Rasheeda Bhagat

Construction and services sector are doing well

MR MANO SELVANATHAN

recently in Colombo

The business sector in Sri Lanka has shown resilience over the long years of violence, but the country has the potential to grow much faster and above 10 per cent, Mr Mano Selvanathan, Group Director of the Carson Cumberbatch & Co, Colombo, told Business Line in an interview.

Excerpts:

What are the implications for Sri Lanka's economy and business vis-à-vis the fresh outbreak of hostilities in the East?

Sri Lanka's economy is holding; the last quarter saw an 8 per cent growth; both industries and agriculture are doing well, as also the services sector. In the second quarter, growth is expected at 7 per cent. But this is not the best situation. Why should we be happy with 8 per cent; we should go beyond 10 per cent. Remember one-third of the market (in north and east) is not fully operational. If that one-third becomes operational, the growth will be over 10 per cent. But we can't afford to sit back and say: `We've done well.' Both businessmen and politicians have to get together to try and resolve this problem through some amicable settlement. We have much potential.

Which sectors are doing well?

One sector that has definitely grown over the last 12-18 months is the construction sector, which is booming, with land prices going up. In Colombo, on the Galle road, about 15 to 20 approvals have been granted for hi-rise apartment blocks. If you drive down from Galle Face, in the first two miles, you'll see at least six such constructions, with the tallest being at least 45 to 50 storeys; others would have about 25-30 storeys.

Which means the real estate market must be hot.

Yes, land prices have nearly doubled, even though it's not as much as in Mumbai! At peak prices a perch (160 perches make one acre) costs around SL Rs 5 million. So construction is an area where investment is coming in, and the services sector is doing well too, with BPOs coming here. HBC has set up a BPO, as also the European company Norwich Union. Skilled manpower... engineering based manpower is available here. Another service sector that is booming is telecom; everybody has a mobile or CDMA line and new telecom players are coming in.

So, the three years of peace have paid a dividend?

Yes.

Was the Ranil Wickremesinghe's Government good for the economy?

Yes, his Government did take decisions to help businessmen; the present Government is also business-friendly.

Are economic reforms taking place?

Not as much as desired; just as in India privatisation has slowed down, so have we. But a time will come when things will be speeded up. Sri Lanka's important sector is the services sector; we have to be a service-oriented economy, whether it is telecom, banking, BPOs or insurance. We have limited land and limited market, so we can't put up a million-tonne steel factory here unless we are exporting steel. Anything that is export-oriented will succeed. But our Government has to go in for privatisation, bridge the budget deficit gap, and push utility projects like power, roads and ports. These will have to be done through the private sector. India has mastered the art and we have to copy the Indian model.

Also, I'm praying that the comprehensive Economic Partnership Agreement with India becomes a reality.

Mr Wickremesinghe had talked about leveraging the southern States of India...

Not only the South, the whole of India has to be looked at. One sector where Indian business could come here is in tourism and hotels. With so many Indian tourists coming in, there is scope for growth. Indians are now becoming high spenders.

Every hotel now wants to get Indians as their guests and they're big shoppers too.

Is tourism hit by the present conflict?

Not so far. We have two important events: the SAF games and the Commonwealth Finance Ministers meeting. Fortunately for us, the Lebanon war has overtaken Sri Lanka.

Others are complaining that the Sri Lankan issue is forgotten.

But I suppose businessmen don't want negative news projected!

I think its good not to have negative news on international media.

Today when I put on Bloomberg it said something about war in the east, and I told myself: "Do I want to see this news in the international media?"

Such news is not good for business.

You have to realise that since 1983 till today it is the business sector that has held this country together.

If there is growth, it shows the resilience of the business sector.

Second, I would give credit to the overseas workers in the West Asia who have sent in more than a billion dollars of foreign exchange into this country, which has really saved the poor and lower middle class homes; they are getting adequate money for food and education.

But for that, there would be a revolution here.

So businessmen like you would salute those workers, particularly the Sri Lankan women working overseas.

Absolutely. I'm of course greatly concerned by the war in Lebanon; there are 90,000 of our people there, a few thousand have come back.

You have varied business interests; what is your core area?

We run a beer factory, making Carlsberg and Lion beer that has 80 per cent of the market.

We are in mutual funds and construction business and looking at the option of putting up a hi-rise building.

The most important part of our business is palm oil plantations in Malaysia and Indonesia.

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