emerging stronger in times of uncertainty...2020/04/20 · emerging stronger in times of...
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Emerging stronger in times of uncertainty COVID-19 : PwC Daily FT CEO Wishlist 20 April 2020
The coronavirus (COVID-19)
pandemic is bringing the world
into uncharted waters. It is
causing widespread concern
and economic hardship for
consumers, businesses and
communities across the globe.
Business leaders are on the
corporate front line, helping
their companies navigate a
health and economic crisis with
an uncertain duration. But the
situation is changing quickly,
with widespread impacts.
Most companies already have
business continuity plans, but
those may not fully address the
fast-moving and unknown
variables of an outbreak like
COVID-19.
Typical contingency plans don’t
generally take into account the
widespread quarantines,
business and community
disruptions, and added travel
restrictions that may occur in
the case of a health emergency.
To facilitate economic recovery,
the Central Bank of Sri Lanka
lowered interest rates amidst
the outbreak, and the
Government of Sri Lanka has
taken many additional steps to
provide economic relief.
The decisive steps taken by the
health authorities and armed
forces has helped to contain the
spread.
PwC was able to track the sentiment
and priorities related to the COVID-
19 outbreak from business leaders in
Sri Lanka. We asked them about
their immediate requirements (within
03 months) and medium term
requirements (03 -12 months). By
delving into the real-world
experiences of organisations, we
uncovered some surprising findings.
More than 200 business leaders from
a variety of industries — including
Banking and Finance, IT/BPM,
Manufacturing, Consumer and Retail,
Real Estate and Property — weighed
in during the week ended 19 April
2020.
We talked to
business leaders in
Sri Lanka about
their priorities -
what we found out
is game changing
200+We heard from 200+ senior executives
in organisations of all sizes
COVID-19 : PwC Daily FT CEO Wishlist | 02
26%
15%
6% 24%
29%
CEO
Board Members andDirectors
Chairman
C-Suite
Others
Who did we speak to?
24%
12%
12% 8%
7%
37%
Banking andfinance
IT/BPM
Manufacturing
ProfessionalServices
Hotel and Tourism
Others
Survey respondents by Industry
What do CEOs’ want right now?
It is evident that business leaders see the
urgency of resuming some form of economic
activity speedily and hence the option of a
smart lockdown as opposed to curfew came
out as a strong choice. Undoubtedly the easing
off of curfew and phased out opening of
workplaces should provide much needed
economic relief to wage earners and
businesses.
The other two key areas of attention related to
labour laws & wage costs and additional relief
on debt servicing beyond what has been
already offered.
The importance of extending the debt
moratorium and subsidised working capital
facility beyond the affected sectors to all
sectors was indicated; whilst the preference for
a government guarantee on these facilities was
perhaps prompted by the inability of most
businesses to furnish collateral that was
expected by the financial institutions when
granting these loans.
The need for a wages grant from the
government is indicative of the difficulties
currently faced by companies in meeting their
total wages obligations.
Exhibit 01 : Immediate requirements of CEOs and business leaders amidst COVID-19
68%
56%
50%
45%
43%
42%
40%
Introduce a smart lockdown for key industries as analternative to imposing a curfew to enable key
economic activities to commence
Low cost working capital financing at 4%, guaranteedby the Government of Sri Lanka, to be extended for
all sectors
Reforms to labour laws allowing downsizing andsalary reductions, initially, for a period of 6 months
and to be reviewed thereafter
Stabilising the Sri Lankan Rupee and preventingfurther currency depreciation in the short term
Compliance with recommended international healthand safety guidelines coupled with COVID-19 testingbefore the recommencement of economic activities
Freeze on interest and capital repayments on allborrowings for 3 months for all sectors
Support innovation (financially/logistically) that willimprove efficiencies in the supply chain and
distribution channels in business models
COVID-19 : PwC Daily FT CEO Wishlist | 03
Exhibit 02 : Immediate requirements of CEOs and business leaders on COVID-19 that
highlighted other priorities
PwC Insight : Focusing on what’s important
We believe that the subsidised working capital facility is a useful measure and it would be beneficial
if all sectors could have access to it and it could be granted without the need for furnishing additional
collateral which most businesses would find difficult to do at this juncture. Therefore, it is essential
that the Government provide a guarantee on the capital lent to ensure ease of access to relief
measures via the banking and finance institutions.
Further, the debt moratorium could be extended to a wider range of sectors affected by the closure
of businesses during the last several weeks. Some form of wage support for the affected sectors
until such time as they regain their normal activity levels, would also be appropriate in order to
alleviate the need for job cuts and heavy pay cuts. Innovations to support supply chain and
distribution stability which featured as a high priority, points towards greater opportunities in
technology usage by businesses and the state, e.g. strengthening agricultural value chains.
Surprisingly, only 45% of the CEOs and business leaders were supportive of defending and
stabilizing the Sri Lankan Rupee. Of the business leaders, only 29% said that Sri Lanka should
focus on seeking foreign funding from different agencies.
39%
32%
29%
23%
21%
11%
Provide government grants for wage support foremployees who have taken a pay cut or lost
employment
Provision of tax relief to individuals and businessesincurring additional costs to comply with Government/ Ministry of Health guidelines (eg. WFH, workplace
health and hygiene) during the COVID-19 preventionperiod
Seeking foreign lines of funding from differentagencies to support government finances
Immediate settlement of government dues toconstruction, fertiliser, pharmaceutical, and any other
sectors to support their working capital needs
Deferment of EPF / ETF dues for six months
Partial rent subsidy by the government forcommercial tenants for a period of three months
COVID-19 : PwC Daily FT CEO Wishlist | 04
What do CEOs want in the medium term?
An overwhelming 61% of business leaders
articulated the need to reform labour laws &
regulations to make enterprises more agile and
competitive. These included the enablement of
new forms of work such as part time work,
contract work and flexible hours.
Benchmarking against best practices elsewhere,
Sri Lanka too could become more competitive,
cost effective and responsive to challenges by
having more flexible and modern labour laws.
Reforms of loss making State Owned Enterprises
by improving their efficiency and productivity was
also seen as a priority to conserve state finances
(e.g. Sri Lankan Airlines recorded a loss of
LKR 42 billion in 2019).
The safety of the financial system was also
highlighted by ensuring they do not have to bear
the full burden of the economic stimulus
packages being granted.
Encouraging investment through tax holidays and
the urgency of promoting exports by granting tax
free status to all exporters regardless of size,
once again underlines the priorities for the
country.
Exhibit 03 : Top 5 medium term requirements of CEOs and business leaders post COVID-19
61%
59%
55%
44%
38%
Reforms to labour laws to support new forms of worksuch as remote work, part time work, contract
employment and flexible hours
Reform of loss making State Owned Enterprises bymaking them more efficient and cost effective - eg.Ceylon Petroleum Corporation, Ceylon ElectricityBoard, Sri Lankan Airlines, Sri Lanka Railways
Ensuring safety of banks and financial institutions bymitigating the burden they have to bear in the
economic stimulus and recovery program
Tax concessions to encourage large scaleinvestments - eg. five year tax holiday for
investments with a value of over USD 10 mn
All export oriented businesses to be tax free for aperiod of 5 years, irrespective of the industry or size
COVID-19 : PwC Daily FT CEO Wishlist | 05
Source : PwC CEO Survey on COVID-19
Exhibit 04 : Medium term requirements of CEOs and business leaders on COVID-19 that
highlighted other priorities
PwC Insight : Focusing on what’s important to build the economy
It is clear that business leaders expect some decisive action towards a business recovery. A crisis
often presents the best time for undertaking sweeping changes that are urgently required.
Reforming labour laws to make our industries more agile and competitive in global markets is
urgently felt. These reforms can lead to greater job creation and labour force participation rates,
including among females; and thus help families supplement their incomes going forward.
Encouraging investments also featured high on the list as the country moves towards a recovery
and comments by respondents included encouraging Foreign Direct Investment which will help
strengthen the balance of payments. This is a good time for the country to attract investment from
global multinationals looking to diversify their manufacturing bases; as well as to kick start large
scale infrastructure projects that are on hold, by mobilising private capital.
Reform and productivity improvement in loss making State Owned Enterprises such as Sri Lankan
Airlines will help to channel scarce resources for more intensive healthcare measures and
modernizing education, which form the basis for future value creation and competitiveness in the
economy.
This crisis in fact, may actually give us that opportunity to boldly address the most pressing
economic concerns we face as a country today.
36%
34%
34%
27%
21%
Sale of nonstrategic State Owned Enterprises suchas hotels; and part divestment & listing of State
Banks and insurance company
Expediting large scale infrastructure projectsundertaken on BOT / BOO basis to boost economic
activity and attract private investment to such projects
Develop a reskilling strategy for the workforce in thesectors where demand will be suppressed for the
next 12-18 months
Providing tax breaks and incentives for investing intechnology related ventures that promote supplychain activities and access to essential services
Removal of Capital Gains Tax and Stamp Duty topromote real estate transactions and removal of
foreign ownership restrictions on hotel properties fora limited period
COVID-19 : PwC Daily FT CEO Wishlist | 06
Key industry findings : What are business leaders thinking?
COVID-19 : PwC Daily FT CEO Wishlist | 07
Banking and Finance
71%
Share of CEOs’ responded
positively for an introduction of a
smart lockdown instead of a curfew
as an immediate requirement.
Hotel and Tourism
80%
8 out of 10 business leaders
required low cost working capital
financing – guaranteed by the
Government of Sri Lanka.
Real Estate and Property
73%
Share of business leaders
who looked forward to tax
concessions to encourage
large scale investments.
Reskilling
34%
Remarkably, only 34% of business
leaders believe enterprises should
develop a reskilling strategy for the
workforce. Based on our data, 70%
of CEOs around the world are
increasingly recognizing the
demand for reskilling for their staff.
Manufacturing
83%
83% of business leaders
required labour law reforms
to support remote and part
time work, contract
employment and flexible
hours in the medium term.
Sujeewa Mudalige
Chief Executive Officer
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Channa Manoharan
Advisory Leader
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Lasanga Abeysuriya
Executive Director – Strategy
and Human Resource
Consulting
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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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