Point of view

Business Community leadership needs to deliver?

By Dinesh Weerakkody

US Ambassador Robert Blake asserted that Sri Lanka’s opportunity cost in terms of the two decade long conflict is about 2% - 3% of the annual GDP Growth. This means our per capita income would have been over 2000 U$D had we resolved the conflict in the late 80s.
Therefore our longstanding conflict, which is the biggest challenge, faced by the economy in comparison to the other issues confronted by the country needs to become priority one, two and three for the government. It is the private sector and the public who have suffered silently during the last 20 years.

Therefore the private sector needs to move beyond the stage of purely expressing concern over the current spate of violence and asking the government and the opposition to work together. The business community must come together in difficult times such as now and show their strength by taking on an advocacy role.

Leaving important national issues like the peace process entirely in the hands of the so called elected people representatives Sri Lanka’s business community would eventually do itself a dis-service, hence getting tangibly involved in the effort to resolve the country’s two decade long conflict would help the private sector in the long term. The private sector contributes around 80% of the national output and employs over 70% of our productive labour force, therefore the private sector like in India must learn to assert itself fully to pressure the government to go for an early resolution of the conflict.

Many people are urging the private sector and civil society to get more involved in national issues and to play a pro-active role, if not according to them society would lose confidence in the private sector and that would be the death of pro private sector policies. In fact the way the country is drifting from one crisis to another most businesses do not realize that they are sitting on a volcano of which the first rumblings have just begun to appear and it can only get more dangerous. Therefore it may not be too late still for the private sector to get involved and play an advocacy role – which could have a bearing on issues that are relevant in the current context. It is perhaps tragic that we have to depend on the international community to urge the government to improve its governance record when we have very capable people in the business community who can take on that advocacy role and act collectively as a pressure group.

Business Citizenship
The problem with the Lankan private sector in general is that it lacks the maturity of a developed market. Companies in Sri Lanka should embrace the role of good corporate citizenship not only because it is the right thing to do, but also safeguarding the political, social and economic interest of the communities it serves would ensure its own survival in the long-term. Furthermore, employees of companies that are engaged productively in deliberating national issues, also tend to work harder to serve in the communities they operate. Not only is this good for business, it is also good stewardship. Often good corporate citizenship is discussed in terms of doing what's right, but as business leaders they should believe that doing the right thing, keeping to the moral code, is a natural by product of acting out of compassion.

Therefore, compassion uses power to serve and wealth to expand its capacity to serve. In fact Henry Ford the father of the auto industry once said, a business that makes nothing but money is a poor kind of business". Many private sector companies are still to realize that one can only prosper in a society that is permeated by social equity and a basic sense of fulfillment. No company operates in a vacuum and its success is dependent on the fulfillment of certain obligations to society.

If the private sector is to continue as the engine of economic growth in the country, they should take on a more active role in some of the activities that the state has failed to perform and also play an advocacy role to ensure that the country is heading in the right path. The community's needs are what they are ultimately servicing through their various enterprises, and apart from anything else it makes perfect business sense to do more for the community. Therefore, companies that want to make themselves economically superior and socially responsible need to plug into the national system. It goes without saying that the private sector cannot function effectively when social tensions are riding high, also if one thinks of the social obligations of the private sector, it must create an image of itself which is on the right side of the moral values, if it fails to do so it can contribute towards its own downfall and would allow the state to take an upper hand.

National affairs
The private sector involvement in national affairs has become necessary because our political leaders have failed to build confidence and are resting their hopes of political power on policies that are harmful for the country. Today, Sri Lanka needs effective leadership in the private sector more than ever before, therefore the private sector needs to come out strongly to pull our nation together to cope with the current challenges. For example in the last four months alone the tourism sector has experienced a 23% dip in tourists arrivals because of an escalation in violence in the North and the East. Sri Lanka has already lowered its forecast for tourist arrivals by 20% for 2007. Many of the city and resort hotels are already experiencing poor occupancy because arrivals from key markets like India and Germany have declined sharply.

This would dampen corporate earnings of some of the big companies and also affect many SMEs. In a corporate world obsessed with maximizing returns the question of private sector taking a lead role in national issues, are rarely on corporate agendas. However research suggests that investing in the well being of their communities is good for their business. Furthermore, today it is becoming increasingly difficult for the private sector to exist and function in isolation. Our society at last has recognized the need for our private sector to take on greater responsibility in matters affecting our society. It makes sense for the private sector collectively to take an intense interest and continuing interest in public issues, because, when the system disintegrates, the private sector will find it increasingly difficult to reap the benefits of their investment and they would only have themselves to blame for their inaction.

The Rationale
Large corporates in Asia have struck partnerships with governments and community leaders to strengthen their communities with which they do business. They have realized that their investment by way of time and resources is not just charity and that investing their time and money for the well being of their communities is becoming necessary for their long-term survival. They also know that it could benefit them by way of brand loyalty enhancing the long-term sustainability of their investment, better potential employees and above all that it helps create a stable society. In Sri Lanka the public's expectations of the private sector have changed dramatically over the past decade.

Today, more and more Sri Lankan people seem to support regulatory reforms which reduce Government intervention in the affairs of the private sector as long as businesses are willing to demonstrate commitment to broader objectives. Our private sector is generally branded as being only profit-oriented. There are certain sections of the private sector that support political parties and thereby, obtaining necessary approvals with no apparent regard for the social costs associated with a project or a government tender.
These sections of the private sector have tarnished the good image of the larger private sector, which is generally conscious of its wider obligations. From a business point of view the argument that is most often heard in favour of a firm's involvement in national activities is that such activities can improve a company's public image and help to attract new customers, investors and better employees.

It is also argued that such activities may reduce the enactment of government regulations, which are costly and restrictive to the management decision-making process. Moreover the widening social divisions, the infrastructure deficit, low productivity in the agriculture sector, fiscal vulnerability, a top-heavy government, the continuing armed conflict and the lack of strong public institutions could negatively impact the private sector growth in the future. Therefore, it may be good for our biz leaders to be a bit more far-sighted and get involved much more than now in critical national issues.