KPMG in Sri Lanka and India are forging a closer alignment to leverage Sri Lanka’s resurgent economy. As the nation emerges from a period of hardship, the recent All India Partners Meet (AIPM conference) held in Colombo served as a strategic springboard to explore new opportunities and solidify collaboration. The conference served as a testament to the strong ties between the two KPMG entities where President Ranil Wickremesinghe and prominent Indian business leaders delivered addresses, highlighting the importance of this collaboration with the emergence of new opportunities.
In this interview, Yezdi Nagporewalla, Chief Executive Officer of KPMG India, and Priyanka Jayatilake, Managing Partner of KPMG Sri Lanka, delve into the collaborative efforts between KPMG in both countries. They focus on driving sustainable growth, tackling current challenges, and seizing prospects through strategic initiatives. Ultimately, these efforts aim to contribute significantly towards Sri Lanka’s economic development.
Why did KPMG India choose Colombo for AIPM, a large event where all India partners meet?
Nagporewalla: First, KPMG India and KPMG Sri Lanka share a common culture and heritage, along with a deep, long-standing relationship. I have been with KPMG India for 24 years, and from the beginning, I have experienced the warmth and strong bond between our two firms. When Priyanka extended the invitation, I accepted it with pleasure, and I can say that almost all of our 600 partners are excited to be here on this beautiful island. Beyond the warmth of our relationship, Sri Lanka’s current ecosystem is buoyant with opportunities, and it’s a great chance for my colleagues to witness the economic pulse here.
How do you see the future outlook of Sri Lanka as the country progresses towards economic recovery?
Jayatilake: We are very optimistic about Sri Lanka’s economic recovery. The debt restructuring process is in its final stages and is expected to be completed by mid-July, which is a positive sign. Additionally, the IMF has approved the third tranche, indicating their satisfaction with the progress so far. This approval boosts confidence among international lenders and investors, which is crucial for driving economic growth.
We’ve also taken steps to bridge the gap between income and expenditure. Government revenue, which was about 7% of GDP during the crisis, has increased to around 11% and is projected to reach 14%. Various reforms under the IMF restructuring programme have improved our macroeconomic fundamentals. Inflation has been brought down to single digits, interest rates have decreased, and foreign reserves have increased due to higher export earnings, remittances from Sri Lankans working overseas, and increased tourist arrivals. These factors contribute to our confidence in moving forward and attracting more investment.
Nagporewalla: From an external perspective, we are quite optimistic about Sri Lanka’s progress. The country is showing positive trends across various indices. As Priyanka mentioned, foreign reserves, currency stability, inflation rates, and trade balance are all improving. These positive trends are largely the result of targeted government policies that are now yielding tangible results.
How do you see the interest shown by Indian investors in Sri Lanka, especially when the economy is on the recovery path?
Jayatilake: As a professional services firm, we’ve noticed a significant increase in inquiries from Indian investors compared to two years ago. We’ve started conducting feasibility studies and due diligence for some of these investors. Indian investment in Sri Lanka is not new; there have been substantial investments over the years from both the government and the private sector.
Notable Indian investments include Lanka Ashok Leyland, which has been in Sri Lanka for 25 to 30 years, and Tata, Mahindra, and Indian Oil (Lanka IOC), which played a crucial role during our economic crisis. These investments have significantly contributed to our economy. The proximity and cultural ties between India and Sri Lanka make it sensible for Indian companies to invest here.
Even during the height of our economic crisis, the Adani Group made significant investments, including a $700 million investment in a terminal at the Port of Colombo and a $1 billion investment in renewable energy in Northern Sri Lanka. These investments demonstrate confidence in Sri Lanka’s potential and encourage other Indian investors to re-evaluate opportunities here.
Nagporewalla: From an Indian perspective, I believe we have the key elements in place. The timing is particularly favourable as Sri Lanka is on the verge of entering a growth phase. Additionally, our geographic proximity and, more importantly, our cultural ties are significant factors. These are the essential ingredients for a strong relationship between neighbouring countries, and I am confident that everything is aligned perfectly.
Can you discuss the long-term relationship between both firms?
Jayatilake: We have had a long and excellent relationship between KPMG India and KPMG Sri Lanka, dating back to the mid-90s. As a partner for 31 years, I have witnessed the strong bond and collaboration between our practices. Whenever we needed expertise or support from India, they have always been willing to support us.
Recently, we worked together on the Asset Quality Review for the banking sector, a requirement for IMF loan restructuring. This collaboration strengthened our relations with lending institutions like the ADB and IMF and highlighted the opportunities for joint initiatives. KPMG India’s transformation into an organization focusing on technology-driven solutions like digital transformation, cyber security and technology implementation presents a great opportunity for Sri Lanka and India to leverage complementary skills.
Nagporewalla: KPMG India has evolved into an organization that now focuses on solutions such as digital transformation, technology implementation, and related services. These transformative solutions present a great opportunity for Sri Lanka and India to collaborate, leveraging our complementary skills.
How can both firms work together to contribute towards the recovery path of SL by leveraging the experience of working on some large government projects in India?
Jayatilake: India and Sri Lanka boast a strong economic collaboration, boosted by the India-Sri Lanka Free Trade Agreement (ISFTA). The economic ties between India and Sri Lanka extend beyond trade, encompassing development projects in infrastructure, healthcare, and education. KPMG India’s experience in working on many projects with the Indian government positions them to offer similar support to Sri Lanka as we venture into many government-led projects.
Nagporewalla: KPMG India has a strong track record supporting the Indian government’s initiatives. We played a key role in the Startup India programme, which helped grow the startup landscape from 300 to over 130,000 companies. In the textile sector, KPMG helped to implement key programmes such as BharatTex 2024, Vision 2047, implementation of Technical Textiles Mission, etc. We have also assisted the government in improving India’s Ease of Doing Business ranking. We are extremely passionate about our partnership in nation-building and we at KPMG India believe our experience can benefit Sri Lanka with its various initiatives towards economic recovery.
Now that Sri Lanka is coming out of the economic crisis, there is a sudden momentum of growth potential in various industries after 2 years of stagnation. What are the services that KPMG India and KPMG Sri Lanka can offer together to cater to the new needs of the business sectors?
Nagporewalla: As Sri Lanka emerges from its economic crisis, KPMG India and Sri Lanka are well-positioned to support the evolving needs of various business sectors. We offer a broad suite of services designed to foster economic recovery and sustainable growth. By leveraging our combined expertise and deep understanding of both the Indian and Sri Lankan markets, KPMG is dedicated to delivering customized approaches that drive sustainable growth and long-term success for businesses in Sri Lanka.
Jayatilake: Sri Lanka is focusing on improving its technology platform. For example, the National Electronic Payment System (NEPS) initiative aims to facilitate electronic payments for all government transactions. Additionally, the DIGIECON 2030 initiative focuses on the digital transformation of Sri Lanka, and the Artificial Intelligence Task Force is developing a wide range of methodologies for AI integration. There are also many initiatives in the ESG space.
We see numerous areas where we can collaborate by leveraging experience across our network, particularly from India, to support these national-level initiatives. Our combined efforts can significantly contribute towards the technological and economic advancements in Sri Lanka.
How is the KPMG network taking various initiatives to keep up with the emerging trends in the global market?
Nagporewalla: At KPMG, we believe in continuous improvement and evolution, to stay ahead of global trends, we continue to invest significantly in research and anticipating the business landscape across the globe. Our periodic surveys cover key global stakeholders and get a deeper insight into the shifting priorities of business leaders coupled with changes in the geopolitical climate. We have been investing heavily in adopting emerging technologies such as AI & GenAI, Cloud Computing and overall digital transformation to increase our productivity and also to move a few degrees closer to our clients and their business priorities. With these initiatives, amid global economic uncertainties, we have been helping businesses to build resilience through progressive solutions. We are also leaders in promoting sustainability and ESG (Environmental, Social, and Governance) practices, which have gained substantial momentum over the last few years. We aid businesses in integrating ESG principles for long-term success and stakeholder trust and do the same for our businesses. Essentially, at KPMG we believe in ‘Working Together, for Better’ and that continues to keep us ahead of the curve.