Should Sri Lanka Business Culture be Changed to Attract Foreign Investments, to Produce Goods and Services to the Global Market By Fathima Shamila Suhaib MBA UWIC – at ICBT Mount Campus Batch No. 6 Student Number – 67 Introduction After worn out by the War for almost 30 years Sri Lanka is now rising high, like a Phoenix raising its wings of beauty. For many Global Business Giants this is very promising, many would see this as a Cinderalla Story “hidden in the kitchen now shining like a Princess….. However Sri Lanka on its developing journey has planned many a routes to shine on the World Map, to attract foreign interest and investment and though the pearl of the Indian Ocean to shine like a new found star. On this context we would discuss how Sri Lanka should attract FDI to the country and should the Sri Lankan business culture be changed in order to attract Foreign Investments and Produce Goods and Services to the Global Market. Sri Lankan Culture
Sri Lanka with its strong values, beliefs and rich heritage webbed around it has cultivated a strong rich culture and the Sri Lankan Business Culture though varies from organization to organization and industry to industry stems and thrives on this. To most, culture simply means “when, why and how we do things around here …. ” And to many even a slight change in this will be seen as a threat to resist as they fear failure and not seen as an opportunity to move forward and succeed. Many just prefer to be stuck in their own “comfort zones” and they don’t realize the things they miss out and that the race is on.
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In order to come to a conclusion should the culture be changed, first we have to identify if with the present culture will we be able to achieve the purpose. As in many cases when the “matter in hand” is seen or shown larger than life the changes or adaptation follow on its course. For this we have to first identify the current position of FDI in Sri Lanka with the prevailing culture. Foreign Direct Investments Foreign Direct Investment to Sri Lanka during 2010 had fallen by 14% to US$ 516 million, as against the US$ 601 million in the year 2009 (Central Bank Annual Report 2010 – SL).
Further the Central Bank Annual Report states that such a reduction may not entirely be unexpected given the adverse effects of the financial crisis on the global financial flow. According to UNCTAD statistics, Global FDI flows have declined by 16% to US$ 1. 8 trillion in 2008 and by some 37% to US$ 1. 1 trillion in 2009. Sri Lanka’s FDI data for 2010 further reveals how these FDI contributions: 59% from Infrastructure Development Projects, 31% from Manufacturing sector and 9% from Services sector. FDI flows for Agricultural sector was very minimal.
It is very clearly seen in the report that many emerging and developing countries have more chance to attract FDI to their countries due to the increasing growth prospects, further it is seen Sri Lanka has a promising potential to attract FDI inflows to Sri Lanka mainly in the Services and Agricultural Sector. How to Attract FDI to Sri Lanka To realize the FDI potential of the Sri Lankan economy, the Sri Lankan government has taken several progressive steps to promote financial opportunities and to enhance the investment climate instead of ad-hoc and costly tax incentives.
And also Sri Lanka had already commenced on a many a programmes to promote Tourism in conflict affected coastal areas. Yet tourism related FDI needs to strengthened further. Specially the language issues, talent management, skill enhancement etc. Many education programmes are to be commenced for these training developments. It is stated in the World Bank, Sri Lanka Standard 2008 Although Sri Lanka’s literacy rate is significantly high when compared to many other Asian countries, the proficiency in English lanuguage remains low in Sri Lanka.
English language skills have become the most skill requirement for the many sectors, and in as Tourism this is a basic minimum requirement for communication is the main factor on providing the promised service. Not only English when Sri Lanka is promoted as a Tourist destination in many European & Asian countries many other language proficiencies are required (German, French, Spanish, Dutch, Chinese, etc. ) On a recent Press Conference Sri Lanka Tourism Chairman Dr. Nalaka Godahewa said : Sri Lanka to be promoted as a tourist destination mainly in European countries.
Tourists from European countries are heavy spenders and stays long and it will be advantageous for Sri Lanka to tap those markets, Sri Lanka Tourism Chairman Dr. Nalaka Godahewa said. He said Sri Lanka Tourism is encouraging visits of journalists from foreign countries as a form of introducing the country’s tourism industry to the world. Further it is mentioned that Sri Lanka has planned to declare 12 themes for the twelve months in order to promote Sri Lanka as a Tourist destination attracting Tourism FDI.
Health and safety measures taken by any tourist destination is the primary consideration of tourists when relating to a country and Sri Lanka has taken measures by inviting Insurance Companies to participate in many tourism related programmes so that the tourism industry can adopt such a system with an insurance company to ensure the health and safety of tourists. Many new Hoteliers are encouraged to construct star class Hotels and Hotel chains around the coastal and Tourist attraction destination boosting Tourism.
The boost of tourism is very well seen with the Hotel sector performance in the Colombo Stock Exchange within the last few months . Sri Lanka had further boost its attraction by been a venue FIFA 2010 recently concluded World Cup 2011by doing all this it attract many Tourist on default boosting its other associated industries and projecting Sri Lanka The Destination to VISIT. The bid for the Common Wealth Games 2018 is yet another step taken by Sri Lanka to shine Sri Lanka name on the Global arena.
Many plans and strategic communication campaigns are underway to encourage Sri Lankans to be part and parcel of Common Wealth Games where the potential of the country as a whole would outshine. And also the performance of country by judging the infrastructure and the involvement and encouragement of its people would be measured by the Judging Committee when they visit Sri Lanka within the next few months before deciding on the bid. Winning Common Wealth Games bid on its own would definitely boost Sri Lanka tourism and Sri Lanka needs to be prepared.
The agriculture sector seems to have been largely unexplored, as a potential investment area in Sri Lanka. “There is growing interest among the international organizations in promoting investment opportunities in the agricultural sectors, as they have begun to foresee some likely threats, given the forecasts of the United Nations on world population growth” Central Bank Annual Report 2010 Sri Lankan farmers are enjoying more than 60% fertilizer subsidy on all fertilizer types for the last 3 months and still continuing to do so, this was facilitated by the “Mahinda Chinthana Pohora Sahanadahara” project.
Sri Lankan government had initiated a “Gewathu Wagawa Programme” to encourage all its responsible citizens to commence even on small scale home gardening for Fruits and Vegetables. Many a projects are underway promoting this while educating them on Fertilizers, treatments and providing seeds, plants and fertilizers free. From the Village Officer to the religious monks and priest are advised to encourage the people to initiate this, from each area teams are formed by initiation of the Village Officer to even visit and monitor the progress and even willing to purchase the product if there is a requirement on excess cultivation.
Low interest loans are been provided to Farmers to purchase farm related equipment and machinery and even to start a small scale business to encourage agri business in the country. Conclusion All these measures and programmes are initiated by Sri Lankan goverment in order to encourage FDI inflow in to the country. But many other factors need to be considered to go forward and to reap the benefit of the same. It is obvious with all the factors discussed above that Sri Lanka Business culture needs to be changed in many ways in order to attract Foreign Investments to the Country and also to Produce Goods and Services to the Global Market.
In the year 2010 Sri Lanka was named the best performing financial market in the world. This further encourage boost in the Colombo Stock Exchange, even though the market later under went a severe drop due to price bands and credit period etc. Now its performance had encourage even Foreign companies to list in the Colombo Stock Exchange. Recently Central Bank had released FOREX rules allowing NRFC fund transfers, this would encourage foreign investments making it easier to do business in Sri Lanka and also they have provided local companies to list on the Foreign Stock Exchange.
Mainly Sri Lanka needs to concentrate on improving the environment for Investments, Private and public sector organizations and other capital markets have to improve the governance within the organizations, skill levels, knowledge, expertise etc. Domestic Policies needs to be strong and legal guarantees are required to protect investments. Mainly release from unnecessary Taxation. As taxation drives away Foreign Investors and many other factors like Knowledge improvement would encourage Knowledge based FDI.
Mainly for ICT, BPO and Tourism Sectors. Sri Lanka’s knowledge sector offers opportunities for growth, particularly given Sri Lanka’s good track record in literacy and secondary education enrolment (World Bank, 2008). Sri Lanka is blooming in its economy and potential growth after winning the war, so changing Sri Lanka business culture on the attractive FDI derivers would be the way forward to attract Foreign Investment to Sri Lanka.