Compiled by Yamini Sequeira
TIME TO REBOOT SRI LANKA
Madhura De Silva stresses the importance of emerging stronger post-COVID
Q: In what ways has the pandemic impacted the business sector in general?
A: The impact of the pandemic has been felt by every company. Even if some conglomerates and MNCs achieved revenue growth, it would not have been as high as expected.
The tourism industry, which has a workforce of around 800,000, is the worst affected – and the long-term impact is that the country will lose the skilled workforce in this industry. When the tourism industry regains its momentum in the post-pandemic era, we will not have a skilled workforce for it to thrive – perhaps even forcing us to import labour.
As for banks and non-bank financial institutions (NBFIs), they will experience an increase in loan defaults and non-performing loans.
Vehicle importers have also been directly impacted due to import restrictions with more than 100,000 people in this sector rendered jobless.
The construction industry – including the building materials and mining sectors – has also felt many shocks.
Micro, small and medium enterprises (MSMEs) are the worst hit due to the pandemic – for example, micro level handicraft manufacturers have simply moved out of this sector, which was preserving our heritage for future generations. The damage could be irreversible.
Q: The pandemic also provides an opportunity to reset corporate structures and cultures. What are the main areas that CEOs and human resources (HR) heads should look at?
A: The pandemic showed us that many companies had not identified the resilience of their business strategies. A silo-based approach in Sri Lankan companies and even at state level is a major impediment to growth.
Unfortunately, most companies in Sri Lanka do not invest time on planning and documenting clear action plans based on past successes and failures. A periodic review of their achievements against plans is also needed.
If businesses do not follow fundamental principles, unproven theories take over and we move ahead on a negative trajectory.
From now on, recognition of employees should be on the basis of merit and how they contribute to an organisation. We have many postgraduates including PhD holders but how many of them are able to contribute to their companies by making use of the findings in their dissertations and theses?
The ethical, sustainable, governance, risk and compliance (ESGRC) process is applicable only for documentation purposes in the annual reports of most companies in Sri Lanka.
If we establish social norms related to ethical practices and create positive customer attitudes, it will help generate higher revenues. Finally, it is all about your conscience and the tone at the top.
Q: Given your past association with state bodies, what are the obstacles they face when it comes to adapting to the ‘new normal’ as opposed to private sector entities?
A: I served as the Director General and CEO of the Sri Lanka Handicrafts Board, which is a rare self-finance organisation in the state owned enterprise (SOE) sector.
In my view, SOEs would be segregated into three categories – viz. SOEs that have a monopoly; SOEs that operate in an oligopolistic market; and SOEs that operate in a perfectly competitive market.
If an SOE is operating in a monopolistic or an oligopolistic market but fails to break even, it is due to poor business strategies and operational models. Unless the government takes radical action to transform these institutions, they will continue to deplete state coffers.
SOEs that operate in perfectly competitive markets should develop corporate plans by capitalising on their USPs.
The best option for these SOEs is to dilute their state ownership by opting for public-private partnership (PPP) models.
Q: And finally, what are the major areas that you believe should be national priorities for rejuvenating the economy this year?
A: Since 1948, Sri Lanka has been classified as a developing nation, and so policy makers should first assess and evaluate past strategies to determine what went wrong while also learning from the success stories of developed countries.
Politicians must have an open forum and define a development strategy with an action plan for the country while identifying industries that have a national competitive advantage to enter the global arena.
We urgently need foreign direct investments (FDI) for industries that enjoy a national competitive advantage.
Moreover, the state and corporate sectors ought to focus on achieving the Sustainable Development Goals (SDGs) as ethical sustainable governance attracts global private equity firms.
Sri Lanka should also move towards self-reliance in food production without needing to import basic food items.
The country’s manufacturing industry needs attention while uplifting the SME sector with access to funding and marketing. We should have vibrant incubation centres for SMEs.
Furthermore, R&D needs to be accelerated through collaboration between academia and research.