutional framework if this journey is to be made one that is unstoppable.”
Jayasundera also responded to some criticism aimed at the Government with regard to governance issues and others, which he noted was common to emerging countries and nations affected by terrorism such as Sri Lanka.
“The World Rule of Law Index, Global Peace Index, Economic Freedom Index, Ease of Doing Business Index and Global Competitiveness Index, all of which deal with diverse facets of governance, having been computed by reputed international organisations, have placed Sri Lanka well with regard to Asia in its entirely and on top in South Asia,” he said, in addition to detailing various criteria.
“I dealt with these concerns not to argue that the country has perfect governance but to highlight the fact that it is certainly not among the worst lot or even the bad, but in the promising lot among emerging global economies as far as governance is concerned. I also covered these aspects to show how seriously many facets including governance have been included into the overall reform process by the Government towards improving the country ranking,” Dr. Jayasundera emphasised.
Central Bank Chief Cabraal said Sri Lanka had seen extraordinary transformation post-war and global organisations such as the IMF as well as independent persons had commended Sri Lanka’s economic progress.
He also said that ambitious targets were set in 2005 under the ‘Mahinda Chinthana’ and 10 years later the country had progressed rapidly. “All macroeconomic indicators have shown remarkable progress. We are mentioning this because we want people to understand that this is the platform we are on now,” he added.
Cabraal said that on many aspects Sri Lanka could be one the greatest case studies for post-conflict progress. Among others, he cited the performance of the capital market as the best for a country in a post-conflict situation.
“Sri Lanka is currently well entrenched in a ‘virtuous cycle,’ comprising low inflation, low interest rate, lower fiscal deficit and public debt, etc. – from a vicious cycle of high interest rates, inflation, deficit, etc. prior to 2005 – and a conducive investment environment,” revealed Cabraal, adding that “it was a tough call to move away from that cycle. I want to stress that today we have a great need and a commitment to maintain the new virtuous cycle and that is a key platform upon which the future will be built.”
Cabraal also said the country was passing several national mileposts because political stability was also important if economic stability was to be maintained as it was imperative for development.
“We are delivering what many other countries in our region have not been able to provide so far and we are proud that those aspects have also been nurtured and provided whilst the environment for capital development and big businesses have taken shape in our country,” said the Governor.
The Central Bank Chief listed several of the 2020 targets, including the development of economy that would be around $ 150 billion, a $ 7,000+ per capita income, and sound macroeconomic fundamentals, an enabling environment that would reflect a major enhancement and a real economy that would have undergone a paradigm shift.
“When we talk about the new targets it will give you a confidence that it is this target that the Government would give and want to deliver in the next few years,” he said.
“The 2020 targets would obviously be challenging, and many stiff hurdles would need to be surmounted. The challenge is to continue to manage the macro-economic fundamentals in a manner so as to deliver sound targets – even if the global environment is tough. We are confident of doing this,” Cabraal said.
“This newfound success will help Sri Lanka to raise its sights towards 2040, where Sri Lanka could move towards the ‘High Income’ category with confidence,” the CB Chief said.
According to Cabraal, by 2020 Sri Lanka’s projected per capita GDP of over $ 7,000 would take it to where South Africa is today and by 2040 Sri Lanka will be where South Korea is today, enjoying $ 22,670 per capita income.
Pointing out that the country is enjoying economic, political and social stability, CSE Chairman Kulatilaka opined Sri Lanka had the necessary ingredients in the right amount for investments to be brought in. He explained the level of returns the CSE has offered both in equities and debt as well as attractive valuations it is offering at present.
For the benefit of prospective investors, HSBC Global Private Bank Southeast Asia Co-Head Rob Ioannou and Citi Securities Services Managing Director Philippe Dirckx in their presentations highlighted the investment experience and potential in Sri Lanka.
Following the inaugural session and a panel discussion including a Q&A session, around 40 of the visiting foreign investors held one-on-one meetings with 15 S&P SL 20 Index companies.
