IMF Chief Christean Lagarde in her message in the IMF Annual Report 2018 says that countries should promote an open and rule basis multilateral trading system, and should strive to make new technologies work for all – boosting rather than undermining inclusive growth and financial stability.
According to her, the growth momentum of the global economy is under pressure from a slow erosion / weakening of trust in institution due to, a) the lingering effects of the global financial crisis. b) perception that the rewards of economic growth and globalization are not being shared fairly and equitably. c) anxiety over future of jobs and economic opportunity. d) weak governance frameworks that often facilitate corruption. She further emphasizes that population ageing and over-funding of pension schemes are holding back economic momentum. Income disparities are widening and if unaddressed the climate change is likely to severely disrupt economic wellbeing in the decades ahead.
Lagarde urged that European Union (EU) leaders need to redouble their efforts to lift living standards across the continent as populist movements question the merits of integration. The poorer southern countries in the EU have not caught up with their richer northern peers – a gap that has worsened since the global financial crisis. Between 2008 and 2017, the average annual growth in real income per person, was negative in the five southern members of the euro zone, hit hardest by the crisis.
She urged EU countries to reform their labor markets so that firms have greater flexibility in hiring and firing workers and their business climate becoming more welcoming to investment. These developments it is hoped, would increase spending on research and development.
Lagarde’s remarks come amid a turbulent debate over Britain’s exit from the EU, as well as amidst signs of spluttering growth in the world’s biggest economic bloc. The IMF partly blamed softening demand across Europe for having to cut its 2019 forecast for global growth, for the second time in three months.
South Asia to remain fastest growing region in world
The World Bank Global Economic Prospects Report released on 05th February 2019, expects South Asian regional growth to accelerate to 7.1 percent in 2019, under pinned by strengthening investment and robust consumption. India is forecast to grow by 7.3 percent as consumption remains robust and investment growth continues. Bangladesh is expected to grow by 7.0 percent supported by strong construction and infrastructure investments. Nepal growth forecast to moderate to 5.9 percent. Sri Lanka is anticipated to grow by 4.0 percent supported by domestic demand and infrastructure projects. Pakistan is projected to decelerate by 3.3 percent with financial conditions tightening.
The country key drive has been the construction industry which accounts for 7pct of GDP. The housing sector also absorbs circa 23pct of the banking sector credit. The quarterly data indicates that the sector contracted by 5pct. A proxy for the industry is the core raw material, namely cement, during the period under review the total cement supply has decreased by 3.55 pct. during the first quarter of 2018. The total imports of cement and the domestic supply of cement has dropped by 3.16 pct. and 4.22 pct. respectively in the first quarter of 2018.
The overall segment of property seems to be depressed with many property developers and engineering, construction companies grappling with fiscal policy squeeze as result of the increase in corporate tax, turnover tax and other taxes (WHT, NBT) which has resulted in an effective tax rate of 67pct vs 21pct in 2014. The situation is further compounded with higher balance sheet debt and the rising cost of production due to the YTD rupee depreciation of 5.9pct
The depressed undertone in the construction industry is reflected the published Central Bank business survey together with the Greater Colombo Housing and Apartment Index. 2019 too does not seem to offer much sparkle to the sector with higher real interest rates and contraction in credit.
Ever watch the movie, Rocky? I mean, any of those would suffice. But mainly, the original. In fact, if you know anything about Stallone’s life itself, you’ll know that he’s probably one of the biggest success stories in history. Now, there are plenty of famous people who failed but never gave up on their dreams. You can find them all throughout history. There sagas are powerful enough to make you second guess ever giving up in life.
Does the common idea of geniuses having an eccentric ideas and behaviors bear any truth? Here is a story of eccentric entrepreneur for you to decide.
People waste searching endlessly for magic, whereas to Lawrence Perera life itself is a magic. “I didn’t grow up around incredible cars or at a time where there was luxury. Few of my earliest and fondest memories involve automobiles. My story begins as kid who broke every toy car received just so that I could see how it was made. My mother noticed my passion for cars and decided that I should get into automobile engineering field and made me enter the German tech without waiting to go to the university, she was keen to see me making a career in the automobile industry’’ says Dr. Lawrence with a sense of gratitude, by starting his conversation with BiZnomics. “Just as we have moments in time crystallized by places, music or movies that imprint upon us, the automobile left an indelible impression on my experience and who I became”.
Now an Automobile Engineer by profession with over 40 years’ experience in the Automobile Engineering Industry both locally and overseas, Dr.Perera is a diploma holder in Automobile Engineering at the CGTTI, and Institute of Motor Industry of UK. He is also a certified automobile engineer in the Institute of Motor Industry and a fellow member of the Institute of Motor Industry – UK (FIMI).
‘’I know from very hard won experience that start-ups are enormously difficult and risky and chances are you might not succeed” says Dr. Lawrence Perera, Leading entrepreneur, Chairman and CEO of Micro Holdings and Micro Cars Ltd. Dr. Lawrence’s “ hard won experience’’ is based on manufacturing the car “Micro” the first designed , developed and manufactured car in Sri Lanka.
He has received extensive training with BMW, Volkswagen – Germany and Peugeot – France. Dr. Perera described his daily sightings of stranded people on the roads due to the chaotic situation of public transport and realized the crying need for a reliable alternative. ‘’I thought that if people had a reliable, economical, decent, comfortable and affordable car that would take them to the place they want to go, the problem would be solved and many man-hours would be saved. I then set to design and develop a small car with every household in mind – and that’s where MICRO started’’ he said.
Describing his product further he states: ‘’It was the tuk-tuk that influenced me to create a small car. The Morris Minor was the smallest at the time and the dimensions of my drawing were smaller. My product which was patented in 1999 was an 80% local manufacture. As far the brand name, I decided on micro mini and finally named it MICRO’’.
Dr. Lawrence Perera had been skeptical of the success of his product at the time it was launched at the price of LKR 300,000. ‘’ At that time local products were thought to be inferior but MICRO turned out to be acceptable and most bought it because it was economically priced’’. Marketing local brands had been very competitive as it was difficult to challenge and compete with international giants in the market.
The Micro was fitted with safety standards such as air bags and seat belts. Yet, Lawrence had to stop production mainly due to complicated manufacturing process and cost of production increasing.
The garment industry in Sri Lanka has made a big contribution to change people’s mentality in buying ‘made in Sri Lanka goods’. Garments sewn in Sri Lanka have earned in international reputation and Sri Lankan consumers are well aware of this fact. The government should encourage local products, and especially an industry such as automobile requires a certain tax relief for composite material used for making cars. Adding to this, He criticizes the industrial policy and taxation systems prevailing as not being friendly and conducive to local industrialist and manufactures. The Micro brand of which Sri Lanka could be proud of became well known the world over, even in countries such as Germany, China and Korea. But I could not develop Micro because support for the automobile industry is almost zero. For one thing vehicle importers were against local manufacture since their imports business would take a downward turn. And next, the industrial policy of the country and the taxation system does not provide any impetus at all. Although a normal car is not a luxury, but a necessity”. He claims that during the last four years, the company run with losses, and that the financing aspect has been terrible. The bank loan interest rate has shot up from 6.5% to 14.5%. p.a. “Business has been thrown into a quagmire”, he says and adds, “We have to pay much more than we earn”
Dr. Lawrence opines, that Sri Lanka has been in a miasma of uncertainty for a while, and that the combined effects of numerous policy changes have thrown many enterprises including the motor vehicle industry into turmoil, insists that the country should have strong decision-taking and unwavering leaders who will dispel personal gains and crack the whip to drive away corruption while instilling discipline in all sectors, in order that the country could emerge from one of its lowest phases in recent history with a record decline in business.
Dr. Lawrence Perera’s view is that gasoline engines will gradually go out of the market. He states that with the introduction of hybrid vehicles, gasoline engines changed, but that hybrids will survive only with combustion engines. ‘’whereas Japan went for the hybrid, China jumped into electric engines which will last for another 100 years. We should also adopt the electric car. With sunshine around all throughout the year, car solar batteries fitted to electric engines can be charged at no cost and what a saving on fuel that will be! Anyway, gasoline engines will gradually make its way out of the market, in not too distant future.
With the influx of hybrid and electronic cars an eco-environment challenge will be the lack of adequate provisions to dispose of used bittern such vehicles in the future. The lack of regulators for strict recycling and safe disposal of batteries will lead to them ending in garbage dumps. Another area that needs attention to curb pollution and improve and conserve of quantity is to adopt a long-term vision or polices of emission standards. The lack of the stable policy outlook may associate Sri Lanka with volatility and high risk.
Adding to his many innovative ‘firsts’, Dr. Lawrence Perera was the first to design an economical rail solution for the Sri Lanka Railway, in 2004, the first in Sri Lanka to assemble 4×4 SUVs under the technology transfer agreement with the Korean Ssang Yong motor company, with Mercedes technology in 2006, and the first to manufacture a luxury double decker bus with the latest technology complete with fully aluminium low floor monocaqne design for public transport in 2007. Commenting on his economical rail solution Dr. Perera says: “In 2004 I designed an economical rail solution termed ‘Lanka Econo Rail’ for mass transport to replace the car in the megapolis. My proposal was to build carriages using scrapped steel, with automatic doors, good seating and all comfort. My proposal envisaged buses at relevant stations to transport the passengers to their destination like the monorail or metro in foreign countries. It was a light-rail concept place of the heavy locomotive system which has been in operation for the past 164 years. However, this was blocked by railway officers who want the steel to be sold at dirt price by the kilo, as obsolete.
Dr.Perera attributes his success to his family – wife and two daughters who had been very supportive, without their support he wouldn’t have achieved so much. Dr.Perera is determined to showcase Sri Lanka’s potential in the international car industry.