Progress in economic hubs, vital to achieve $ 100 b GDP goal

Dinesh Weerakody in a question and answer format analyses the benefits and consequences of an open financial system and investment as a whole

Sri Lanka has set an ambitious target of achieving a $ 4,000 per capita income by 2016. Is this achievable?

Overall, the country's macroeconomic fundamentals have strengthened over time. Sri Lanka provides very strong prospects in tourism and infrastructure, which can attract the interest of foreign investors. Compared to other South Asian countries, Sri Lanka is relatively open to foreign investment. It offers a relatively open financial system, moderately good infrastructure, and generally capable workers.

The Government is continuing to invest in improving infrastructure including roads, ports, airports-both international and domestic, power, telecoms and hotels. The Government has also ramped up investments into social overheads, particularly education, health, IT, vocational training, skills development, recreation and sports, all of which would help towards the $ 100 billion GDP goal.

The progress in the five economic hubs - ports, aviation, commercial, knowledge and energy would be key to this drive. Also, Sri Lanka needs to innovate and upgrade its production process and move up market with value addition and enhanced productivity.

What role should the financial institutions play to achieve the $ 4,000 per capita income?

The key issue among all economic drivers would be the new developments in the banking sector. Significant increases in private sector credit with access to long-term external financing is required. Therefore, banks would have to be more forward-looking, innovative and develop new business models to manage these future opportunities and position themselves. Also there is a need to strengthen the SME banking capability and to support capacity building within SMEs.

What can the financial services industry do to develop the Bond Market now that the Government is giving incentives?

I believe banks have the skills and connections to become intermediaries to drive the bond market. Investment Banking will have to come of age and so will the rating agencies.

I am one of those people who believe that the future belongs to those who prepare for it.

You have argued that building leadership in companies is important to exploit new opportunities.

Leadership development helps to build a broader leadership capacity and a deeper pipeline of leaders.

The focus is not just on those at the top but includes most or all management levels. There is a related tendency to focus attention on high-potential employees.

This makes sense in terms of potentially maximising the return on investment (ROI) from developmental efforts. On the other hand, an unintended consequence is that it allows a significant part of the organisation to atrophy.

Leadership development efforts in Sri Lanka too, often is like focusing on the white-caps in the ocean and entirely missing the unseen force of the deep blue sea.