ICC’s crusade to safeguard future functioning of global economy

International Chamber of Commerce Sri Lanka (ICCSL) Chairman Dinesh Weerakkody speaks about the International Chamber of Commerce’s (ICC) global response to the coronavirus (COVID-19) to provide businesses with hope during these challenging times.

As the institutional representative of more than 45 million companies in over 100 countries, what has been the ICC’s global response to the pandemic?
The ICC has issued a call for G20 leaders to urgently agree on a comprehensive global action plan to address the escalating COVID-19 outbreak and restore confidence and stability to the global economy. The ICC believes that coordinated action among the world’s largest economies is urgently needed to boost the ongoing efforts to manage the spread of the outbreak while minimising the potential social and economic impacts of COVID-19. 

ICC Chair Paul Polman and Secretary General John W.H. Denton called for leaders to agree on coordinated steps to: ensure access to essential medical supplies, scale public health financing to tackle COVID-19 and restore confidence and stability in the global economy. 

The ICC has expressed particular concerns about the growing impact of trade policy measures on the availability of medical supplies needed to respond to the pandemic. In this connection, the organisation has called on G20 leaders to show urgent leadership by committing to:

Avoid export bans or limits on the free flow of all necessary medical supplies, medicines, disinfectant and personal protective equipment,

Reverse the existing export bans on medical supplies needed to tackle COVID-19 and
Reduce the costs of all necessary medical supplies by lifting import taxes, quotas and other government-imposed costs.

The backbone of the ICC are the SMEs. What is the ICC doing to ensure that stimulus efforts flow rapidly into the real economy and provide direct and immediate support to MSMEs and their workers?
The ICC has launched a call for urgent and decisive action to save SMEs and combat the economic repercussions of the COVID-19 pandemic. Highlighting the threat to the continued operation of micro, small and medium-sized enterprises (MSMEs) worldwide, the ICC has already launched a campaign to encourage coordinated and collective action to help businesses. 

As part of this campaign, the ICC has released a call to action encouraging governments to ensure that stimulus efforts flow rapidly into the real economy and provide direct and immediate support to MSMEs and their workers. This agenda is of paramount importance to safeguard the current and future functioning of the global economy and the livelihoods of billions of workers throughout the world.

‘‘As part of this campaign, the ICC has released a call to action encouraging governments to ensure that stimulus efforts flow rapidly into the real economy and provide direct and immediate support to MSMEs and their workers.

The ICC issued a 10-point plan for G20 trade ministers to speed up the response to COVID-19. What is the status of that initiative?
It is a roadmap for G20 countries to use trade policy to fight COVID-19 and rebuild the future. The ICC has outlined 10 concrete ideas for trade ministers with three core goals in mind – to speed the health response to COVID-19, to keep trade flowing to restore growth and safeguard jobs and to maintain momentum on reform of the trading system. The road map is available on https://iccwbo.org/more-icc-websites/

The world economy, according to economists, cannot survive the current social distancing for more than a few weeks. Your thoughts?
The shutdown obviously is to slow the spread and justifies the high cost of the shutdown because all stakeholders share the overarching priority of putting lives, health and safety first. However, when there is evidence of a drop in the rapid community transmission with good testing, a gradual approach is probably best. 

The strategy would be to manage with a combination of border controls and domestic social distancing measures stopping mass gatherings but not threatening livelihoods. An unsustainable shutdown should be the last resort.

 
What are the sectors that are badly hit?
At sectoral level, tourism and travel-related industries will be among the hardest hit. The economic impact has also spread to the financial markets and most international indices have declined at least 20+ percent. 

Over 80 percent of our garment exports are to the USA and Europe. Shopping malls in these countries have been shut. The USA and Europe recession from corona would dampen demand. 

Whilst the demand chains for our predominant black leafy tea varieties will largely remain in the Middle East, the demand in the European markets will lessen. Tea production having a high labour component needs to be exempt someway from the restrictions of lockdowns and transport restrictions. This will affect tea smallholders and the sector. 

The construction sector will face a major challenge. The demand for the upcoming high-rise apartments would slowdown and pose a major challenge to the financial sector. 

The impact of this crisis will depend on how quickly the virus is contained. How much of the economic support the government can deploy during the epidemic’s immediate impact and aftermath will depend on how far and long the virus spreads.

What has the government done to soften this crisis for the private sector?
The Monetary Board of the Central Bank of Sri Lanka (CBSL) has introduced several extraordinary regulatory measures to provide flexibility  to  licensed commercial banks and licensed specialised banks to provide relief to businesses and individuals affected by the COVID-19 crisis. 

In deciding on these measures, the Monetary Board took note of the overall resilience of the banking sector especially due to the already built-up capital buffers, the current and future liquidity levels, potential upsurge in the rising trend in non-performing loans due to the sudden challenge of borrowers  to  service  their  loans  due to the extraordinary disruptions to the functioning of the economy. 

There is little doubt the COVID-19 control measures will work, although the timelines are unclear as we speak, principally due to public apathy in pockets in the outstations. It is however imperative that we now consider the economic and social impact we will face from the corona pandemic within Sri Lanka on its key economic institutions.

What is the way forward in this crisis?
Very difficult to speculate. However, the first and most obvious factor in determining readiness is the number of new cases in a given area. Regions with significant ongoing transmission should expect that restarting economic activity will only lead to more transmission. Case numbers and more importantly, hospitalisations need to be low enough for our health system to manage individually, rather than through mass measures. 

A second factor is the strength of the systems in place for detecting, managing and preventing new cases. Elements of these systems include the following — adequate medical capacity, especially of intensive care facilities. 

Therefore, a viable strategy to address the joint health and economic crisis caused by COVID-19, which involves according to medical experts, is gradually sending the young who face the lowest risks back to work on a voluntary basis.

This should happen according to them as soon as the congestion of the healthcare systems is less critical but while a large fraction of the population is not yet immune. 

Furthermore, according to them, all of these workers in critical sectors should be temporarily separated from the rest to ensure the critical sectors continue to function. 

On the private sector side, all the companies are experiencing unprecedented challenges across their supply chains, business operations, their regular markets and also liquidity. These difficulties all translate into cash impact that can put survival at risk for many companies and lead to distress. Companies needs to address these risks by taking deliberate actions to protect their cash and needs to prioritise cash management. 

What is the ICCSL doing to help its members?
Several ways we have assisted our members. From addressing their immediate issues with the authorities, financial institutions and also by providing technical support via the ICC global. 

We will be organising an online discussion on how to address many of the COVID 19 challenges in the coming weeks. 

In addition, our members have helped those affected by giving dry rations. We are also raising funds to donate a ventilator to the IDH.