VISION 2021 0 38

VARUNI AMUNUGAMA FERNANDO ( Jt. Managing Director – Triad,  Director – Derana Media Network )

When the world froze in shock in the face of the Covid-19 pandemic, Sri Lanka in my opinion managed the situation in a timely manner, placing the welfare and health of our people first. 

Living in ‘the new normal’ is undoubtedly a work in progress, and just like the rest of the world, our nation is trying to balance conventional methods of managing a crisis with our own indigenous innovations. There is an inherent resilience in this blessed land where no matter the challenge, we always find a way. 

It was sadly inevitable that the economy would be adversely affected, leaving many of our key industries struggling. As we work towards managing the pandemic and beyond, what is important is the steadfast vision of the political leadership, efficiency and integrity of the administration, and the participatory action of the business sector. 

As a group, we took the leadership in calling on corporates to reconsider salary cuts, layoffs and redundancies as a first course of action at the very outset of the pandemic. Founded on a people-driven strategy of management, our group was proud to set an example of ‘shared resilience’, where we deployed all our verticals, especially our communications network to support emergency national initiatives. 

It is not the past but the future that matters. We will take every step to continue to create wealth for this country, and uplift the lives of people by focusing on entrepreneurship development, crafting positive mindsets, and building the next generation to be global locals. 

We have always believed that ‘Sri Lanka Can’. We will continue to do our best using our resources and acumen to transform our motherland.

Nanda Fernando  ( Managing Director, Sampath Bank PLC )

After facing back-to-back challenges, 2021 is the year we are looking forward to, and one that we expect will usher in an era of sustained economic prosperity. We are hopeful that the Covid-19 pandemic will come to an end during 2021, and given the conducive environment created through stable politics, a pro-growth budget presented by the government, and low interest rates, both investment and consumption demand will pick up strongly during the year. Sampath Bank has made all necessary preparations to ride this wave of prosperity together with our customers and other stakeholders. 

S. Renganathan   ( Managing Director / Chief Executive Officer, Commercial Bank PLC )

“It is not realistic, nor is it sustainable to expect immediate growth following an all-encompassing and on-going global crisis. While we adjust and adapt towards the new normal, it is important to stick to basics; sustainable growth strategies that uplift your stakeholders, business continuity planning, innovation, and most important of all, a positive outlook.  “

Ashroff Omar   ( Group CEO, Brandix Apparel Limited )  

“Against the backdrop of a global pandemic that has affected millions, cost thousands of lives and caused a recession worldwide, it is hard to see opportunities, let alone stay optimistic. However, the pandemic also brought a big pause in our lives; facilitating a mindful intentionality. My biggest learning in this crisis is, for myself and my team, to focus on things we can control rather than worry about things that we cannot. At the heart of this is the welfare of our people.

As organisations, we need to take this opportunity to examine our systems, structures and processes end-to-end. Our goal should be to eliminate waste and rework, further optimise and digitise workflows so that as individuals, we are efficient, best-in-class, and physically and emotionally well rested. This will enable Sri Lankan industries to withstand the current recession, by creating a runway long enough to recapture the market as economies bounce back. 

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Property and Construction Industry 0 613

By : Kenneth De Zilwa

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.

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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

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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.

 

 

Active Trade policy for economic development 0 855

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Professor W. D. Lakshman

Biznomics-active-trade-policy2Do countries with lower barriers to international trade experience faster growth? This has been one of the most vigorously debated questions in economics and political economy. Mainstream economics since Adam Smith strongly favours free or freer trade. In contrast, different strands of political economy have been critical of these views. Liberal trade has become a policy position pursued by international trade organizations like the GATT (and after 1995, the WTO), and by international financial institutions like the IMF and the World Bank. For many in this line of thinking free trade has become an ideology. Renato Ruggiero, the first Director-General of the WTO, writing in the last decade of the twentieth century, argued that liberalization had “the potential for eradicating global poverty in the early part of the next [twenty-first] century—a utopian notion even a few decades ago, but a real possibility today”. The free trade ideology has attracted traditional elites and economic bureaucracies in many developing countries as well.

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The free trade policy prescription is based on the theory of comparative advantages developed by a long series of well-known economists starting from David Ricardo of the nineteenth century. (Ha-Joon Chang in our issue of May-June 2019 presents a lucid explanation of the fundamentals of comparative advantages theory). In reality however, international trading has never been free.  During the period of European colonialism, foreign trade was controlled by the imperial powers and a few large and powerful trading companies. Colonial territories were opened up for foreign trade using imperial power. Countries that could not be brought under direct colonial rule (e.g. Japan and Thailand in Asia) were compelled to open up for foreign trade through unequal treaties which they were forced into signing. Foreign trade in colonies and countries brought under unequal treaties was seriously disadvantageous to the territories concerned.

 

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After World War II and in the era of decolonization, there was the US domination of world trade matters. The currently prevailing pattern of international division of labour and the rules of the game governing international trade are being governed and managed by the set of international institutions referred to earlier, working according to dictates of the US-led bloc of Western powers. Various global forces operate in support of these institutions – the ideological commitment to free trade, bribery and corruption unleashed by MNC-led international capital, and numerous political pressures, occasionally backed up by military power of dominant nations.

Foreign trade has been described as an engine of growth (implying causality) or at least as a handmaiden of growth (implying concurrent movement). Countries which have experienced export-led or outward-oriented growth processes are cited in support of growth-engine or growth-handmaiden hypotheses.  Mainstream theory however ignores inward-oriented import substitution activities which often pioneered the economic growth processes of the countries concerned. The export-led characteristic developed later once production capacities were developed through import substitution. Historically, in the initiation, sustenance and guidance of both these growth processes – import substitution and export orientation – active trade policy has played a crucial and critical role. The effective policy stance here has never been free trade, passively leaving trade flows to global market forces. In effective trade policy stances there were always complex and dynamic combinations of openness and restrictiveness.

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A point of great significance in trade policy discussion is that every process of development, taking place over time and space, is unavoidably uneven from one region to another at the country level and across different countries at the global level. As development processes take place at different rates in different countries, some regions and countries have achieved development earlier than the others. In this process, the “developing countries” always have got themselves stuck in a “late development” syndrome, subjecting them to more disadvantage than advantage. The “one suit fits all” type of development policies advocated in different versions of neoliberal packages, are hardly likely to meet the development challenges of all developing countries. This point comes out strongly in the extensive trade policy debates in development theory and practice.

Cont..

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