The macro economic outlook shows several positive signs, specially in the enterprise sector where the business community looks forward with renewed hope to a promising future based on a stable political environment. The stability is not only in the political sphere, but also in the social and economic fronts as well, which is an encouraging scenario to drive growth, Chairman and Group CEO of Laugfs Holdings Limited, W.K.H. Wegapitiya said.
The stabilised environment will address investor confidence in a positive manner which solves one of the critical stumbling blocks to attract the funding to develop the country.
As the country witnessed political instability and ineffective implementation of economic strategies in the recent past, this new situation is a welcome change. This is turning out to be an advantageous and conducive environment, even though the overall operating environment has been challenging.
Low GDP growth affects income and expenditure levels, which also negatively impacts consumption, presenting challenges for companies such as Laugfs which are involved in the power and energy sector. Our external environment has not reacted positively to conflicts between America and Iran, and the impact of the drone attack on the Saudi Aramco oil processing facilities last September.
We strongly believe that with the new government in place, this will provide a positive outlook for businesses like ours, and there are positive signs indicating progress. However, we cannot expect change overnight and it will take some time until real political stability is firmly established under the new President. We are hopeful that these factors will position the country on a favourable path in the next few years. Laugfs Holdings is a diversified conglomerate across many industries, and we have a number of power and energy businesses ranging from energy to LPG, petroleum, lubricants, and renewable power generation. We are a proud Sri Lankan multinational company, expanding our footprint to Bangladesh through the LPG business and considering a wider regional approach.
The world economy which was predominantly focused on the West, is now transitioning to Asia, mainly due to the economic power houses, India and China. The spillover effect of these changes could be leveraged to our advantage if we have the right regional approach. For example, the Sri Lankan market is small with a population of 21 million with only five million households, compared to the 165 million population of Bangladesh, so we can see the real need for outward expansion.
Laugfs is focused on regional expansion, and we have set up our infrastructure to meet this end. We even have our own fleet of ships; with the intention of leveraging the regional market to be a part of the region’s economic growth. With our location and ports, Sri Lanka has the strategic potential within the Indian Ocean, to create trading opportunities with countries such as Dubai. Though the country has the location specific advantage, we have not done enough to take maximum benefit of this situation. Sri Lanka must harness these emerging regional opportunities to drive growth. Though the country has an export-oriented economy, the same, traditional exports remain within the export basket, without exploring the possibility of exporting value added products and services to cater to the emerging needs of the world. While we have developed certain niche markets, we can do much more to add value to gain a higher foreign exchange income.
Other Asian economies that were behind Sri Lanka such as Singapore and Malaysia are now exporting innovative, technology driven products. With our traditional export markets facing challenges, we must focus on the new markets in Asia with value added exports. Measures should be taken to encourage more investments in producing goods with greater value creation potential, to reach the global marketplace.
Sri Lanka’s present GDP stands close to US$ 90 billion and it is a small economy compared to other Asian countries. We need to transform our economy into a more manufacturing and export-led economy and that needs strategic structural changes.
Laugfs as a company is not an introvert or domestic market oriented company. Our focus is to explore more regional markets and expand our footprint globally. We believe that is also the path that will lead the country towards greater, export-led economic growth in the long run.