Financial Times

Lengthy wish list for 2004
What began as a year of hope ends on a somewhat gloomy note with the prospect of peace looking increasingly uncertain and with it, the recovery of the economy and corporate profits.

Although many companies have been reporting healthy results in recent quarters, the jubilant mood of the business community has turned to despair in the last few weeks as the power struggle between President Chandrika Kumaratunga and Prime Minister Ranil Wickremesinghe shows no sign of being resolved. This is bound to affect sentiment among investors thinking of taking long-term risks as it already has in the stock market whose free fall was temporarily interrupted last week by the artificial propping up of certain shares on very thin volumes.

It therefore comes as no surprise that peace and political stability is high on the business community's wish list for 2004 along with the desire for an end to the confrontation between the president and prime minister. Although these two national leaders don't appear to realise it or seem deaf to the pleadings of the rest of the country, a workable cohabitation arrangement between the two is imperative if Sri Lanka is to progress as a nation.

The uncertainty generated by the power struggle has already started to affect the economy. Its impact on the economy will only get worse the longer the crisis drags on. An early resumption of the peace process can also be ruled out until the two national leaders sort out their differences - hence the importance of resolving the cohabitation crisis triggered by the president's takeover of three key ministries.

There are increasing signs that the failure of the two main political parties to sort out their differences, despite the most serious threat to the country's survival posed by the demands of the Tiger separatist movement, can only result in a premature general election. Another key item on the business community's wish list is the desire for less elections.

No economy can function effectively if there is no law and order. For some time now the business community has been crying out for a more effective implementation of the law given the increasingly brazen nature of the crimes that are taking place and the inability or unwillingness of the political leaders to stamp out such lawlessness, particularly among their own party faithful. Despite the fact that rampant crime will obviously discourage investors, neither of our two main political parties seems ready to rein in the excesses of their supporters.

Consistency in government policies is another long-felt desire of the private sector, which for long has had to put up with the uncertainty and disruption caused by sudden, even drastic changes in the policy regime. Such indecisiveness and lack of consistency is definitely not good for business. The more successful economies manage to ensure consistency in economic policies even when there are changes of government.

More transparency on the part of the corporate sector and those organisations that regulate them, such as the Securities and Exchange Commission, is a desirable feature that many must look forward to in the new year. A free and accurate flow of information is essential for a market economy to function effectively.

Any restrictions on the right to know of the investing public will only hurt the system in the long term. One wish that is certainly close to the hearts of businessmen is the desire for business leaders who are truly independent and have the courage to confront wayward politicians and force change. Too often business leaders have too close a connection with the ruling party and politicians in key decision making positions. They often lack the ability to act impartially in the interests of the overall business community.

Back to Business