Sri Lanka poor governance hindering productivity: expert

Sept 29, 2009 (LBO) – Poor governance, weak institutions, high inflation, high interest rates and protectionism, are hindering efforts by Sri Lanka’s private sector to improve productivity, a trade promotion expert has said. Lloyd Yapa, a former government official who supervised an industrial export drive of the government at one time, also says companies should try to differentiate themselves in markets by adopting strategies that set them apart from competition.

Productivity improvements themselves may not help in the long-term.

“Productivity taken to an ultimate conclusion will not help. Why? Because your techniques can be copied by all companies. So profit swill drop,” Yapa told the annual sessions of the Sri Lanka Association of Economists this month.

“This has happened in Japan and even in the US.”

Yapa said the solution is for firms to adopt a strategy of positioning themselves in a market segment with a differentiated set of activities and products which cannot be copied.

But for firms to do this, the government must remove stumbling blocks placed in their way so that they are induced to raise productivity and deal with competition.

“The best way for the government to induce companies