Colombo Plan Secretariat seminar:

‘Change easier at time of crisis’

Ramani KANGARAARACHCHI

Change is easier at a time of crisis therefore countries must use the crisis to bring about the much needed changes in the system, said Institute of Policy Studies Executive Director Dr. Saman Kelegama at a training program for private sector development organized by Colombo Plan Secretariat at the Hilton on Monday. He was making a presentation on ‘How the Asian economies can capitalize on opportunities’.

He said that undertaking change in organizations has been difficult in some Asian countries due to the welfare, politics, and stringent labour laws but this is the best time to diversify export markets, import and aid sources, because a diversified structure is more conducive to cushion external shocks. People have seen the adverse impacts of excessive dependence on US and EU market for Asian exports, he said.

In finding solutions traditional retrenchment through VRS (voluntary retirement schemes) has to be approached with caution as adverse selection in VRS is bound to be there.

Getting them back may be more costly in the long run. Remaining staff will work in an insecure environment and their work load may increase and as a result productivity may suffer. Careful strategizing is required while looking at depleted assets, inventory and waste in minimizing cost, he said

When capitalizing on opportunities it is necessary to regulate global finance and financial markets, recognize the limitations of the information revolution, implement difficult reforms, explore new markets and look at international best practice, he said.

Dr. Kelegama said that capitalism is characterized by booms and busts but booms should not be treated as permanent and busts as temporary.

The information revolution by IT is inadequate for economic agents to act rationally and take prudent decisions at the correct time, he said.

Although it is the common practice during recession to cut the innovation and training budgets it should be a tool for getting the most out of what is already happening and when the market is small there is an opportunity to convert a small group of competitors thereby having a large effect on market share, he said.