Heightened economic uncertainty lightened by favourable weather - corporate leader


by Sanath Nanayakakre

On the surface everything seems fine, but good weather conditions the country has enjoyed recently are the 'truly fine' phenomenon that will help mitigate the fallout from recent developments in the country's political sphere, at least to some extent, Samantha Ranatunga, former chairman of the Ceylon Chamber of Commerce and Managing Director/CEO of CIC Holdings PLC told The Island Financial Review yesterday.

Ranatunga's comment on the fair weather factor strikes a convincing chord as this is something only detail-oriented people would have noticed as an underlying macroeconomic condition. According to him weather conditions should also be weighed on a par with other concerns such as external liabilities of international sovereign bond maturities, reserve adequacy, downgrading by Fitch Ratings, S&P Global Ratings (warranted or unwarranted) or the volatile foreign exchange market.

Ranatunga heads one of Sri Lanka’s leading conglomerates with ventures in businesses ranging from agriculture to chemicals and from medicine to household products. Touching on agriculture, he said," The agriculture sector is doing extremely well and we're going to see bumper harvest this season and in the coming season. This is a redeeming factor amid the political developments in the country. Fortunately, the weather has been very kind and the irrigation system in our agricultural zones has also delivered its promise, and thus our farmers are focused on their crop yields expecting to produce more, sell more and earn more. Whatever misfortunes we may face, we have had a good monsoon. The monsoon rains have filled the reservoirs built by our ancient kings, the Mahaweli project, the Moragahakanda project etc. As market prices for farm products are encouraging, farmers are keen to cultivate more. CIC being an inputs player and also dealing with some of the outputs, we see a lot of benefits for all stakeholders", he said.

When asked for his views on the current political impasse, Ranatunga stimulated a lively conversation without taking sides himself.

"I think, we Sri Lankans spend a lot of time talking about things we can't change. I am not saying talking about constitutional matters is a waste of time because it is the law that governs the country. But if we talk about it in excessive length, will our problems go away? Will the exchange rate settle? will my import bill become manageable? Will my market share increase? In the end your problem remains your problem. If I don't perform well, I will be a non-performer and will get kicked out. People who invest capital don't want to hear political reviews from me. They want a risk-free return for their investment. Today TB rate is 9%. They want at least double that amount. Today our ROC benchmark rate is around 20%-22%. Unless you hit that 'how the hell' are you going to survive as a business? We are passing opinions and judgments on situations we can’t change. Collectively, we have to be conscious. But individually we have to do our best to deliver", he said.

"The sectors in which CIC is involved are not directly impacted. But tourism, exports and finance are the main areas vulnerable to situations like this. CIC too is under marginal pressure. Our costs have gone up, but we have to be price-competitive as the operating environment is challenging. Today people spend a lot of time on Face Book and other social media platforms, and everybody can share their deeply felt opinions online. But some voices get magnified and draw more attention because they shout at the top of their voice. In this context, I still admire the mainstream print media in a holistic sense. They try to present responsible views and balanced reports. But such media practitioners are also dying by the day. At CIC we don't discuss current political situation with employees. Today corporate earnings have dropped across the board. So, our employees are driven to deliver positive results for the company. We look at our processes objectively and rationalize our operations".

"If you let me put the Chamber hat on, I'd say there is a fair amount of economic unpredictability resulting in important decisions getting hampered. I must say that we have urged for an early settlement towards stability to ensure the smooth functioning of the public and the private sector. We communicated this message to the President when we had a meeting with him last week. We categorically told him that we need to find a solution to get back on track. He said he was also attempting to find a solution in the shortest possible time. Businesses can't succeed if the sitting government is unstable. Ceylon Chamber is very conscious of the situation and would like it sorted out soon. The luxury of time is not there for the private sector. When the state sector doesn't function well, it triggers an impact on the private sector. 'Wait-and-see' is not an ideal answer for the private sector. Time is money", he said.

"We are concerned that the fertilizer subsidy could suffer an impact from this political fallout. We are not finger pointing. What we say is when there is no stability business is in a mess. No matter which government. We mean any government".

"We blame politicians. But we don't send the best representatives to parliament and that's why we see fisticuffs in the House. We can't expect to reform members of the House, so let's reform ourselves and take more individual responsibility for enhanced individual performance," he said.

Ranatunga, however, went on to make a pertinent point about governance as an art and science of getting things done before it's too late, in spite of various criticisms. "Although a level of criticism is an essential component of citizenship in a free country, we are justified in asking how widespread this distrust might be and what point healthy skepticism tips over into outright aversion leading to stoppage of important policy or abandonment altogether. This should make us feel ashamed of ourselves", he said.

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