Financial Times

Uncertainty is no deterrent
Once again the talk in the private sector is how the latest political uncertainty is affecting business activity and damaging the economy’s growth prospects.
Every time political uncertainty rears its head in this country our corporate sector, or at least sections of it, plays the same record. “Nothing is happening” is a remark that is heard very often in business circles every time some crisis or the other shakes the government.

The latest one, where the JVP has quit the ruling coalition, is no different and the talk is how economic activity has slowed down and decision making stalled. Now it is true that political uncertainty, or uncertainty of any sort, affects investor sentiment adversely and makes it difficult for corporate decision making. But we have been living with regular bouts of uncertainty for so long that it is almost the norm now. This country has been lurching from one political crisis to another for much of our recent collective memory. In fact it could almost be said that we’re a nation of political crisis junkies getting high on uncertainty because we have been living with recurring bouts of uncertainty ever since the ethnic riots of July 1983, which triggered what now appears to be a never-ending series of crises.

The latest crisis has taken its toll of the markets and stock market activity has fallen to abysmally low levels. Brokers do not anticipate any significant turnaround in trading activity given the prevailing uncertainty and the fact that we now have a minority government. A comment by a broker, Asia Securities, sums up the situation nicely. “In this political quagmire, the only certainty is that the uncertainty is likely to continue,” they said in a report. However, not everything is doom and gloom. Amidst all the uncertainty and talk of the government toppling with the withdrawal of the JVP, those investors with a long term view are continuing to invest. A good example is what we now know as Sri Lanka’s most profitable company, Dialog Telekom, which in just a few years has begun generating super profits that exceed even those of our most venerable blue chips who have been in business for over 100 years and trace their roots to the colonial era.

Telekom Malaysia, the parent company of Dialog Tekeom, is ready to invest additional US $ 100 million within next two years to ensure the island-wide coverage despite the political uncertainty.

The joint mechanism issue that has rocked the government has received the formal support of the business community. The J-Biz, or Joint Business Forum, which represents much of the organized business sector, has once again reiterated its support for it and has expressed satisfaction over the firm stand taken by President Chandrika Kumaratunga and opposition leader Ranil Wickremesinghe in their support for implementing the scheme. J-Biz has commended what appears to be some level of bipartisan consensus on the issue and said that the scheme, now called P-TOMS, would create a conducive environment for the resumption of peace talks.

All this uncertainty and talk of crisis is happening while the words of former Malaysian premier Mahathir Mohamad – of the importance of political stability for economic growth - are still ringing in our ears.

Mahathir had his own way of ensuring political stability and there are many who have reservations about the manner in which he did so, however much they may admire his economic achievements. We have no option of adopting similar methods. So it looks like we will have to live with the uncertainty for the foreseeable future. That means the private sector simply has to get on with it, instead of complaining.

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