Creating a healthy business climate

Opportunist politicians in the Opposition have left no stone unturned in their quest to regain power. Nevertheless, none of them has been able to diminish President Mahinda Rajapaksa's popularity and that of the Government.

On every occasion when Opposition politicians resorted to their dirty tricks to sling mud at the Government, the masses in unison put them into the political dustbin. This is manifest in the United National Party (UNP)-led Opposition's track record of losing 24 consecutive elections, including two Presidential elections and an equal number of Parliamentary general elections.

The forthcoming elections to the North Central, Eastern and Sabaragamuwa Provincial Councils would expose further the UNP's political nudity, its mud-slinging politics and concocted stories to gain cheap popularity. The UNP, even at this late stage, should realise that people are by no means gullible and moreover that it could not woo the masses' support through its abominable tactics.

The UNP's self-appointed economic pundits have trotted out their own theories to project a dismal picture. They rue Sri Lanka's march towards new economic horizons after terrorism was eradicated. The country's milestone achievements in economic development and Gross Domestic Production (GDP) are a clear indication that Sri Lanka is on the right track.

It is predicted that Sri Lanka's economy will soon reach a GDP of US$ 100 billion, up sharply from the slow-paced economy of about US$ 24 billion GDP in 2004. The country's per capita income too will rise to over US$ 4,000 - a rapid increase from under US$ 1,000 at the time President Rajapaksa took office when the country was plagued by terrorism.

The economic pundits, true to form, always projected a negative outlook on the country's economy. The Opposition has even gone to the extent of using the recent developments in the stock market as a tool to buttress its gloomy picture on the local economy.

It is common knowledge that a downturn or an upward swing could be observed in a stock market due to a variety of factors, not necessarily manipulation.

Adverse news reports on Colombo's stock market heightened following the resignation of the Securities and Exchange Commission (SEC) Chairman Tilak Karunaratne. One must bear in mind that Karunaratne's resignation will make way for a knowledgeable professional, who understands stock markets, with a solid regulatory background, to take over the SEC and steer the local stock market forward.

The prevailing global uncertainty has posed a big challenge to many countries, including the so-called developed nations. Sri Lanka, however, even during the time of global recession a few years ago, faced this daunting challenge. When the markets and economies in the West were on the verge of collapse and some leading banks in the world put up shutters, the situation in Sri Lanka was comparatively stable. Even when certain economies in Asia went through a lean period, the Sri Lankan economy was resiliant due to the far-sighted vision outlined in the Mahinda Chinthana . This was despite the fact that the country had to spend a colossal sum of money on defence as Sri Lanka at the time had been fighting a deadly battle against the world's most ruthless terrorist outfit. On the other hand, mega development activities have continued at a rapid pace since 2006.

With countries in the West restricting their imports due to the negative trends in their economies, export values of countries such as Sri Lanka also dropped. When the purchasing power of people in those countries to which we supply goods and services dropped, the country's foreign exchange earnings too would obviously recede. This simple economic theory has been given extra spice by the UNP's economic pundits to make it a political slogan. Do the UNP's spin doctors in economics understand these basic theories which are known even to a turk?

The global economic conditions continue to worsen with the US and European economies remaining sluggish. However, these adverse global conditions are unlikely to affect the local economy more than what was anticipated at the time the economic growth forecast for 2012 was revised downward to 7.2 percent.

The credit that could still be disbursed in the second half of the year by licensed banks even with the credit ceiling in place could comfortably support the revised economic growth path. Hence, growth estimates still seem to be within the country's reach, albeit the gloomy global conditions. It is important to have a clear understanding of the changing circumstances for regulators and stakeholders in Sri Lanka's stock market. Unfortunately, there seems to be only a marginal appreciation of this stark fact.

The CSE's market capitalisation has suffered a marked percentage drop this year. At the same time, it is no secret to any knowledgeable investor that this downturn is a result of the global uncertainty, rather than it being unique to Sri Lanka. Regulators and market analysts have more often than not attributed manipulation, 'stock mafia' acts, insider trading and fraud for the downturn, without taking into account the overall picture.

It is a crying shame that Sri Lanka is earning notoriety for biased analysis that is being dished out to the public by certain Opposition politicians and a coterie of businessmen loyal to the UNP. It seems that these so-called market experts have forgotten the fact that many banks, including Commercial, DFCC, HNB, NDB, Sampath and Seylan reported huge profits in their half-yearly performance.

Sri Lanka's stock market, which was in the doldrums for many years, was revived after terrorism was eradicated under President Rajapaksa's political sagacity. Hence, the recent SEC trends are transient and it is only a matter of time before it regains its upward spiral. The ultimate objective of the SEC is to protect its investors.

A protracted period of positive activity had brought about positive sentiment to the market.

This was evident with many fundamentally sound counters showing upward movements during last week's trading. The policy measures implemented in February/March, aimed at reducing the high import growth and the high credit expansion, are now yielding the desired results.

It is the duty of all patriotic businessmen to get their act together, brushing aside petty personal agendas. They should make a tangible contribution by pooling their ideas and expertise. While maintaining their own business interests, they should create a healthy business environment that would inspire the confidence of not only local investors, but also those overseas.

It is the bounden duty of one and all to make the best use of the peaceful atmosphere prevailing, not only to develop infrastructure, but also to have a comparatively stronger economy that would enable Sri Lanka to face future challenges courageously.