Companies are expecting strong growth and increased opportunities from the peace dividend in the coming year, according to a survey conducted by MTI Consulting of Chief Financial Officers (CFOs).
At a Corporate Finance Forum this week, MTI Chief Executive Officer Hilmy Cader said companies are also looking towards value creation and cost optimisation.
The most critical issue for companies according to the findings of the survey is liquidity management. Mr. Cader added that there is optimism about the future following the end of the war although companies are still adopting a 'wait and see' approach.
Director of Frontier Research Amal Sanderatne who addressed the Forum said, 'the worst of times are behind us' although there were lessons learned during the tough times. Sri Lankan corporates operate with a cautious mindset which worked well during the global financial crisis, Mr. Sanderatne said. With the end of the war, he said the next two to three years may see a boost in domestic demand which will in turn stimulate growth. However, Mr. Sanderatne said interest rates need to stay low below 14%. The end of the conflict also reduces the risk perception which lowers the risk premium. He said there is no longer the 'doomsday factor' of bomb threats and violence.
Mr. Sanderatne also pointed out that only large mega cap listed firms can present themselves to foreign investors whereas small and medium firms should look at the domestic equity market in order to raise capital.
Attorney-at-law Harsha Cabraal who spoke on corporate governance said the current mandatory corporate governance code of the Securities and Exchange Commission (SEC) for listed companies is a step in the right direction but is not as comprehensive and wide-ranging as codes in other developed countries. The SEC's corporate governance for mandatory compliance in 2007 introduced requirements for independent directors, non-executive directors, audit committees and remuneration committees. The SEC also has a code of best practice which is voluntary for listed companies.