The Sunday Leader

Facing The Northern “Magic Moment”

By Sadhana Senanayake

Question (Q): Has the Daya Group faced any problems/obstacles when taking their company to the east?
Answer (A): Yes, land issue is one of the major problems. Administrative officials are not interested in giving lands for business and also none of the lands has proper deeds. The ownership of these lands is with the Government.
Accessories transport is another problem for goods production, most of the inputs should be transported from Colombo and if the final product is to be exported; that too should be transported to Colombo. Transport problems have eased to a certain extent due to developing the road network considerably in recent times, however long distance transport remains a major issue.
Adverse political interference prevails at a very high level to the extent of discouraging genuine businessmen establishing new ventures in the area.

Q: How is doing business in the east different to other areas in the country?
A: Ampara district is multi-cultural, multi-racial and multi-religious. Recruiting and retaining them at the workplace for a longer period is difficult. Most of the trained girls stay back at home as soon as they get married. Therefore, staff turnover is a major problem in the district. During harvesting periods, absenteeism is very high. As the area is predominantly agricultural, inculcating an industrial discipline is difficult. The number of professional hailing from the area is low, hence it is necessary to hire such persons from faraway places, but there is no attraction for such professionals to migrate to this area. As a result, finding suitable persons to fill vacancies at the management level is very difficult.

Q Is the employability/lack of skills of the people in the east a problem?
A: Yes, it is a major problem. it suffered during the last three decades due to war and conflict prevailed in the area. Skilled labour is rare and also they take more time to acquire skills during training.
Further, the number of organizations offering training or courses for skills development is minimal. On the other hand, institutes conducting courses leading to professional qualifications for example in finance, management or marketing are not in existence.

Q: What do you personally think should be done to encourage more businesses to move to the north and east?
A: Arranging cheap transport such as railway by extending the rail line from Batticaloa via Maha-Oya to Ampara would be helpful in developing the business environment of the area. Offering additional incentives and tax benefits to entrepreneurs who will set up businesses in the area .Setting up training facilities in the area.
In a report by the World Bank titled “Investing in Infrastructure: Harnessing Its Potential Growth in Sri Lanka,” it said, “The infrastructure needs in the northern and eastern regions are higher than the rest of the country as a consequence of the conflict itself and the diminished access to the region.
A “principle of inclusion” could be applied to bring those regions to the level of infrastructure services available in most of Sri Lanka.”
However, as Bernard said, the north and east have still not got the infrastructure that is available to other parts in the country. It is this that discourages business from venturing to the north.
Though there has been progress in reconciliation and rehabilitation, it is still an ongoing process and these are issues that cannot be solved overnight. The people of the north and east are still feeling the effects of war, which makes the climate for business in the north even more unstable.

 

After three decades of conflict, Sri Lanka is looking to improve its economy by developing the war affected areas. Businesses have begun to move to the north and east, but in an area that has been ravaged by war, doing business has not proved to be easy.
It has been four years since the end of the conflict, and yet there are still numerous issues facing business that move to the north. There are logistical implications, as the cost of moving a business to the north physically is expensive, the cost of transport is high.
The lack of infrastructure in the north is another issue, as businesses have to start from scratch, the north lacks basic raw materials, and therefore companies have to move their materials from other parts of the country.
Lack of a skilled labour force means that companies have to move people to the north as well, and this leads to more cost as their employees will need accommodation and basic living expenses, especially as the prices of consumer goods in the north are elastic to demand.
The economic environment in the north and east is not stable compared to other parts of the country and as a result businesses are required to take a huge investment in order to take their business to the north.
Service related businesses that don’t need logistic change such as IT and mobile service industries are the only ones which are proving to be sustainable businesses.
Only large companies such as the Daya Group have been able to move their businesses to the north and east, as they have the funds and man power to do so.
The economic situation is not surprising due to the fact that that part of the country was victim to three decades of war. During the war period, private companies such Koolair Pvt. Ltd, were active in the north and east in November 1998 and 8 years after, as they supplied a 20 megawatt diesel power plant with 25 generators during the war. Koolair was the first private sector company to supply power to the Jaffna peninsula, restoring power to the region after lapse of nearly 7 years.
Due to the increase in demand for power in the peninsula at the time, they signed an additional contract with the Ceylon Electricity Board in November 1999 to shift the plant at Malabe also to Jaffna to meet the increased power requirements. This involved the shifting of seventeen generators each weighing more than fifteen tons to the site at Kankesanthurai without the help of forklifts or heavy lifting machinery such as cranes etc.
Speaking to Asela de Livera Chairman/ MD, Koolair (Pvt) Ltd, he said that they used 120,000 litres of diesel for the 20 megawatt plants, which was paid for by the Sri Lankan government. He said that one thing that most people don’t know is that the CEB provided the north and east of the country with free electricity for almost 3 and a half years from 1988 to 2001, which is a significant amount. Currently, Koolair does not run the plants anymore, but they run a workshop that maintains the telecoms towers that they provide generators for.
This workshop provides employment to about 100 people, all who come from the area. During the last four years of the post war period, the Sri Lankan economy has been showing signs of improvement, in 2010 for example, Sri Lanka transitioned into a middle-income country and could aim to be an upper-middle-income- country in the next 15 years.
Daya Group of Companies Corporate Planning and Business Development Director Kingsley Bernard is also Bimputh Finance PLC’s director/CEO.
He has over three decades of both private and public sector experience of which more than two decades have been in top management positions. In an interview, he expressed the issues that the Daya Group has faced, taking their business to the country’s east.

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