We examine how business is conducted in cities around the world, with local experts acting as guides
The 25-year civil war that ended in 2009 obviously had a devastating effect commercially on Sri Lanka in general and Colombo in particular. Tourists stayed away and little foreign direct investment (FDI) was forthcoming, particularly before the 2002 ceasefire agreement between the government and Tamil separatist forces. Despite all this, in the period 2004-13 the nation’s economy still grew by an average of 6.5 per cent a year, according to figures from the World Bank.
The bank observes that, in its bid to become an upper-middle-income country, Sri Lanka now faces key challenges in areas such as: “boosting investment, including in human capital; realigning public spending and policy with the needs of a middle-income country; enhancing the role of the private sector, including the provision of an appropriate environment for increasing productivity and exports; and ensuring that growth is inclusive”.
Delon Kellar ACMA, CGMA is a business planning manager in the CEO’s office at Standard Chartered in Colombo. He believes that there is an “air of renewed optimism” in Sri Lanka’s largest city and commercial capital.
“Sustainable economic growth and long-term development are probably the only missing pieces of the puzzle in what otherwise appears to be a city bursting with potential,” Kellar says. “Working here is fantastic (leaving aside the stress of travelling to work, which is not uncommon for this part of the world). Literacy rates are relatively high and sophistication is seen in all walks of life, in both the city centre and the suburbs.”
Roshan Liyanage ACMA, CGMA, divisional treasury manager at fashion group MAS Active, observes that peacetime has “ushered in a conducive environment for business – Colombo offers potential for growth in many spheres. There’s a literate and trainable workforce here and English is widely spoken. Our location offers access to markets in India and China, as well as connections to major trade routes. On top of that, the Board of Investment of Sri Lanka encourages FDI. But do bear in mind that a good knowledge of our somewhat complex tax system and its regulations could be an advantage.”
Colombo’s commercial community ranges from small firms all the way up to large multinationals, reports Liyanage.
“Some companies are publicly quoted, but most are privately held and there’s a significant number of state-run enterprises here as well,” he says. “The business culture varies widely, influenced by ownership, scale, history, industry and employee profile.”
While Liyanage believes that a sound business model and skilled workforce are the prerequisites for trading in Colombo, Reyaz Mihular FCMA, CGMA, managing partner for KPMG in Sri Lanka and the Maldives, says the secret to commercial success here lies in building a strong network of contacts.
Kellar agrees. He advises newcomers to “build your network – Colombo is known to be a city where everyone ends up knowing someone known to you. This can be especially useful when using word of mouth for marketing your wares in the service industry. Social media has also played its part here, with several start-ups and even some well-known establishments using it as an excellent networking tool.”
He adds that foreign firms looking to establish a presence in Sri Lanka would be well advised to proceed with caution initially.
“While high returns are usually a result of high sales volumes, this may not always be the case in Sri Lanka,” Kellar warns. “This country is relatively Colombo-centric in the commercial sense, so the market’s potential should be aligned accordingly. Starting small enables you to gauge the market, be flexible and avoid getting into the same situation encountered by many failed businesses in the past.”
The corporate culture of Colombo is generally “very professional, with a strong management ethos”, according to Mihular.
Liyanage concurs. “Most multinational, quoted companies and most large private firms here have professionals at the helm who are highly attuned to developments in the marketplace and in areas such as corporate governance, sustainability and HR development,” he says.
Kellar observes that much commercial activity in Colombo is based on establishing strong working relationships. There is a lot of emphasis on intangible aspects such as reputation and trust here, he says, adding that, “while individual businesses based here may be influenced to follow cultures of customer-centricity or cost-consciousness, for example, the values of their founders remain intact to a large extent. I suppose this is expected and healthy for firms that are proud of their cultural heritage.”