In the midst of the global economic crisis which is spreading out of the financial markets into the real economy, there are many opportunities in the capital market for countries like Sri Lanka, a securities expert said.
“There are many prospects for us as there is a keen interest on the peace front,” Channa de Silva, Director General Securities and Exchange Commission (SEC) told The Sunday Times FT on the sidelines of a seminar on the impact of the global financial meltdown for the Sri Lankan economy organised by the Institute of Chartered Accountants of Sri Lanka (ICASL) on Tuesday.
“The strong growth in Asia (in 2007 emerging markets accounted for 45% of global GDP) might attract continuity of foreign direct investments and we can exploit this situation. The reduction in oil prices is a true gift to this country. But there is much work to be done.
There is a real need to change accounting practices such as valuing biological assets and off balance sheet vehicles need to be scrutinized, a need to change risk management, a need to change banking prudential requirements and also insurance prudential requirement as well as a need to change the SEC,” he said.
He said there needs to be some strong assessment of systematic risk while also facilitating credit lines for business / industry and encouraging innovations. “There should also be support for easy creation of small and medium industries (SMIs) and unregulated entities have to be brought under proper oversight,” he said.
Mr. De Silva said that the total impact of the financial market has to be assessed and also emphasized the need to create a collective think tank body to overcome this situation. “There is a need to start a deposit guarantee scheme and also further capitalise the banking and the finance companies. Providing access to finance to small firms and supporting SMIs are some of the recommendations to the government,” he said.
He said the food prices have dropped by 23% and metal by 26%. “This is an ideal time to get into forward contracts.” He also noted that the authorities need to sit with the industrialists and be in constant dialogue with them.
|
E-mail