Business community optimistic of better growth in 2014

By Lalin Fernandopulle

The business community expressed mixed views on economic activity in 2013 and projections for the new year which would be another challenging year as many countries are yet grappling with the global financial crisis.

Commercial Bank Chairman Dinesh Weerakkody said that credit growth was flat in the banking sector during the year and added that debentures helped raise funds for large corporates. There was a steady decrease in interest rates and exchange rates in the second half.

There was pressure on Non Performing Loans. Despite many challenges the public sector has expanded.

In his predictions for 2014, Weerakkody said that though low interest rates would improve the appetite for private sector credit growth it may impact inflation.

There could be a consolidation in the industry with an increase in mergers and acquisitions, which would help create stronger, bigger and better financial institutions.

“Low interest rates would help the stock and property market to grow. It would be a good time for capital markets.

Sri Lanka should ramp up efforts to develop the higher education system to meet the demand for more skilled workers.

Companies should look to improve their governance structures to improve access to low cost funds,” Weerakkody said.

Chevron Lubricants Lanka PLC, Managing Director Kishu Gomes said that 2013 brought about new challenges, having negative implications to the Sri Lankan business community which was quite contrary to the early expectations seen with the momentum gathered after the end of terrorism.

Yet, considering the mounting global challenges having negative effects on the local economy, the business community should be happy with the many positive developments in the operating environment which would pave the way for economic development thus improving performance.

“I don’t expect the market to boom in 2014. From the subdued conditions today we cannot expect a quick turnaround during the early part of next year but those who play strategically will always find the right opportunities to grow their businesses,” Gomes said.

He said we need to think strategically, invest wisely, execute aggressively and beat the competition to stay ahead of the curve.

Thinking beyond Sri Lankan borders will help prop the local economy rather than trying to increase the size of the pie in the market.

Tea Exporters Association, President and Heladiv Group Chairman Rohan Fernando said the tea export industry performed creditably during 2013.

“As per the indicative figures we should achieve in excess of US $ 1.5 billion from tea exports. This is in spite of some of the Middle East markets in Syria, Libya, Iran and Iraq not transacting regular and normal business,” he said.

China is increasing the intake of tea from Sri Lanka and this could enhance our export earnings. Tea prices this year are the highest in recent times and we should market and promote it to sustain the levels of achievement during 2014.

“Implementing promotion and marketing programs should be a priority and quality assurance at tea factory level will also be an area for concern as tea exporters are facing numerous quality related challenges from foreign clients,” Fernando said.

“The tea export industry will do well and improve on the 2013 performance provided there is aggressive marketing and promotion of Ceylon Tea in the global market,” Fernando said.

Past Chairman Chartered Institute of Logistics and Transportation and Past Chairman Institute of Chartered Ship Brokers - Sri Lanka Branches, Dr. Parakrama Dissanayake said that Sri Lanka's port and shipping industry fared exceptionally well in 2013, notwithstanding the global economic slump affecting external trade.

The launch of the Colombo South Terminal with state-of-the-art facilities that could accommodate ultra large container vessels was a milestone. With the envisaged consolidation and concentration among shipping lines, 2014 will be a challenging year. However, with the port of Colombo expected to add incremental deep draft capacity, Sri Lanka would be in an unassailable position.

IFS Sri Lanka, Managing Director and Vice President, South Asia, Jayantha de Silva said that the IT and BPM or the knowledge economy achieved around US$ 600 million in export turnover this year and added that the industry will record a higher a growth rate next year with all stakeholders geared to boost business.

The IT and BPM industry is poised to be a one billion dollar industry by 2015 and we are confident with a common goal the players in the industry will make a major contribution to achieve the mid and long-term targets.

The IT and BPM industry in Sri Lanka comprises around 350 companies and the industry has set a target of US $ 5 billion in export revenue by 2022. Chairman of the Ceylon National Chamber of Industries, Gamini Gunasekara said that though there was slow growth in the first and the second quarters of 2013, there was satisfactory growth in the economy in the last two quarters. “Industrial output and exports grew and we expect this growth momentum to continue in 2014.”

“We expect 2014 to be promising in terms of economic growth and business especially with the provisions in the 2014 Budget. Much encouragement has been given to the industrial and export sectors,” he said.

“We expect a favourable global demand for our major exports such as apparel, tea and rubber would remain strong. Political stability will continue despite the many elections due to be held in 2014.

We are used to this kind of frequent elections and they will not create a negative impact on the economy or businesses,” Gunasekara said.

National Chamber of Commerce of Sri Lanka (NCCSL), President Sunil G. Wijesinha said that this year corporate results were poor and the economy faced an adverse global situation. Exports were low and by the end of the year it was picking up.

Compared to this year we can expect better economic and business performance in 2014. Sri Lanka will become a hub of some export commodities.“Our position has improved against our main competitors Bangladesh and Thailand.