“We encountered some challenges with the outbreak of the COVID-19 pandemic but have been able to tackle them well and are on a strong footing,” noted Gihan Cooray – the Deputy Chairman and Group Finance Director of John Keells Holdings – in his assessment of the Sri Lankan economy.
“Compared to what is taking place in the region and globally, there are quite a few opportunities for the economy,” he explained, characterising the apparent momentum in domestic activity and economic recovery as being “quite strong” with businesses beyond the leisure sector performing well.
Following the onset of the pandemic, diversified businesses faced uncertainty and various challenges across industries. Cooray pointed out that while organisations in the leisure segment and hotels may have shut down, the retail sector experienced high demand – such as supermarkets providing essential groceries, for example.
In addition to long-term planning to manage balance sheets and ensure liquidity, he emphasised the importance of short planning cycles, preserving as much cash as possible, initiatives to control spending and so on.
Offering his outlook on the tourism industry, Cooray maintained that “the rest of the year will continue to remain somewhat challenging given the current environment and airport closure.” However, domestic tourism has played a part in sustaining the hospitality sector.
“In the longer term, we will need the market to open up and foreign arrivals,” he asserted, elaborating: “In the post-COVID world, the tourism industry’s outlook will depend on the timing of the release of vaccines and there seems to be progress on this front in the global context.”
In his opinion, the drivers of tourism in the country remain promising – and he cited Sri Lanka’s 2.3 million tourist arrivals in 2018 prior to the pandemic and Easter Sunday attacks last year. Having said that, Cooray believes the island has not realised its full potential as yet compared to hotspots such as Bali, which is expected to attract between five and six million tourists.
“In a sense, Sri Lanka has lost out due to the 26 year war and we have not caught up yet,” he noted, adding: “Tourism is one of the lowest hanging fruits for the country, and we remain confident and bullish about the prospects for the industry although the immediate term will depend on how soon the markets open up.”
Earlier this year, the government imposed restrictions on the import of nonessential products in an effort to improve the trade balance and protect local businesses among other reasons. Acknowledging that the import ban was implemented to help ensure stability from a macroeconomic perspective, Cooray believes this policy has its pros and cons.
While this has introduced administrative burdens for businesses including leading conglomerates, he noted that projects have continued to progress. “Naturally, it would be favourable to see a tapering off sooner rather than later with regard to this import policy but it helps balance macroeconomic conditions as well,” he acknowledged.
The SME sector has been recognised for its contribution to the economy over the years with such businesses also serving as suppliers to larger businesses.
“After a tough couple of years, we observed a pickup in business over the last 12 months or so in the pre-COVID era,” Cooray revealed, noting that one of the catalysts of this improvement was the SME sector’s improved access to finance.
Furthermore, he emphasised the importance of policy consistency in supporting not only SMEs but businesses across all industries as macroeconomic stability helps businesses to plan for the future.
Summing up his views on the capacity and role of SMEs in the prevailing environment, Cooray declared: “Ultimately, it’s an ecosystem in which larger businesses work with SMEs – and having stability and clarity will help the operations of smaller businesses as well.”