Sri Lanka’s corporate sector must take more steps to strengthen its governance provisions and avoid lobbying for undue business advantages, CBSL Governor Ajith Nivard Cabraal said.
“I have been in the government for eight years and the private sector for 32 years, so, I have experience in both. To be frank, I don’t think there is much difference in terms of governance standards between the two.
“I may not be popular for saying so but we have seen on many occasions when the private sector requests many undue advantages. Sometimes after meetings one or two approach you and ask for an edge over other companies.
“These are common occurrences and we don’t talk about it usually but these are governance issues which our country faces. Therefore, it’s not only the government but the private sector also that needs to strengthen their governance provisions to be more honest and broad-based,” Cabraal told a full house of private sector giants at a recently held event at Ceylon Chamber of Commerce.
Commenting on risk management in business, Cabraal urged Sri Lanka’s private sector to take a more conservative approach to profits and reinvestment in order to ensure the sustainability of profits over the long term.
“Reinvestment is vital because you don’t know where the next shock will be. Global situations can be so volatile, so you will understand that there will be shocks. Whenever there is a shock, the private sector comes to the government and asks for help.
Where is the government going to give help from? They have to take it from someone else and give it to you.
My message therefore is that your economic performance and financial performance also have to have roots in the sustainability of your profit making. You have to make sure you have reserves to meet that rainy day when it comes,” Cabraal advised.
He went on to state that companies which are capable of successfully navigating bust cycles in a business through prudent risk management would be the ones which are also capable of effectively managing boom-cycles, thereby ensuring their long-term survival.
“In good times always put something back so that you don’t have to come to the government and ask for help when there are floods, droughts, or war in other countries.You are now strong enough and the country is moving into a new era of development. So, managing your risk is important. Profits aren’t only for that year but have to be sustained,” he added.
“By respecting the law and embracing these new conditions, we’re showing the world that we’re a different breed and that we’re sufficiently sensitive to all factors in making our transition to a middle-income country.
In doing so, we can proudly say that we made the transition while respecting the law, the country, the environment and maintaining our ethics, Cabraal concluded.