Sri Lanka Economic Summit: Session 01
The recently held ‘Sri Lanka Economic Summit 2019’ took stock of the evolving global scenarios and explored its implications for Sri Lanka under the theme of ‘Global Dynamics in the Next Decade’. This article captures a few areas discussed by the speakers under the broad topics of global headwinds and how Sri Lanka can positively leverage on this.
A key societal trend seen globally is the rise in Protectionist policies which threatens global trade and escalates geo political tensions. These pitfalls in protectionist measures affects the smaller economies that are supplying goods and services to the global market, since, they are now faced with a challenge to remain competitive and this may have a corrosive impact on their growth.
The former Indian Commerce and Industry and Civil Aviation Minister, Shri Suresh Prabhu observed that the trade war between USA and China has also taken a toll on large organisations such as the World Trade Organisation (WTO). He added that the erosion of power of WTO impacts small economies like Sri Lanka because global organisations such as WTO acts as a lever for developing countries to go shoulder to shoulder with larger, established nations.
Mr. Nirukt Sapru, CEO of Standard Chartered Bank Vietnam acknowledged that the world is witnessing a power shift from West to East where Asia is playing a major role in gearing this shift. Rapid urbanization in Asia despite demographic drags seen in some countries is testimony to this and in the next decade, Asia is projected to have a significant share of worlds’ GDP.
Mr. Mangala Yapa, Chairman of Board of Investment (BOI), echoed similar sentiments in terms of global Foreign Direct Investment (FDI) trends. He stated that the global FDI inflows saw a decline of 13% in 2018, and with the current economic and political vulnerabilities, an immediate recovery in global FDI inflows is a farfetched goal. Elaborating on the same, he added that this negative growth was driven by developed economies which had a 27% drop while the developing economies which constitute about 50% of the global economies had the least impact with a growth of 2% in 2018. Developing Asia (China, Hong Kong, Singapore, Indonesia, India and Turkey) had FDI inflows accounting to USD 512 Bn and, East Asia and South Asia recorded FDI growths of 4% each.
A key business trend observed was the integral role data is playing in the corporate world today. As identified by Mr Nirukt Sapru, data is becoming the world’s most valuable commodity and a large share of top corporates have data as their main asset of the company. This trend is further catalysed by the digital revolution in mobile phones and its democratization of access. The increasing use of the mobile phones provides a huge boost to access markets and information. However, it should be noted that, this gives rise to an increasing challenge to regulate the data and ensure its privacy.
“Mobile technology provides opportunities for companies to serve consumers better, for example by using location services but they need to be gathered legally and ethically” - Mr Nirukt Sapru
Another key business trend observed by Mr Nirukt Sapru was the use of Artificial Intelligence (AI) and robotics. New technologies increase efficiency of businesses and consumers and, are increasingly replacing the human workforce. Hence, the workers can now focus on the areas that cannot be automated given that they are provided with the right set of skills.