Cinnamon Life -Sri Lanka’s most-anticipated mixed development- hosted an exclusive breakfast forum on 10 December 2019 at the Cinnamon Grand in Colombo, where prominent business leaders were made privy to insights from illustrious emerging markets investor, Dr. Mark Mobius. The invitee-only event titled ‘Emerging Markets and Sri Lanka’s Growth Trajectory’ was extremely well attended, being Dr. Mobius’ only officially speaking appointment while in the country.
The high-profile interactive forum is the latest in a series of similar events organized by Cinnamon Life, intended to cement Sri Lanka’s position as on par with global business capitals of the world as an investment destination.
Dr. Mobius initiated his presentation showing the growth trajectory of countries such as Singapore, China, Malaysia, Vietnam, Brazil, Namibia and the UAE, highlighting the change in landscape over the last 25 years. He expressed generous praise for Sri Lanka and his enthusiasm at the opportunity to travel to the country at a very transformative period for the local economy.
The presentation in itself was insightful, Dr. Mobius not just highlighting the country’s strengths, but also showcasing the immense growth potential Sri Lanka as an economy has with regards to foreign investor appeal. Admitting that while Sri Lanka’s agri-based economy has always held global interest -especially with tea as its strongest brand and commodity- as well as its charm as a tourism destination, he also made note that the recent attractiveness of Sri Lanka to the software and real estate sectors.
Individual sectors aside, one of the more fascinating points Dr. Mobius was keen to stress on during his visit was the issue of privatization. “You don’t have to privatize,” he said simply. “Just increase transparency of state-owned enterprises, by publicly listing the companies. This is a high priority even if they are losing money, because only when issues are made publicly known, where these losses are coming from can be definitively pin-pointed, and as a result, addressed.”
Dr. Mobius also mused over how investments the world over have been significantly altered by the entry of sophisticated communication, the internet, and IT, and yet maintained that through his four-decade long tenure, he has learned that the acceptance of new trends and optimism has always paid off as an investor.
On the conclusion of his presentation, Dr. Mobius was joined on stage by Sector Head of John Keells Properties, Nayana Mawilmada, following which a riveting tete-a-tete ensued.
Drawing parallels with other global emerging markets vying for space in the midst of the ongoing power stand-off between the US and China, Dr. Mobius brought reassurances to an initially skeptical audience. “Emerging countries such as Sri Lanka actually stand to benefit from the new re-arrangements of moves in trade and exports. China for instance should be encouraged to invest and manufacture here as should other superpowers such as India while Sri Lanka maintains its independence. Furthermore, with low global interest rates -as it now stands-, it is easier for emerging economies -more than established markets- to refinance and restructure the debt as rates come down, and then to raise more money at very low rates.”
Himself having invested in an apartment at Cinnamon Life, Dr. Mobius indicated an interest in the local property market, the country’s financial services, as well as its tourism sector.
He however didn’t shy away from highlighting the key shortcoming in the local property sector. “The methodology for property investment is the same around the world,” confessed Dr. Mobius, “and that is the challenge in the development of mortgage markets. Here in Sri Lanka there is a dire need to develop a mortgage market where owning property is made easier for potential investors.”
When asked for his expert opinion about what practical steps need to be taken by the new government in order to get the economy moving with confidence, Dr. Mobius stated off the cuff, “Tax reform, ease of foreign exchange flows and travel: make taxes easy to pay and competitive to the region , change procedures for foreign exchange controls by making the way easy for money to come in and go out, and make visa procedures easy for tourism to flow.” All of which he claims will easily solve the issues of tax deficits and strengthen the currency as a result.
Dr. Mark Mobius is widely recognized as the architect of the emerging markets asset class. The founder of Mobius Capital Partners – a firm which utilized a highly specialized active investment approach with an emphasis on improving governance standards in emerging and frontier market companies-, Dr. Mobius has served as Executive Chairman of the Templeton Emerging Markets Group, where during his tenure, the group expanded Assets Under Management from USD 100m to over USD 40bn. He is a member of the Economic Advisory Board of the International Finance Corporation (IFC). Since 2010 he has also served as a member of the supervisory board of OMV Petrom in Romania, and was previously a Director on the Board of Russian oil firm, Lukoil.
After more than 40 years of a career in global emerging markets, Dr. Mobius has earned for himself industry recognition and influence, having acquired numerous global industry awards and written several best-selling books on the subject.
