Business in turbulent times

With the cancellation of the Cease-Fire Agreement (CFA), which anyway was not working, and escalating clashes between government troops and the LTTE, there is no doubt that war is at our doorstep.

The authorities have alerted the nation to a state of high alert with roadblocks, security checks and extra security at schools. Economic progress will be stalled with rising expenditure on the war and reduced subsidies. How then does business succeed or survive, for that matter, in such an environment?

War is nothing new to Sri Lankan businesses. The resilience of the economy and business is one of the reasons why Sri Lanka has raised its head in terms of growth inspite of the war. To achieve an average five percent growth over the past two decades is admirable and new ventures are springing up all the time even though there is uncertainty.

An advertising executive, in an interesting article, talks of marketing in a turbulent environment and says that brands like Cargills, ODEL or Abans have proved that products sell with the right mix. He makes the point that terrorism is an issue not alien to the world and most countries are facing the same problem, but tackling it accordingly while business goes on.

Hayleys, John Keells or Aitken Spence are other examples of how business has taken on the challenge of working in an ‘uneasy’ environment and have survived, and also grown, with a judicious mix of products tailored for times like this. New groups like Vallibel and Laugfs and their founders Dhammika Perera and W.K.H. Wegapitiya are on forward drive as they look for new investors in a conflict-filled environment. New opportunities, on the other hand, are opening up all the time, and grabbed by those prepared to take risks.

However, it’s not the war alone that will bleed this country to death or deter much better growth and investments. It’s the state of lawlessness, widespread corruption, hooliganism, lack of governance, rising crime, fear, abductions and contempt for the law that’s taking the country down the drain.

Elsewhere in this section is a feature on the state of corruption in Hong Kong and the workings of Asia’s best-run anti-corruption watchdog. What amazed the visiting Sri Lankan delegation, studying the workings of this commission, was how it has been able to reduce public sector corruption including political corruption to near zero levels and is now tackling a bigger issue of private sector corruption. Just imagine a Sri Lanka free of political and public sector corruption? Will we ever find that Utopia?

Maybe … maybe not. The point however is that the business community is tackling much more than the state of war in just doing business in Sri Lanka and that’s the quietly disappearing rule of law. The primary goal of wiping out corruption in Hong Kong is to make it a safe place to do business and also ensure a level playing field. Sri Lanka like Hong Kong, also wants to develop economically and people here have the same goals and aspirations like any other developed society. But getting there is the question with war not being the only deterrent.

Business chambers have been labouring this point but without any real force or power to convince the authorities that the rule of law is important for any economy as much as ending the war. Recently the Chamber of Commerce issued a statement condemning Mervyn Silva’s attack on the Rupavahini news director but that came more than a week after the incident, showing the chamber’s reluctance and that of some business leaders to get involved in anything political. On the other hand, issuing statements are also not going to change the way the country is run. Statements are a mild form of attack and fly over the heads of thick-skinned politicians and considered mere irritants.

A young entrepreneur involved in many investments and tired of the country’s situation, made an interesting point. “We can’t depend on the government anymore. We need to find alternatives,” he said, implying that civil society must come together to stop a total breakdown in the social fabric of the country.

Governance and lawlessness are serious issues affecting business and unless business leaders, captains of industry and their ilk decide to take on these issues head-on, war or no war, doing business in Sri Lanka will always be a problem.