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Sunday Dec 15, 2024
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Honourable Ministers, distinguished delegates, ladies and gentlemen, it is my privilege to be with you today and I am extremely excited to be back in Sri Lanka for this important business forum.
The last CHOGM Conference in 2011 was held in one of my favourite Australian cities, the great city of Perth. For those of you who were in attendance there, I am sure you will agree that Perth is a city on the rise; it is one of the great developing destinations of the Asia-Pacific region and has enormous potential.
But this success hasn’t come easy for Perth. Over the past decade the city and local authorities have worked very hard to make the city a destination for trade, commerce and tourism. Perth has strived to become a global hub for business and the city took the hard decisions to build targeted tourism infrastructure to lure global travellers.
I am very happy to say, when I visit Colombo and Sri Lanka, I feel that same sense of momentum, optimism and positive energy.
Growing in confidence every day
Sri Lanka is a country that is growing in confidence every day. This is my fifth trip to Sri Lanka in the past two years and every time I visit, I am more impressed by the continual improvements in infrastructure and the rising living standards of its people.
Colombo has always been a great trading and maritime city, and of course was part of the old spice route. But I believe that now, along with the rest of the country, it has the potential to become one of the region’s great destinations for business, tourism and investment.
Sri Lanka is a country that has shown great resilience, ingenuity and character over much of its history. It has been forced to overcome much hardship, hardship that would test the mettle of the strongest and most stable nations. But overcome it they have… and now it is Sri Lanka’s time to shine on the world stage and I say – deservedly so.
Economy is growing strongly
Economically, Sri Lanka has come a long way in a short timeframe; it is only a few years back that the country was stricken by conflict, but now Sri Lanka’s economy is growing strongly, taking advantage of its great strengths and on a pathway to fulfil its great potential.
I have always believed the greatest test of any nation or government; is how they provide economically for their citizens. Economic development is one of the key building blocks of life. If an economy is growing strongly, it delivers jobs for its citizens, allowing them to provide the necessities they require for human development: shelter, food, clothes, schooling and most importantly the great hope that each parent has for their children; to have a better quality of life, full of hope and opportunity.
On this test, Sri Lanka and its Government led by President Rajapaksa are delivering strongly. In all my meetings with the Government authorities, they have stressed that the employment and living standards of their citizens is their number one goal and they are working assiduously towards achieving this ambition through economic participation.
Macroeconomic environment remains strong
In 2010, the IMF upgraded Sri Lanka to a middle income country and Sri Lanka’s macroeconomic environment remains strong. The country has experienced three successive years of strong GDP growth of 8.0% in 2010, 8.2% in 2011 and 6.4% in 2012. Just as positive, in 2010 Sri Lanka’s GDP per capita was estimated at US$ 5,500 and by 2012 had risen to approximately US$ 6,200.
Most impressively, the Sri Lankan Government has a plan to deliver this growth across all parts of the country through a significant infrastructure building program and large inflows of foreign direct investment… you only need to drive into the city along the new Airport Expressway or the Southern Highway to Galle to appreciate the work that is taking place.
I believe Sri Lanka because of this good work, combined with its central location, natural beauty, unique culture and educated workforce has all the ingredients and is poised for great success.
Comparative advantages
Let me briefly discuss some of these comparative advantages that make Sri Lanka a 21st century destination for business.
Sri Lanka’s geographic location in the Indian Ocean makes it extremely well positioned for business. The country is connected to major shipping and air routes to the east and west and the successful redevelopment of the country’s port and airport infrastructure, including a new international airport at Hambantota has provided capacity for future growth, and the potential to turn Sri Lanka into a serious maritime and aviation hub.
Sri Lanka now receives daily flights from across Asia; including direct flights from the leading cities of India, as well as Bangkok, Jakarta, Kuala Lumpur, Singapore and the major cities of the Middle East.
But business is always first and foremost about human capital and it’s here that Sri Lanka provides outstanding opportunity.
Sri Lanka has one of the highest literacy rates in South Asia at 91.2% and a well-developed education and vocational training system. The country has a large pool of skilled and semi-skilled workers, highly regarded for their precision, quality and productivity. The Sri Lankan workforce is also renowned for high calibre professional skills. For example Sri Lanka has the second largest pool in the world of UK qualified accountants (25,000) and accountancy students (86,000). What this all adds up to is opportunity… the opportunity to work with a pro-growth country eager to encourage foreign investment, combined with the skills base and natural assets to give business a regional advantage… this really is a destination on the move.
Tourism opportunity
I’ll now speak to you about one of the business opportunities I believe could turn Sri Lanka into a leading tourist Mecca for the rising middle class of India, China and the rest of Asia. An opportunity to develop the country as a base and destination for mass, luxury and business tourism; something I am committed to through my company Crown Resorts and our plans to establish an integrated resort, right here in Colombo on the Beira Lake.
Lonely Planet recently rated Sri Lanka the ‘number one country to visit in 2013’ and they are absolutely right. This island nation has a pristine coastline, a unique culture and heritage, and is easy to access.
The Sri Lankan Government has done an impressive job promoting tourism infrastructure in the west of the country and now in the east. A significant number of major international hotel and resort companies are looking to establish projects in Colombo and other parts of the country.
The Sri Lankan tourist authorities have recognised this potential and have set the very ambitious tourism target of attracting over 2.5 million tourist arrivals by 2016.
This is a worthy goal, but it will require tourist arrivals to grow by a massive 24% annually from 2011 to 2016 on a compounded basis.
I believe with the demographic shifts taking place in India and China, it is achievable. But it is only achievable with the right tourism infrastructure and attractions.
Now is the time for Sri Lanka and all countries to understand the tourism opportunity emerging in Asia, and to work hard to meet the market with the right tourism offering.
Extraordinary demographic changes
The demographic changes we are seeing in India and China are extraordinary. The size of the middle class in India currently stands at around 170 million; and is estimated to be growing by 40 to 50 million per annum over the near term.
According to a McKinsey study, if India continues on its current high-growth path, the Indian market is likely to undergo a major transformation over the coming decade. Income levels are expected to almost triple and the size of India’s middle class population base could swell to 580 million by 2025.
With the rising affluence of India’s middle class population, spending patterns in the country are evolving with leisure related purchases capturing a larger proportion of consumer spending.
One of the major shifts taking place is in relation to outbound tourism.
In the year 2000, only four million Indians travelled abroad, this is growing rapidly. According to the United Nations World Tourism Organisation, India’s outbound travel market is now estimated to reach 50 million people by 2020, therein providing major opportunity for Sri Lanka and nearby neighbours.
China’s growth story
China’s growth story is even more progressed. China has now lifted 500 million of its citizens out of poverty in a very short timeframe and this rise in living standards is the key to the development of a new demographic… a group of people that will have a profound impact on global economic growth for decades to come: the Chinese middle class.
China’s middle class are changing the world. There are over 300 million middle class consumers in China today – equal to almost the entire population of the USA… and by 2030, China is expected to have 1.4 billion middle class consumers. To put this in perspective, it is forecast that the combined US and European middle class population will only be about 780 million at the same point in time.
Through their spending power and tastes, this Chinese middle class will profoundly alter every aspect of the world economy. Those businesses and countries that move now will have a significant advantage in the future.
When it comes to tourism, China’s outbound travel market is one of the fastest growing in the world, as the middle class spend increasing amounts of money on their preferred leisure activity… luxury travel.
In the year 2000, just over 10 million Chinese tourists travelled abroad. In 2011, this number has risen to 70 million people, an increase of 566%. Chinese outbound travel is now estimated to reach a staggering 100 million people by 2015.
While the tourism opportunities from China are incredibly large, unless tourism operators and authorities appreciate exactly what the rising Chinese middle class wants, and unless we can cater for their desires, then we have little hope of taking advantage of this opportunity.
Consumption habits of China’s middle class
A 2011 McKinsey study into the consumption habits of China’s middle class found that the rapid increases in wealth, and the shifting social conventions that sanction the display of that wealth, are driving a growing infatuation for luxury goods.
The study found that by 2015 China will account for 20% of the global luxury goods market.
No one should be in any doubt, the wealthy Chinese middle class want luxury travel, luxury hotels, signature restaurants, quality entertainment, gaming, casinos and high-end retail.
These factors explain why Chinese tourists prefer visiting major cities, where they can enjoy these luxury experiences. It also explains why they are attracted to luxury integrated resorts, which meet all of their travel needs under one roof.
To make this point, Dr Mark Faber, a well-known US investment analyst, found that “80% of Chinese travelling outside the country for the first time head for a casino and 90% of Chinese who travel to the US visit Las Vegas”.
Singapore case study
Singapore provides a case study in how a country, which delivers iconic luxury hotel resorts with gaming as a component, can benefit immensely by attracting a much greater share of Chinese and Asian tourists.
Ten years ago the Singapore Government had concerns regarding their flat inbound tourist numbers with visitors not staying long enough and complaints from some tourists that the country had nothing new to offer.
Singapore’s market share of Asia Pacific travel had declined from 8% in 1998 to 6% in 2002, and the average length of stay for tourists in Singapore was down from four days in 1991 to three days in 2002.
Key members of the Government were determined to develop and implement a strategy, which would turn this trend around and make Singapore one of Asia’s and the world’s key tourist destinations.
In 2004, the Singapore authorities decided to build two of the world’s largest integrated resorts with an extremely diverse range of leisure and entertainment activities, including casinos.
Resorts World Sentosa was the first of Singapore’s integrated resorts to open in January 2010. The second resort, Marina Bay Sands, opened in April 2010. The observation deck and infinity pool, which are located on top of the Marina Bay Sands hotel, are now instantly recognisable images around the world.
Just two years after the opening of these two integrated resorts, Singapore began reaping economic and employment benefits beyond anyone’s expectations.
In 2010, the year the integrated resorts opened, Singapore’s GDP increased by 14.5%. That year, the two integrated resorts contributed approximately S$3.7 billion (A$2.9 billion) to Singapore’s GDP, making up approximately 1.7% of GDP.
The integrated resorts have also made a significant contribution to employment growth by directly employing over 22,000 people and supporting more than 40,000 jobs throughout the Singaporean economy.
Singapore has been able to successfully tap into the Chinese tourism market – receiving 1.5 million Chinese visitors in 2011, an increase of 34.7% on 2010 and a 68% increase on 2009 before the integrated resorts opened.
Just as importantly, the increased tourism revenue the resorts have generated, have provided a benefit to the entire tourism industry more broadly. Overall hotel occupancy has increased over the last three years, averaging 85-87%, compared to 76% in 2009, before the integrated resorts were built.
Success of integrated resorts in Singapore
While visiting Australia in late 2012, the Prime Minister of Singapore, Mr Lee, spoke about the success of the integrated resorts in Singapore stating: “Business-wise [the integrated resorts] have done very well. Revenue-wise the government has done very well. From an urban planning point of view, it has done a lot for our skyline… it’s helped our image enormously.”
The Prime Minister went on to say it became imperative to build the two projects or lose out to rival jurisdictions in the region: “As the world was developing, as the business was developing, the casino became the integrated resort business — not just making it a place to gamble.”
Singapore has shown that cities and countries can establish sophisticated tourism infrastructure that meets the emerging Asian market and maintains the characteristics of its population.
Sri Lanka poised to take international stage
Delegates, Sri Lanka is now poised to take the international stage as one of the world’s most unique and exciting global destinations. The Government is wisely investing in its people, giving them the opportunity to participate in an emerging economy. The country’s major infrastructure rollout is having an impact in all provinces and is being successfully delivered.
For business, these improvements and Sri Lanka’s natural strengths make the country an appealing place to do business in. As a company, we are excited about the opportunity to invest here and thank the Board of Investment for the work they have undertaken to make Crown’s proposed project a possibility.
Sri Lanka is a modern economy, growing strongly with a very professional approach to business and foreign investment. For all these reasons, I believe it is Sri Lanka’s time to shine in Asia and I urge you all to consider this great country and these great people as a destination for your business.
