2010 – The year Sri Lanka captured world attention

My karate sensei who has been trained in the famous Shaolin Temple mentors us once a week and the theme last time was ‘Talent is not Enough’. The underlining ethos was that if one is brought up in a competitive sporting landscape, then when life throws that usual wicked blow, all that is required is to pick the pieces and start and go after the challenge once again with more passion and drive.

When I look back at 2010 from a country perspective, I see this same ethos holding ground, where we see saw groups of people who made it in 2010 with out-of the-box thinking, after having picked up the pieces from a disastrous economy and a low ebb business confidence that existed in May 2009.

I guess it’s true; talent is not enough. There has to a strong drive to support this. The reality today is that some companies have almost trebled their bottom line business performance whilst from an economic perspective the country has recorded a commanding eight per cent plus growth trajectory, which sure captured world attention.

In simple words, we have demonstrated to the world that a home-grown economic and business model can bring back past glory even when it comes to a country. I am in no way being blind to the issues in the country such as the electricity tariff hike that is taking the shine off Budget 2011. However, let me single out the top 10 achievements of Sri Lanka from a very critical angle that caught world attention in the year gone by.

CSE on a roll



Whilst the stock market has given birth to a new super rich in Sri Lanka, in the year gone by it crossed the all time 7,000 mark, making it the best performing stock exchange globally. Some might comment on how pension funds were injected but, the reality is that it was an innovative method of bringing in excitement and demand in to the market and may be it can be a new model from which the world can learn. Provided that it does not create a bubble, we need to continuously innovate with such initiatives so that Sri Lanka stays ahead of the game.

GDP pick up

Once again I hear critics questioning the accuracy of the numbers. Be that as it may, the fact is that Sri Lanka’s economy is growing at seven plus when most economies globally are struggling. Our focus should not be in dissecting these numbers but more on how the gap between the Western Province and the rest can be bridged.

Using such initiatives like the setting up of industrial estates and the development of microenterprises and SMEs, maybe Sri Lanka can drive development in rural Sri Lanka. Separately we must also make APTA a reality by pushing India to sign on the groundbreaking agreement. This can open new markets that will help drive the supply chain from Sri Lanka. A key thing to focus on, provided that 65% value addition exists and the effective tax rate will decline as per Budget 2010.

I would also strongly push for greater integration with the Indian and Pakistani markets by expanding on the current FTAs and developing on the proposed CEPA agreement so that we are poised to drive for 10 per cent GDP growth. Even at the current performance we made a mark in the world.

Best tea auction

In the last three years I have heard many stories of where Sri Lanka’s tea industry will be doomed either by the wage increase or certain key markets facing severe challenges globally. However, the Sri Lankan tea industry has continued to perform and fetch the highest prices globally. Sri Lanka is sure to cross the 1.5 billion magical mark in 2010 even though most economies are heading for a double dip. It’s an interesting business model that Kenya, India and even Rwanda can learn from.

Tourism – 600,000+

Even though we know that there is no rush of hotels setting up even with the peace dividend that has come into Sri Lanka, at the end of the day Sri Lanka crossed the 600,000 mark in the number of tourist arrivals, which silences critics who are yet sceptical about whether Sri Lanka is actually safe.

We now need to see the Shangri La property coming up so that business confidence increases. A point to note is that even with this brilliant performance which is essentially private sector driven, the earnings will be just 0.5 billion dollars.

The projections for next year is approximately 0.6 billion, which means that there has to be a focused drive to make this industry a one billion dollar industry for Sri Lanka. If not it cannot join the billion dollar club of apparel, tea, rubber, jewellery, ICT/BPO or for that matter food and beverage. This indicates the thrust that is required.

Even with the guest houses being counted, our carrying capability is below 16,000 rooms in Sri Lanka, which explains the change at hand.

Infrastructure spruce up

Once again we hear many schools of thought. Some argue that Sri Lanka’s interest payment on debt was seventy billion in 2000 whilst last year it topped 302 billion. The fact of the matter is that, be it today or tomorrow, these are costs that had to be incurred if we were serious about making Sri Lanka tourism- and business-friendly. Now the challenge is how these assets can be best used so that Sri Lanka can double its GDP from the current 42 billion dollars to, say, 80 billion.

Then we can demonstrate to the world that Sri Lanka used a novel home-grown developmental model that has made the economy become a 10 per cent GDP growth economy. For this to happen, we must implement the Ease of Doing Business recommendations so that we can in effect become No. 65 from the current standing of 105. This is the challenge that once achieved can set Sri Lanka in a totally new league.

MDG achievement

The poverty levels registering 7.6 per cent and unemployment at 5.3 per cent make Sri Lanka right on track on many of the MDG’s dashboard. Whilst there is many a debate, the reality is that in many sectors Sri Lanka is grappling with the need for man power. Be it tea, construction, apparel, rubber or cinnamon or even the BPO sector, the constant complaint is more man power to meet the demand patterns. This clearly explains the 5.3 percent unemployment mark.

Whilst we have demonstrated to the world that Sri Lanka can fight a war and also focus on the overall quality of life indicators, the bigger challenge is how we are going to meet the needs of the bubbling tourism industry when a million tourists come to Sri Lanka. I am sure more people will opt for a career in a star-studded hotel than in a garment factory or tea plantation. This is the challenge.

Lesson in politics

Whilst South Asia can boast of eight per cent plus GDP growth opportunity to global brands, the fact of the matter is that the most unstable political economy exists in South Asia. India’s Parliament is in turmoil on the 2G spectrum scandal. The Maldivian Parliament is at logger heads. Pakistan is challenged with terrorist issues and flood havoc, Bangladesh is up in arms with the industrial riots that occur weekly whilst Nepal has the constant issue of the Maoists.

In this backdrop Sri Lanka shines with one of the most stable governments at play and the revolutionary Budget being passed in Parliament. Now the challenge is to make the necessary reforms so that the public sector can be made efficient. This will require some iron-fisted changes that I guess only a stable government in power like in Sri Lanka that can administer. The challenge is how this can be made to unfold.

Pvt. Ltd. profits

Whilst any number can be challenged, the only numbers that cannot be challenged are the private sector profit numbers. After all they are audited numbers. The latest is that the private sector listed company profits have registered 268% growth. I guess now the challenge is how the reduced interest rates can be ploughed back into R&D so that a company can be sharper in the market place.

Another challenge is how the private sector engages with the public sector so that the Ease of Doing Business indicators can be corrected to facilitate FDI inflows into the country.

Budget 2011

Whilst many can be critical that the Budget caters to a minority cross-section of Sri Lanka’s population, the cutting edge very unpopular Budget that was presented sure shook the world, given that no one expected it. The next step is how the overall strategic plans can be cascaded to clear priorities on a monthly basis with clear expenditure planning.

I would go one step ahead whereby we need to move into result-based activation, which is the next level of delivery that Sri Lanka must move into. The good news is that one ministry has already activated this with the support of ADB whilst another key ministry that I work with closely has developed a calendarised docket that will become the working document for 2011.

UK fiasco

Whilst this may not sound very positive, the fact is that it sure made Sri Lanka reach headline news globally when the Diaspora staged protest demonstrations on the visit of the Head of State. I will interpret this positively as it communicated to Sri Lanka that we need to have a strategy that will engage the Diaspora globally. Maybe the launch of the Peace Collection brand that consists of produce from the north east targeting the Diaspora can be an option. The good news is that this will happen shortly.

Next key challenge

From the above 10 highlights which are strictly from my own experience, we can see that Sri Lanka sure captured world attention in 2010. The supply chain improvement-driven Budget adds to the strong economic agenda that Sri Lanka is working towards. But a key point to note is that the domestic market of 20 million people cannot absorb the supply chain development that Sri Lanka has in store.

After all, be it tea, rubber, apparel or cinnamon, almost 90 per cent of consumption takes place by a global consumer. This means that we have to engage with the world and have more friends, especially in the US and EU.

We have to have strong marketing and promotional support to drive Sri Lankan trade into these overseas markets. May be locals in the key overseas markets must be employed as middlemen who can drive the Sri Lankan portfolio in each respective country. We will have to invest money on nation branding with specific initiatives to build linkages with the Diaspora, which to be honest is a tough challenge from my experience.

Conclusion

Hence we see that much needs to be done if we are to really make a mark globally. But the good news is that we have already captured world attention with some cutting edge decisions, which have made Sri Lanka stand out already as a ‘Wonder of Asia’. Now we have to sustain it and be recognised for this proposition, which is the challenge. Have a great new year!

(The author is a corporate personality and serves the public sector on many boards of management on an honorary capacity in the economic agenda of the country. The thoughts expressed are based on his doctoral studies the author is engaged in and not the views of the offices he holds either in the State, private or international public sector.)