CORPORATE SECTOR
Compiled by Tamara Rebeira
NAVIGATING POLITICAL CHAOS
Dr. Trevor Mendis presents business strategies for this election year
Q: How do you foresee the upcoming elections impacting the business environment?
A: The upcoming election will be crucial and could either redirect the country or see a continuation of existing economic policies.
But due to the uncertainty of whether it will be a presidential or general elections, people are left in a dilemma. The business community is also facing this uncertainty, leading it to adopt a ‘wait and see’ policy.
Businesses must first survive under these circumstances. And they need proper strategies to do so; they should know how to float first instead of swimming or diving. Floating is also an art.
Q: In light of the political uncertainty, what measures do you recommend businesses to take in order to mitigate risks and maintain stability?
A: Strategy provides direction – all corporate giants should have a well-designed strategic plan. And they should stick to this plan and have multiple contingency plans based on a scenario analysis for election outcomes.
For instance, if party A wins, what would the future be? If party B wins, what would the scenario and strategy be? And if party C wins, what would the strategy for the future be?
It’s important to have at least three contingency plans to take companies forward.
Q: Are there specific industries or sectors that you believe will thrive in the year ahead?
A: One area is agro-based business, as COVID-19 taught us the bitter and valuable lesson that we should improve these businesses. Corporates – including listed companies – should be involved in agro business as it’s lucrative.
Secondly, the focus should be on essential items regardless of the circumstances. During the conflict, companies that focussed on essential items performed well. Some corporates focussed only on one area but the pandemic and economic downturn taught them a lesson.
Corporates should consider diversification as focussing solely on one area is a risk. The inculcation of such strategic thinking into companies is of paramount importance, but is minimal in Sri Lanka.
The third area is IT-based. Today, the world is moving towards a drone era, having transformed from an IT era to a satellite era. Technologies such as AI and robotics are evolving, and they’re potential areas for Sri Lanka.
We can also focus on export oriented products to expand the export basket with value additions.
Q: We’re emerging from an economic crisis while the cost of living remains a challenge. Do you expect consumer sentiment and spending behaviours to change?
A: Financial management by the government and people is inadequate. We’re emerging from an economic crisis and our heads are just above water.
As a nation, we must have at least seven stringent policy areas in place – viz. energy, transport, education, healthcare, trade, foreign and agri. These policies must be designed for at least 10 to 15 years.
Policy formulation is the duty of the government, not the people. The prime objective of any government should be to increase foreign exchange reserves, which we haven’t achieved over the years.
We must also improve domestic revenue generation. Integration of systems is important to ensure easy and accurate access to information – especially for government organisations.
Another aspect is ensuring strict law and order, as poverty is not an excuse to break the law and wealth is not an excuse to bend it.
Sri Lanka also needs stringent quality standards to compete in the global market as there’s a visible gap between global standards and ours.
Q: What role will innovation and entrepreneurship play in driving economic growth?
A: The hierarchical structure of any multinational begins with cottage industries, followed by SMEs, private limited liability entities, listed companies, conglomerates and finally, multinationals.
Unfortunately, our cottage industries and SMEs are weak, and when the foundation is lacking – along with poor standards – multinationals are unlikely to emerge.
In addition, the Central Bank of Sri Lanka must act as the bankers’ banker and introduce two forms of lending: quantitative and qualitative. The Central Bank can direct qualitative lending to focus on the cottage industries and SMEs, allocating at least one percent of its credit portfolio to these sectors, which can boost these businesses.
Moreover, the government can introduce global quality standards for cottage industries. Although small in size, the products should be of high quality.
This approach not only sustains cottage industries but also supports local entrepreneurs and contributes to export earnings.
