Business bigwigs sad about the “state of affairs” – MTI/CIMA survey
View(s):Sri Lanka’s business community looks unhappy with almost everything from regulations to human rights violations allegations and shrinking consumer demand but interestingly remained confident of economic stability this year, a joint survey by MTI and CIMA has said. Around 24 per cent of Chief Executives of local companies have expressed concern over government regulation and policies in 2014 followed by sales growth, competition and consumer demand deterioration, according to the survey titled “CEO Business Outlook”. It was conducted by the MTI Consulting firm with CIMA and the results came through responses obtained from about 150 CEOs with 65 per cent of the sample comprising those from the top 100 listed companies.
Seen here is Hilmy Cader, CEO MTI Consulting and Dharshan Cooray from CIMA
The survey found that the CEOs were mainly concerned about the shrinking consumer buying power that was expected to pose challenges to the business since it could impact on the sales growth.
It is noted that 60 per cent of the Standard and Poors (S&P) SL20 companies and 55 per cent of the small to mid cap companies witnessed a YOY dip in earnings during the first nine months of last year.
In this respect, 53 per cent of CEOs observed that the previous year had been “below expectation” in regard to the business environment for their respective industries and domains. Only 39 per cent believed their businesses met their expectations last year, that was marginally better than 2012.
Moreover, more had confidence in the country stabilising this year with 62 per cent of the respondents compared to only 56 per cent that expected the same in 2013. In addition, 20 per cent of the CEOs believed there would be an acceleration of the economy still higher than the 17 per cent of respondents that expected the same in the previous year, the survey stated.
On the other hand, though 60 per cent of the business community in the survey believed that there would be a recovery of the global economy in 2014 due to the revival of the US market, however, the Middle Eastern crisis was the key setback and the number one challenge this year.
On the topic of economic governance, the CEOs remained increasingly concerned as 46 per cent of those participating in the survey noted that government policies and economic and political stability combined were the key economic challenges that needed to be addressed since this was set to have a “significant impact on their business performance.”
In this respect, the survey stated that this category was in relation to the interest rates in terms of cost of financing, exchange rates, political stability in view of the Geneva intervention and exports that were repeatedly voiced as key concerns. But the CEOs were careful enough to hail the expansion and completion of construction activity and the “ambitious infrastructure developments.”
MTI stated that the survey was supplemented by learnings from the Colombo Stock Exchange (CSE) Listed Company Performance Analysis (2013 Q1- 3), MTI CFO Survey 2013, MTI HRM Survey 2013, MTI Thought Leadership Research on Sri Lanka’s Banking, Exports & Tea Domains and MTI’s Consulting and Corporate Finance experience in 2013 – Sri Lanka and International.