21st September 1997


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Better management skills vital

Dr.Mahathir Mohamed,the Malaysian Prime Minister was asked whether it was more important to have visionaries or managers in a developing country. His quick and certain response was that managers were far more important and critical for the development of a country. Visionaries, he said, may have the most grandiose visions but if they cannot be translated into reality by proper management they were useless.

Perhaps an answer to the question as to why Sri Lanka cannot progress and develop faster lies in the lack of adequate management capabilities. Management capacity is indeed needed even at the political level. Political leaders must be able to direct and ensure that their own ministries are managed efficiently. An efficient bureaucracy is indeed essential.

The Sri Lankan tragedy is that the country which boasted of a highly capable bureaucracy at the time of independence cannot do so now. The bureaucratic capacity of the country has been weakened over time and there is little doubt that the country's bureaucracy is at the lowest levels of efficiency. Various reforms have been contemplated but nothing has been implemented.

In an economy where private enterprise is expected to take the leadership in economic development, efficient management of private enterprises is indeed essential. The capacity of private enterprise to compete in international markets depends very much on efficient management. We cannot say that we possess skilled and effective management in many of our private enterprises either.

There are many requisites for the development of efficient managers. These include an educational background which is conducive to clear analysis of situations and quick decision making. A well rounded education is indeed a pre-requisite to the learning of management skills. Another important requisite is a high level of motivation for success and excellence.

Without such a motivation the best of education and management training and expertise may fail. It is sometimes said that management cannot be learned. Perhaps this epitomises the need for managers to have a special kind of mental orientation and motivation. Yet, like most things, management is as much a science, as it is an art.The scientific aspects of the discipline can be learnt and it is vitally necessary that the country develops institutions which impart this knowledge.

The country has over the last couple of decades developed institutions catering to management training. Unlike in the past there are courses of undergraduate study built into several degree courses. There are also special degrees in management and industrial management. There are business schools that are being established; a Post-graduate Institute in Management and several universities offering post graduate degrees in business administration and public administration.

These are certainly positive developments in creating the required management expertise. Yet it would be vitally necessary that these institutions themselves ensure that they impart a quality education in management, are always open to new ideas and bring in expertise from outside to enrich their management training. A mere paper qualification would not ensure that we have good managers. Also these institutions have a responsibility to upgrade managers and make good managers better managers.

One obstacle to improving managerial skills is that many entrepreneurs do not recognise the need for skills and training in this field. There is also the tendency to view management as the art of somehow or the other getting things done rather than following efficient methods and better organisation.

Some entrepreneurs do not want to pay for the higher skills thinking that it is an added cost. Only better managed firms know that a highly paid manager could bring in returns to the company several fold the cost.

There is no doubt that the international experience of countries like Singapore, Malaysia, Korea and Japan underlie the vital importance of good managers. If Sri Lanka is to achieve rapid economic development we need good managers both in the public sector and in private enterprise. Dr. Mahathir's advice should indeed be taken seriously.

Market Focus

Substantial declines in the indices were recorded with 30 odd points declining over the week, with ASPI recording 770 levels. Turnover over the week was poor due to lack of substantial foreign investments. Average daily turnover was mainly in the region of Rs. 40-50 million.

Retail investors were mainly on the selling side, raising funds to purchase the Plantation IPO's put out by the Treasury. Due to the large amount of Plantation IPO'S expected to be offered by the Treasury (12 within the next 3 months), it is expected that more booms and slumps in the market would occur due to funds being transferred from secondary market operations to the IPO section in this case the Government.

On the macro economic front, the Balance of Payment (BOP) figures released for 1Q 97, shows a deficit of US$ 40m. As in comparison to 1Q 96 surplus of US$ 82m. However, it is expected that the BOP would end-up in a positive note, with the economy beginning to recover. Foreign Direct Investment (FDI) is expected to grow. Furthermore portfolio inflows have been up significantly from the beginning of the year, this is evidenced by 30% rise in the Colombo market since then.

Sectorial Analysis:

Plantations: Innovative Management/Privatization/high world market prices/world class products with profits to underline the overall success have helped the plantation sector to bounce-back strongly. Production also has increased, with yearly annual increase of 15% in Tea and a 25% increase in Rubber products over the last 5 years.

Corporate results:

Horana Plantations Ltd:

First half 1997, the company has recorded a turnover growth of 16% to 293mn. Operating profits have come down by 6.1% to Rs. 44 mn. Profit after tax (PAT) has dropped by 2.6% to Rs. 38mn.

Ceylon Glass Company Ltd.,

1st quarter 97 - Turnover increased by 13.7% to Rs 147mn. Operating profit and PAT has declined by 33% to Rs 12mn, & 55% to Rs. 6.5m respectively.



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