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10 insights Ricardo Haussman must know about Sri Lanka 


Comments / {{hitsCtrl.values.hits}} Views / Tuesday, 19 January 2016 00:53


I guess anyone’s dream will be to study at Harvard and get a rub off this power brand on their personality, be it formal education or executive education. There were two lecturers who made a mark during my experience at Harvard – Professor Matt Andrews and Ricardo Hausmann. 

12Harvard Kennedy School of Government trailblazing Professor Ricardo Hausmann  

 

Ricardo Hausmann – in Sri Lanka 

Venezuelan origin Professor Ricardo as expected made a cutting-edge presentation at the Sri Lanka Economic Forum last week where he compared Sri Lanka to Thailand in 1961 before it moved strategically to become a power nation of Asia. Then he extended the analysis to Turkey and Costa Rica which gave an insight to where Sri Lanka needs to head on a five-point agenda. His depth of thinking and experience benefit will sure benefit the country. 

In my 10 years of being associated with different facets of the Sri Lankan economy (of which five years was serving the UN), the move to bring in Harvard Development Centre was the best move I have seen today for Sri Lanka.

 

SL Economic Forum – sidelines

On the sidelines of the Sri Lanka Economic Forum 2016 where I was able touch base with Professor Ricardo, some thoughts he shared sure brought out the strong equity of him being a specialist in trade and commerce. 

In my view Sri Lanka is lucky to get the expertise of Ricardo Hausmann. His experience of working in developing countries and his attitude to handling the islander mentality will be a perfect fit for Sri Lanka. When I was listening to him in Sri Lanka the other day, the thought that went through mind was, “Is Sri Lanka ready for Ricardo Hausmann?”

Be that it may, let me share 10 things that Professor Hausmann must know about Sri Lanka if real change is to happen in our country.

 

1) Coalition governments and revolutionary budgets

It would be a very entrepreneurial challenge to implement a revolutionary Budget like what we saw in November 2015, when a country is governed by a coalition government. Having been the Executive Director of the key policy making entity of the country – NCED – for three years reporting directly to one of the most competent treasury secretaries in Sri Lanka, Dr. P.B. Jayasundera, I would strongly support the Budget recommended with a few changes. But implementation will be an absolute night mare which is what we are experiencing. 

A better option would have been not to launch a step change budget but make changes right throughout the year, meaning Kaizan’s approach. The best example is the budget proposal on abolishing duty free permits on vehicles for the public sector and the one on free uniforms for school children. These are apt proposals for Sri Lanka but could not get traction due to the political economy at play. I guess Ricardo Hausmann must take cognisance of this before guiding us to the change required.

 

2) Get the basics right

When an economy has gone through three decades of terrorism shocks, the internal processes need structural changes before the system can take in new idea implementation. A classic example is the tender process of Sri Lanka of which I have had first-hand experience in my tenure as Chairman of Sri Lanka Tourism. It’s a sure-fire recipe for disaster. 

I would strongly recommend that this must be the first task for the Harvard Development Centre to address as every economic initiative has a cost and it will have to go through the tender process hammer. The centralised procurement agency is a good idea as per the third generation economic reforms that were presented by the PM but first the process check must be done and required changes made at the outset.

 

3) Hire for attitude and strong activation

I remember once a person for whom many have a great deal of respect, Charitha Ratwatte, who voiced: “Even if we implement the plans of the 1960s, Sri Lanka can be very competitive.” Given my exposure to public service for almost 10 years I cannot agree more with this insight.

There is no point of getting the best brains in the world like the Harvard Development Centre if we don’t have leaders in place who are hired for attitude and train for skill than political affiliations. It’s a tough call in a political economy like Sri Lanka based on the deliberations that Professor Ricardo Hausmann had with us in Boston. But I guess we will have to take this tough call if we are to make Sri Lanka a top 30 nation in the World Competitive Report of 2017 (within two years).

 

4) Collect the reports 

Coming from a multinational management culture which is essentially information-led decision making, in my view all the answers to Sri Lanka’s problems have been formalised and documented by the millions of committees appointed by the powers that be in the last 30 years. Maybe the first task is to get all these reports together and then summarise the findings. Thereafter examine why it was not implemented. 

A classic case in point is Sri Lanka’s tea industry. There are 59 such reports that are stacked away that if implemented could make Ceylon Tea a five billion dollar industry for Sri Lanka, especially given the issues faced by the privatised tea plantation companies. A simple suggestion of extending the lease period to 66 years that will cover two lifecycles of the tea bush will change the total attitude to investment by the private sector on the RPCs.

 

5) George Soros insight

Even if we don’t listen to any professional, it’s time that Sri Lanka listened to multi-billion dollar experienced George Soros (who incidentally sponsored the Sri Lanka Economic Forum 2016) who identified that Sri Lanka Tourism has the best potential to drive a fourth revolution for Sri Lanka. 

For this to happen, the basic is for this industry to have the service of a global advertising agency and PR partner together with a digital marketing driver. Without this support we cannot attract the top dollar tourists or build a strong imagery rank for brand Sri 12-InLanka. On this front first a creative pitch must be done before embarking on any digital front so that we get our ‘positioning’ sorted out as per the call of the private sector. 

We must also trust the people who can take this process forward and support their judgement. Keep politics away from this decision and Sri Lanka can make tourism a 10 billion dollar industry. Let’s stop chasing numbers as there is a concept in tourism called ‘carrying capacity’. Sri Lanka must respect this.

 

6) Find and politically back talent

There is a strong debate on the role of ‘collector’ vs ‘strong leadership’ demonstrated by chairmen of key State entities. This has been a perennial problem in the public sector not only in Sri Lanka but globally which we had a case study in Harvard that Professor Ricardo was privy to in our batch. I guess the time has come for us to stand by honest leadership that has a track record for being the catalyst for change. 

If at least the Harvard Centre for Development can infuse this thinking to the current Government which has a strong bias to link with the world, it will be a big win. If not, the first Sri Lanka Economic Forum will be just another piece of history that Sri Lanka anyway has a track record of accumulating.

 

7) Consistency of policy

The biggest challenge for the private sector is consistency of policy, given my exposure of being the Chairman of Sri Lanka Export Development Board, Industrial Development Board and Sri Lanka Tourism. The logic is that due to political pressure, public policy has become a wild ass and the private sector has in fact lost faith in the system in the last 20 years. 

This must stop, if not Ricardo Hausmann’s time and money invested will be another one of those pieces of fine art where Sri Lanka loves to allow moss formation. For instance if Sri Lanka is serious about export development, let’s allocate two billion dollars and deposit this with the EDB for aggressive export promotion that must start from supply chain development. As at now it has to rely on requesting money from the Treasury monthly.

 

8) Authoritative leadership style

Whilst we appreciate democracy, the fact of the matter is that island nations like Sri Lanka require some decree of focused authoritative leadership. But such leadership must only be on the work scope and not for political tasks. Some cases in point are Singapore under the rule of Lee Kuan Yew, Malaysia under Mahathir Bin Mohamed and Gujarat powered by Narendra Modi. Maybe Sri Lanka needs some degree of such behaviour.

 

9) Quick decisions 

I guess this point is linked to the earlier mentioned discussion which is on leadership style. The argument here is that we have seen Sri Lanka policymakers not making timely decisions that create chaos in the market place. 

A classic example currently in Sri Lanka is the issue on Maximum Retail Prices announced at the Budget 2016 and the landed price reality of importers on the essential items being higher. Given that product is on the basket of goods of every Sri Lankan household, the issue is affecting the total country. 

Whilst all accept that the cause of the issue being the fluctuating exchange rate and market prices globally, unless quick decisions are made people can lose confidence in the system. This undermines the very essence of the Harvard development agenda. 

 

10) Senior citizens 

I guess the time has come to allow the younger generation who are tech savvy to take control of driving public enterprise from the senior citizens who may be in the inner circle of the political economy. If not, Harvard recommendations will just be limited to a piece of paper. 

The world has moved to practicing ‘destructive strategies’ and changing the business model drastically. This cannot be done without youthful leadership. That’s the reality and we must respect this. I remember Professor Ricardo citing a similar situation in Mexico at a class during our sessions and the lesson he taught us. 

 

Conclusion 

While it’s great to have a systematic development agenda being pursued rather than a home-grown development model that can have a somewhat of a political flavour like we have been exposed to, let›s first keep our home fires burning.

(Dr. Rohantha Athukorala is an alumnus of Harvard Kennedy School of Government executive leadership education. He has a double degree in marketing, an MBA and twice an award winning marketer in the Sri Lankan economy. The thoughts are strictly his personal views and writing is a hobby he pursues.)


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