HSBC Asia Pacific Head of Trade sees exciting prospects in Sri Lanka

By Sunimalee Dias

Global giant HSBC is seeing exciting prospects in Sri Lanka especially for trade and supply chain solutions.

“We consider Sri Lanka to be an important market within the South East Asian franchise for HSBC. With improved discipline fiscally and politically Sri Lanka will go through a very exciting growth phase with lot of upside potential for the economy,”

HSBC Head of Trade and Supply Chain, Asia Pacific (ex-Greater China) Simon Constantinides told the Daily FT in an interview on the sidelines of a two-day visit to Sri Lanka.

He also affirmed that the Bank was comfortable with the current economic situation in Sri Lanka.

With growing concerns on inflation regionally that has been the talk for the last 12 months; it was pointed out that the continued increase in prices will prevent growth in other areas.

Constantinides observed, this would mean less concentration on infrastructure development which would mean that economic progress would be impacted based on the government’s economic policy.

Speaking further regarding the country’s deficit, he said while it was not a planned sustainable deficit on the other hand there was opportunity to invest for the future.

Sri Lanka was likened to having “very similar traits of any country” coming out of a war with opportunities to invest and move forward. And with a market that is confident in its strategy the country is expected to forge ahead there needs to be generation of revenue that must be carried out through internal sources, he explained.

In this respect China, Malaysia and Vietnam had invested in infrastructure development and it is believed that food and oil prices will dilate overtime.

It was pointed out that the country has an opportunity to boost its agricultural development in the post war era as this sector is key for any market.

Commenting on the loss of the GSP plus he said that the concern should be in the increase in the cost of component. Constantinides explained that while costs move up and down it is just a natural factor of cross border trade.

“It is a short term impact and it might not be so relevant,” he said.

In the meantime, it was observed that strong intra-regional trade has helped Asia more than other nations.

Asian Economies

With the liberalisation of the RMB there is continued interest in trade in currency and is now becoming more important in trade in Asia.

RMB is now considered as a primary and secondary currency for trade settlement according to the trade confidence index in view of the majority of participants in import and export, the regional head said.

On the other hand India, an important market for HSBC with fantastic growth opportunities however is considered to be facing a risk in terms of infrastructure.

Similarly China faces the risk of its fast growing economy and the possible real estate bubble that could impact in every market due to its vast spread and reach into most regions and countries.

In this respect, it was pointed out that with Sri Lanka’s proximity to India and closer cultural ties this would prove advantageous for the former. However, China is likely to continue to be a supplier as opposed to a buyer for Sri Lanka.

Commenting on the impact of the risks these countries posed to Sri Lanka’s growing economy in the future it was pointed out that it could affect the country depending on the level of dependence on these two nations at such times.

Speaking further on HSBC’s outlook on Asia he said while being “very focused on leveraging our financial strengths, our long track record of participation in emerging economies to service our clients.”