Delivering fresh perspectives

Dr. Gamini Wickramasinghe, Chairman, Bank of Ceylon urged the business community to think of out-of-the-box solutions to gain synergies.

Dr. Gamini Wickramasinghe

He was speaking at the 26th LBR-LBO CEO Forum held on February 25. He elaborated upon some thought-provoking business themes in relation to agricultural output gap and inflation, Forex revenue generation through airport retail trade and capacity building in the IT/ BPO sector.

He cited several perspectives on combining different businesses and management processes so that these sectors may interact with one another to enhance enterprise business strategy.

Inflation

Under the first theme an unconventional `Inflation Targeting' Model: Bridging the Agri-Output Gap, Dr. Wickramasinghe focused on the importance of improving the agricultural output gap. Inflation has been an important topic for the economy not only in recent years, but at various stages in economic history. It is well known that persistently high inflation has a negative effect on economic welfare. Although inflation dynamics are affected by movements in four key markets -monetary, fiscal, output (in particular agriculture) and exchange rate related, Dr. Wickramasinghe stressed that purely from a practical angle, increasing agri-output has pervasive benefits.

He elaborated upon the complexities in financing small entrepreneurs of the agricultural sector centreing on the case of Dambulla farmers reflecting a high delinquency rate due to crop damage succeeding bad weather. Such risks had the Bank of Ceylon looking at an integrated solution comprising lending -an essentially Banking Product plus Agricultural Insurance.

"The merged processes work efficiently giving the farmer and the bank respite." Dr. Wickramasinghe said. "This enabled us to focus on regional strengths and look at improving output at provincial level through an enhanced lending product to the agri sector.

On the other hand Inflation is associated with the dominant role of food and agriculture in the economy. We also spend heavily on importation of food items. Increased domestic production not only enhances supply and thereby curtails domestic prices but also can help cut down imports and imported inflation." Under the second theme A Development Model based on Airport Retail Trade Dr. Wickramasinghe promoted the concept of Airport and City Duty Free Complexes. He indicated that against a backdrop of global market turmoil and looming recession, the Middle East remains strong on growth in certain niches and cited Bahrain and Dubai as growth centres. Similarly he urged that Sri Lanka should have a long term vision for duty free and travel retail which encompasses tourism and infrastructure.

"Currently the single largest source of tourism to Sri Lanka comes from Asia, which accounts to 40 per cent of the arrivals. Of the Asian countries Indian tourists who mainly travel to Sri Lanka for pleasure purpose contributed much to the Sri Lankan economy with a market share of more than 20 per cent in 2007. However in the past Sri Lanka unlike our neighbouring countries such as India and Maldives was not able to position itself adequately to attract the high net worth tourist. At present the receipt per tourist per day is not more than US$ 80." Dr. Wickramasinghe emphasised.

Development

The Development Model suggested by the speaker combines retail and warehousing infrastructure, transport infrastructure, PPP possibilities and Tourism expansion. The infrastructure component comprises Luxury Electric Express Train railways and elevated highways to Katunayake and Duty Free compounds at the Maradana Railway Station compound and Katunayake Free Trade Zone.

One flat duty percentage (including all taxes) is suggested to be charged on a selected category of items: consumer electronic, electrical photographic, communication goods.

Dr. Wickramasinghe suggested the phased implementation of this project, initially focusing on the airport and Maradana complexes and subsequently islandwide, enabling access to the public at large.

Infrastructure

"Part of the Maradana Railway Station will be modeled in the lines of the Victoria Station in UK to manage airport handing. The highway will be a toll road and the attraction is that this highway will not require any land acquisition. Building an elevated highway is more cost effective than acquiring and constructing a highway" he explained.

"Sri Lanka is relatively cheaper than Dubai and Singapore in terms of infrastructure and labour costs. Items also may be slightly cheaper." he commented stressing that he believes that via a project of this nature Sri Lanka could aspire towards becoming the most sought after duty free destination providing authentic goods in the Asian region. The third theme centered on IT/BPO capacity building.

Dr. Wickramasinghe pointed out that the IT /BPO sector has been identified as offering great potential for growth in Asia as reflected by the stronghold India. However, the industry in Sri Lanka today is facing several challenges amongst which the availability of a quality talent pool is a matter of concern.

BPO

Dr. Wickramasinghe commented "The estimated workforce in the BPO sector alone is around 4,000 with the combined IT/BPO workforce amounting to approximately 11,000 in 2006 generating a revenue of over USD 170" he stressed that to reach the ambitious revenue target of USD 2 bn the workforce needs to be increased at least tenfold.

He cited the successes of India comparing the revenue generation amounting to USD 4bn of Infosys on an employee base of 113,000. In 2007 the combined workforce of the IT/BPO sector was 13,300 of which 5,700 was employed in the BPO sector while the total revenue generated amounted to USD 211 Mn. To enable growth, "Sri Lanka should have a long term vision to become a BPO platform" the speaker stressed.

"We need to integrate IT, Accounting professional education processes with BPO process to get results. Bank of Ceylon is currently working towards a sustainable programme which brings together the IT and Accounting Training Institutions." said Dr. Wickramasinghe.