Hopes ETCA will enable expansion to India :
ComBank to expand overseas presence:
The government should establish systems that make life more convenient for people and the financial transaction levy proposed in the government budget for 2017 should encourage the shift to electronic transactions, Chairman of Commercial Bank, Dharma Dheerasinghe said.
In an interview with Business Observer he said the government has to take people to the next level of technology and promote use of technology by them. “It is an addition to convenient banking. We take it as an encouraging proposal to promote and use technology.”
Once the systems are set up, people would get used to use them. That’s how countries such as Japan and Thailand achieved technology usage. Thailand started paying even the farmers through electronic cards many years ago but Sri Lanka is yet to introduce such systems, he added.
Even in rural areas people should not suffer because they do not have internet connections. The government should take measures to promote IT education throughout the country and prepare the next generation to face technological challenges.
“Take electricity for example; today everyone has electricity - whether they live in a rural or urban area,” Dheerasinghe said. “The growth in the electricity sector has also given a huge impetus to the economy as villagers also got the opportunity to do various businesses using electricity. These are positive changes in the economy.
“As a bank we are gearing to support the system and provide more facilities to our customers through modern technology,” he said. “We should encourage the technology and support people to change their lives with the support of technology.”
As a first step, Commercial Bank has already set up advanced technology banking centres where customers can conveniently get their banking needs done by themselves. An example in Colombo is the centre at the Orion City.
Subsidy dependency
Dheerasinghe voiced strong disapproval over the habit of various business lobbies to keep asking for concessions such as subsidies in every government budget.
There is a consultative process before the budget running into several months, he noted. The Treasury invites people and business sectors to send in their view, ideas, and proposals during the consultative process so that these responses are taken into consideration when writing the final budget proposals.
The budget now has become a policy statement which is consistent with the income and expenditure statements. It becomes law after the parliament approval. The budget comes in the form of a legal enactment, an appropriation bill.
Following the consultative process, the government decides about the crucial sectors for subsidy, and the sectors that can be taxed.
“We all are stakeholders of this economy; be it the private or public sector – corporate or private individual,” says Dheerasinghe. “As stakeholders of this economy we are part of this economy. People have a wrong impression that the budget is only for a certain sector and each sector should be given subsidies. This cannot be done by any budget; budgets cannot offer or propose subsidies, concessions and benefits to every individual in the country. The government is getting money through taxes and it is obvious to offer more subsidies, more taxes have to be imposed. People who want subsidies should be fair by others – they should know they get a subsidy because someone else is taxed.”
Budget deficit
Dheerasinghe believes Sri Lanka’s budget deficit is already unmanageable. “No country can run a deficit forever; a country can only sustain a marginal deficit. In that marginal deficit you must have a surplus primary balance (the government revenue in excess of recurrent expenditure) – then only you can have capital expenditure programs.
“For the past several years, there was a negative primary balance which means the government’s recurrent expenditure is higher than the total government revenue (salaries, pension and maintenance).
“You will not have any capital investment program because, to reduce budget deficit you have to curtail the capital expenditure program – if you curtail capital expenditure programs you will not have roads, buildings and other development programs and you’ll only see a meager GDP growth at the end of the year.
“Governments have been borrowing in the past and the country has to service those loans - not only the loan but the interest as well. We are in a debt-trap,” she says.
Trade agreements and ETCA
Dheerasinghe’s vision for Commercial Bank is to expand overseas where markets and the opportunities they bring are bigger. The Commercial Bank is already in Italy, the Maldives, Myanmar and Bangladesh. “Sri Lanka is a small market so we need to go abroad – if we can open Sri Lankan branches in India through ETCA, we would be happy,” he said.
“The country’s growth and success depend on our level of efficiency and productivity. If you are less productive and the efficiency level is less, you are scared and you want to be protected - it is the biggest source of inefficiency we can see.”
Education and training
Dheerasinghe believes education and inculcating the right attitudes in youth play an important role in economic growth. “There should be reasonable effort to educate our children with positive thinking beginning with the grade one level. We should teach our children to be practical about markets, productivity and competition, if we want to groom future leaders.”
One of the key issues with regard to the job market at present is that young people want state sector jobs. They come with good qualifications but do not want to join the corporate or the private banking sector because they want government jobs with less work.
Youth employment
Dheerasinghe has noted that even those who join the private sector leave when there are openings in the public sector which he says is a sad situation. “If you are in a private bank you have to do more work. It is up to the management to look after the staff and on their part they are duty bound to give their best. Taking a job is a win-win situation. The private sector has no jobs for people who want to ‘come to work and spend the time with no productivity.”
Commercial Bank employees have targets and their performance is monitored through KPIs (Key Performance Indicators). Those who perform well will get their performance bonus. “Our pay is related to productivity. We have a basic pay and our variable pay is much bigger than our basic pay – variable pay depends on their performance,” said Dheerasinghe.
“As a bank, we need people who have developed their skills in our core business - borrowing and lending. We want people to grow within our organization to take up the senior jobs that directly come under our core businesses. Therefore we do not take outsiders for those jobs - that is our culture.” Dheerasinghe feels customers do not bother about the owners or the directors of the bank; they want convenience, and friendly and helpful staff.