Beginning of a new era of economic prosperity

The 36th Annual General Meeting of the FCCISL was held at the Federation House on Monday. At the AGM, Kosala Wickramanayake completed his term as the President of FCCISL. Following is the full text of his message presented to the AGM:

Dear members,

Following the defeat of terrorism at the banks of Nandi Kadal, Sri Lanka stands at the cusp of a momentous new era. Peace has returned after three long decades and with it a renewed sense of purpose.

There is optimism everywhere. The opportunities for the growth of business are immense. We live in a land of great potential, and the FCCISL – as the apex body representing the chambers of trade and commerce – has an important role to play.

The accelerated economic development now underway brings with it a promise of prosperity. We must ensure that its full potential is harnessed. This is not an easy task, but our organisation, with its scope and reach, can do much to overcome the challenges.

Given the country’s recent economic performance, there is good reason to be hopeful. Despite the financial, fuel and food crises around the world, which turned into a full-blown economic recession, our economy demonstrated its resilience by recording a 3.5% growth in 2009. Even more remarkably, it achieved a growth of 6.2% in the final quarter of the year. This, in my opinion, is the beginning of a new era of economic prosperity.

Other indications are also promising. Inflation was brought down to 3.4%, and the exchange rates were maintained at relatively stable levels. The benchmark interest rate saw a sharp decrease to 7.5%. Foreign exchange remittances by our expatriate community grew to US$ 3.3 billion, while timely government interventions in the financial and fiscal markets had a positive impact at the macro-economic level.

As expected, the country’s tourism industry received a great boost with the defeat of terrorism. It grew by 49% during the year, compared to an average of just 14% in the Asia-Pacific region.

Meanwhile, the infrastructural base for an economic takeoff is being laid. This is evident in the large-scale investment in ports, airports, highway networks, power, railways, irrigation and water supply. It has created an environment conducive to attract both foreign and domestic investment. Also, the proposed reforms in the spheres of education, health and social safety will, hopefully, lead to significant strides in the progress and well-being of our people.

There are other encouraging developments. Among these is the decision of the International Monetary Fund (IMF) to help place the country’s macro-economic fundamentals on a sound footing by granting BOP support of US$ 2.6 billion under a stand-by arrangement facility.

We hope that the government will, as a matter of priority, initiate reforms in certain important areas. These include the higher education system, the rigid and complex labour laws, the public service, the tax system and the investment regime. Assistance to the Small & Medium Enterprises (SMEs) is also necessary. Other areas that need greater emphasis are vocational training, agriculture and agro-processing.

Sri Lanka is fortunate in possessing the natural resources and human capital necessary for progress. In fact, I believe that if the proper government policy framework is in place, we can achieve an economic growth of 8-10%.

As I stated earlier, the Federation has an important role to play. With 50 chambers of trade & industry and business associations affiliated with us, and over 12,500 member businesses, we can do more than any other organisation in the private sector. Today, we are present in every region via this extensive network, and so can harness its strengths to spur the economy forward.

We launched a number of important initiatives in 2009. The most ambitious among these is the Chamber-Network Engagement in Economic Rehabilitation (CHEER) project. This Rs.266 million project, which focuses on rehabilitation efforts in the North and East, is funded by the European Union. Our main partner in this initiative is the reputed INGO, Oxfam GB.

During the year, we also partnered with Oxfam GB on another humanitarian project. It entails us working together to reduce the vulnerability of civilians affected by the conflict. We will collaborate to reduce the risk of disease and improve the unsanitary conditions in the camps for internally displaced persons.

Training continued to be an important aspect of the Federation’s activities. Our Chamber Academies upgraded the skills of entrepreneurs, employees and job-seekers in various regions. They conducted a range of certificate and diploma courses that covered essential theoretical and practical knowledge.

Meanwhile, the Handwerk Centres – which we run in collaboration with the National Construction Association of Sri Lanka and Handwerkskammer Koblenz, Germany – were restructured as profit making entities. We also increased the intake of trainees to these centres, which have played a notable role in skills development.

They have trained many individuals in construction industry-related fields such as masonry, building painting, carpentry, welding, electrical wiring and air-conditioning. Those who successfully completed their training have received locally and internationally recognised certificates. It is imperative that we enhance the expertise of our workers, so that they receive a higher pay here and abroad.

In 2009, the Federation organised the Sri Lankan Entrepreneur of the Year event for the 14th consecutive year. This event, which was designed to recognise, reward and motivate the country’s entrepreneurs, was a great success. Aimed at promoting innovative entrepreneurship and good business practices, the ‘Sri Lankan Entrepreneur of the Year’ Award is the most prestigious honour bestowed for entrepreneurship in the country.

I believe that this awards scheme has done much to encourage our home-grown entrepreneurs. Some of them have transformed their businesses into textbook examples of success stories. They have been able to showcase their products internationally, and have become world-class players.

We also continued to focus on SMEs. We have for many years emphasised that the SME sector is the backbone of the national economy. Many SMEs have today become prominent players in business largely due to the advice and support extended by our Small and Medium Enterprise Development (SMED) division.

Our Regional Chambers Sri Lanka (RCSL) program will certainly go a long way in empowering the SMEs. It aims to create a sustainable regional chamber movement that can cater to the changing needs of the private sector, particularly the numerous SMEs in the outstations. Key areas of the programme are the development of organisational capacities and professional competencies, lobbying and policy advocacy, service development, income generation and peace building.

It is pertinent to mention here that there is an imbalance between the development taking place in the Western Province and the other regions. This situation needs to be remedied if we are to avoid social instability. We must never again be confronted with the spectre of another youth uprising.

The private sector needs to engage with the state authorities as well as international organisations and donors to ensure that development takes place more evenly in all areas. Multilateral institutions such as the International Monetary Fund (IMF) and the Asian Development Bank (ADB) can also play an important role.

Meanwhile, the Federation continues to follow a dynamic approach on international trade affairs. We have extensive international connections, and have used them for the benefit of local businesses. Among our activities in this sphere are the facilitation of trade delegations and missions, trade promotion and the signing of MoUs with foreign chambers.

I must also mention our internal restructuring program, which commenced in August this year. I truly believe it will transform the Federation into a more vibrant, efficient and cost-effective organisation. Our aim is to make all units self-sustaining and income-generating, rather than relying on donor funds.

Since the Federation was established 37 years ago, it has accumulated much experience in all aspects of commerce and industry. If we take into account the collective knowledge and expertise of our member chambers as well, then this experience would be immense. Furthermore, we have always been in touch with the ground realities.

It is by acting as a forum for the expression of diverse views that we have been able to make informed decisions. This is why the government always considers our opinions seriously when formulating policy. In fact, our recommendations are often incorporated into the budget.

Over the years, we have built a strong rapport with influential government officials in important institutions, including the Central Bank and the Treasury. Our Key Person’s Forum – which was initiated to maintain a dialogue with senior decision makers – has proved very useful in this regard.

Looking ahead, I believe the Federation has to play a greater role in the development of market-oriented agricultural practices. This must be done with the objective of empowering the farmer as an entrepreneur in his own right. Such an initiative will ensure that consumers get a better product at a better price.

I also believe we must take a more proactive approach in rebuilding the lives shattered during the long drawn-out war. Our partnership with Oxfam GB to help the people of the North and East has proved very promising, but more needs to be done.

Ideally, our future efforts in these areas should focus on large-scale vocational training projects. This will enable the war-affected people, including the ex-LTTE combatants, to find sustainable employment and contribute to society as part of the new Sri Lanka. Such projects are imperative to build ethnic harmony and achieve a lasting peace.

We must also create a greater rapport between the business communities of the North and South, thereby facilitating trade links. This will not be a difficult task, for commerce speaks a common language and breaks through cultural barriers.

In conclusion, I must state that the Federation will continue to remain a dynamic organisation. With our professional approach, we will expand our scope, reach and influence to steer the growth of business. We will harness the inherent strengths and potential of our country.

I wish to thank the Board of Directors, the Executive Council and staff of the Federation for all the support extended to me. I must also acknowledge the contribution of our donors, whose assistance enabled us to implement our projects so successfully.