Time for Sri Lankan businesses to tighten their belts says MTI CEO

After three years of crucial post-war Bull Run, Sri Lankan businesses have begun to feel the ‘pinch’ of the combined impact of the global economy and the local consumers’ reduced buying power.

According to MTI Consulting CEO Hilmy Cader it is a cyclical challenge that countries and business go through, except on this occasion the challenges faced by the global economy (which significantly impacts the local economy) are almost unprecedented.

“The fact that North America, Europe, Japan and India are all experiencing severe economic challenges (at the same time) raises the question, “are we in the early days of a 1930 style depression?” asks Cader.

“The real challenge for Sri Lankan businesses is that we need to quickly shift gear and mind-set, mean times avoid moving into a shell. Sri Lanka needs to cautiously continue its growth agenda, the key word being cautious,” he added. The last three years have been characterised by a phenomenal increase in credit, significant part of which has been for consumption.

This in turn has boosted corporate profits of businesses that have benefited from such consumption spending, based on which these businesses have added significant fixed costs.

According to Cader, “The time has come for businesses to take the fatness off their businesses, adopt a trim and a fit cost optimisation process, while at the same time cautiously continuing the growth agenda.!