Overdue for clarity

Monday, 11 May 2020 00:25 -     - {{hitsCtrl.values.hits}}

It is simply a fantasy to think that Colombo’s GDP engine can be restarted by a series of people going to their offices, and sitting inside there, while consumers are locked up, and local and national demand continues to be suppressed


How not to reopen

There is considerable confusion as to what the upcoming “relaxation” measures that are to allow a “resumption of work and civilian life” in the still “curfewed” (24/7, as opposed to the rest of the island that seems to be “intermittently curfewed”) parts of Sri Lanka, actually mean. 

As I have noted before, this curious extension of curfew, now longer in terms of shutting businesses in Colombo than Wuhan itself (the global epicentre of the pandemic with thousands of deaths), has already detached itself from data or even medical logic, given that Colombo has had no surge, and all the “spikes” have been from isolated clusters (Navy and armed services and their contacts, and a super-spreader family returning from India) as best we know from what we have been told.

We look forward to this much heralded “Gazette” which is to make clear what now numerous “clarifications” have only served to make less clear and render more confounding. It is hard to avoid the conclusion that people are using words and phrases like “while curfew is still in place” and “resumption of civilian life” (two things that blatantly contradict each other) more as approximations, assuming they are not smokescreens, rather than as a description.

Whatever the Gazette says, hopefully it will at the very least go to the heart of the illogic of the current announcement.

As one leading hotel told me: “Yes, our key staff can report to work on Monday. But no customers can come by as they are only to go out for buying food and medicine.” Therefore, no business that counts on customer traffic can reopen, which means the bulk of the city is not open. 

It is simply a fantasy to think that Colombo’s GDP engine can be restarted by a series of people going to their offices, and sitting inside there, while consumers are locked up, and local and national demand continues to be suppressed.

And if the public sector is opening, how and under what situation, could members of the public avail of those, in some cases, long postponed services or facilities? And if all of that requires a curfew pass for example, we are utterly wasting productive time and energy, by having people expend those energies getting “passes” for everything they may need to do to regularise or normalise their lives (over nine national deaths, not even a blip on the national mortality radar; keep in mind Ho Chi Minh, Hong Kong and Taipei never “locked down” much less curfewed, and all have fewer deaths than we do!). 

“Open” or “Closed” should be a binary choice. Of course, “open” with various Ministry of Health (MoH) guidelines makes eminent sense and can be a helpful transition. But the more we try to “control”, we undermine the very benefit we are hoping for, in terms of finally, finally, releasing our economic energies and letting people earn desperately needed income, and contribute some of it to a national exchequer in dire need of it.

New economic models won’t work without this

It is reported that the President in a meeting with his Economic Revival and Poverty Eradication Task Force has asked them to “formulate a new economic model” to achieve this objective. There was special emphasis on revitalising apparel and tourism, more on the latter below. And there was a push to seek to attract new investment rather than just loans.

All this is admirable, and we can all cheer the intent behind it. However, this cannot succeed, no matter the will, no matter the intent, no matter the level of commitment, if we don’t address the following. 

We must state a clear, compelling, reliable strategy for managing going forward, COVID-19 or no COVID-19. We have argued throughout for publishing clear evidence-based “thresholds” which based on number of cases – whether isolated or sustained, whether unidentified or in traceable clusters, whether sporadic and local, or multiplying and indicating community transmission (which we have happily not gotten to, on the evidence as well as the judgment of medical professionals here) – would trigger different degrees of mitigation, suppression and focused containment. 

This could apply to a part of a city, a part of a district, or exceptionally, a part of the island, or the country as a whole, if justified not by hysteria but actual evidentiary trend-lines. The most draconian, if we wish to take a leaf from New Zealand’s playbook and perhaps Hong Kong’s, would allow strategic sectors to operate, protect supply chain, and allow people to move around only for food, medicine, and local exercise (with physical distancing). This, rather than outright curfew, then becomes the worst possible scenario.

And then, based on actual emerging facts, we have increasing amounts of economic activity at all the other evidentiary tiers, each with clear indications of triggers, what operates, what doesn’t, so everyone knows, is clear, and can plan. And this would also allow the finance sector to know what may be needed in each situation. 

While we hope we have seen the worst of COVID-19 now, as we open borders, or if there is a second wave in the Fall, if this is not clarified, no economic model can possibly succeed.

Let’s look at various scenarios. My business has been closed. Do I reopen next week, or the week after? There is a cost to reopening. If I am going bankrupt, why add to my debt? Perhaps I could fight to stay open. 

But if there are 30 COVID-19 cases somewhere in Colombo, and we in panic shut down the whole city again, rather than realising “30” is considered “victory” all over the world in increasingly functioning economies, why bother? 

Someone would have to assure me that focused quarantining and containment is what will apply, as rightly advocated now by many of the leading medical professionals here as well as the International Chamber of Commerce (ICC), so I can consider the risks and benefits of reviving my business.

Suppose I am an investor, wanting to invest in Sri Lanka as per the above. Will I bring my money to this jurisdiction if “curfew” rather than temporary and differing degrees of targeted “lockdown” is still on the table? 

Particularly, as this could be ordered with no explanation again, with a few hours’ notice, and then extended indefinitely, irrespective of the economic tsunami caused, even if there are, by global standards, a very modest level of infections and deaths? 

Why wouldn’t I invest elsewhere, where the playing field is better known, and I know and understand the range of options? Will I either not consider investing elsewhere, or invest more tentatively here than I otherwise might, factoring in the unknown risk? This is not theoretical. This is based on several conversations with viable potential investors, including key overseas businesses that were “planning” to establish a base here.

Coming even to the apparel sector, if we indefinitely extend the operating guidelines, outside of evidentiary thresholds, and call that “the new normal”, until one day a vaccine materialises, we make ourselves less competitive, and as people restructure their demand and contracts and relationships, we could well lose business to our neighbours, unless we create some other way to amplify competitiveness despite such costs. At any rate, outside the need for “circuit breakers”, why would we impose these restrictions and costs indefinitely anyway? 

Even beyond costs, if we become the only country, as we virtually were, who keeps “curfew” in its arsenal for an indefinite, extended period of time, people may not wish to place orders here, knowing their own supply chain could be considerably interrupted. 

They may realise there is a “global risk” of some interruption that is shared by all. But the “strategies” have to be targeted, minimally invasive, applied for an identified period of time, as even the UN advises on human rights grounds. As of now, I don’t see how we pass that test?

This applies even more to tourism, which has some other unique challenges, which I shall highlight below. However, who will book a holiday if they know their trip to Yala could be compromised or cancelled because there were 20 cases in some part of Jaffna? 

Or who will be comfortable in fearing that while doing business and vacationing in Colombo, a cluster in one neighbourhood could lead to them being suddenly under “curfew” and absent any stated strategy, they are unlikely to have any reliable idea of what to do other than repatriate? They are then unlikely to rush back.

So, we must, must state a strategy, and if we will just accept the need to establish and abide by evidentiary circuit breakers, we can then focus on attracting business, investors, tourists and more.

Also, imports are about 40% of our economy in terms of Government revenue. So, a clearer statement of economic strategy there will be needed at some point too if we genuinely wish to attract investors, and we even will need clarity to allow pre-existing commitments to be honoured rather than becoming an economic pariah. “Cutting deals” on a case by case basis, will not create a 21st century economy.

If we wish to revive tourism

If we keep having “overnight curfews” no hotels can viably open, as they depend on their bars and restaurants for revenue, particularly when they don’t have many in-house residents, as they initially won’t. And if we offer distancing and hygiene guidelines, what is the argument for keeping them from responding to long pent-up demand from locals, expats, embassies and get some needed income flowing?

Again, though, if every time there are so many cases, we rush to shut hotel bars and restaurants, not only will they not survive, but fewer and fewer people will be attracted to visiting us here. Again, hence, those “evidence-based thresholds” and “circuit breakers” are so needed, as why would someone book without any guidelines or assurance? And via social networking, such confusion or frustration going “viral” on this front, will be a potent additional consideration.

And as a step to reviving tourism, we must get people to hold their deferred conferences (using larger rooms than they need to allow for distancing initially for sure, but it cannot be so forever, hence again the need for clarity), and to visit the many attractions on this beautiful island. 

But tell hoteliers their bars are closed, and many of them won’t open, and people just will not visit and linger, because their profits to a large extent hinge on that. The “extended stay” travel idea of the President, also excellent, over the colder months, also requires a clear statement of parameters, as no one is going to make extended plans without knowing the basis for decisions we might take. 

Let me first get one bit of “medical nannying” out of the way. The Excise Department has sanely (I don’t say “rightly” or “wrongly” as I’m not moralising either) requested a reconsideration of the shutting of liquor stores given the contribution to the exchequer (Rs. 15 billion a month). This drew “spirited” (pun intended) outrage from the medical fraternity. We need to stop having this discussion. We are either opening economically or not.

Linked but distinct, the issue of “bars” is not alcohol, but premises, as the Japanese have said re nightclubs or karaoke. So, there is a vast difference between a spacious hotel lounge/bar where people have meals, come for coffee, as well as for drinks, and a stuffy, teeming place, where social distancing is not possible, and people are imbibing. So, these should be treated differently, and opened at different “phases” arguably. 

WHO suggests abstaining, but says if you drink, to drink prudently. I am not sure this is new medical science, nor is alcohol a peculiar immunological menace relative to COVID-19 versus other viruses or pathogens. 

It is a legal product, and while a medical warning is fine, policymakers, not doctors, need to make that call. We cannot be aiming to revive tourism if medical warnings, even where well taken as a general guardrail, are going to determine leisure policy. That would be a death knell to tourism, period. This is not a matter of opinion; it is factually demonstrable. And beyond that, to many cultures, wine and other beverages are an intrinsic part of even family life. 

Leaders can do many things to avail of this. India has put a special “COVID tax” on the purchase of alcohol, as a way of getting still more money into the exchequer. Unless we take a legislative decision that we are suddenly going to outlaw alcohol (in which case, forget about any wide-scale tourism), we must stop “moralising” when livelihoods are at stake, and a legal product which can bring desperately needed revenue is an option. 

It is not risk-free, nor are polluting vehicles, nor is sugar by global medical consensus, nor is mass profusion of “fast food” and hypertension, heart disease, diabetes are explicit risk factors for COVID-19! 

So, perhaps we can shelve the selective hypocrisy, and realise life is about informed choice. Only four countries as best we know, where alcohol was not already illegal, for a limited period of time (roughly three weeks), banned alcohol sales over the COVID-19 period. That hardly seems a global medical consensus anyway. 

And other than over that period, they and all other countries have continued to avail of that contribution to the economy, rather than letting the “black market” prosper at the expense of the State. Influencing intelligent prudence and moderate drinking through communication, limiting how much people buy, imposing taxes, are all “brakes” that can be intermittently applied needless to say.

Coming back to tourism more explicitly, if you look at the level of tourism in Pakistan, even when law and order issues weren’t there, and ask why no major hotel chains were ever established in the mind-bogglingly beautiful northern areas, it is simply this issue. Hotels make their profits overwhelmingly on the basis of their bars and alcohol, whether we like that fact or not. 

And tourists, other than backpackers or those on spiritual quests we can all commend, simply will not go otherwise by an overwhelming percentage. That is why Male, the capital operates on one basis of no alcohol, and the money-making islands very differently. 

In fact, virtually all of the tourism-attracting Muslim countries allow liquor, at hotels and resorts and licensed clubs for that reason, compare Dubai to Kuwait on that basis and the respective trajectory of tourism there.

So, rushing to shut bars in panic, even those where there is plenty of space, even where there are residents and not just people “popping in” (access can be temporarily limited of course), is economically self-defeating and undermines this policy, and will not let the tourism sector develop any real momentum in terms of reopening vibrantly and showcasing their primary attractiveness, the numerous gifts of location, experiences, warm hospitality, wonderful cuisine and access to remarkable cultural sites.

Colombo and East Asia

Non-curfewed, non-locked down, hotels and bars open, Taiwan, had their economy rise 1.54% in the first quarter (they have six COVID-19 deaths among 21 million people, Vietnam has zero). Of course, Taiwan is not thrilled as it is the lowest rise in 15 quarters, but by global standards, it is remarkable. 

Their “mild outbreak” was leveraged to allow local manufacturers to maintain normal operations and win order transfers from foreign peers that were shutdown. So, they had a 3.67% increase in exports and roughly a 3.13% gain in imports.

The narrative about Colombo, prior to all this, was that this was the city in South Asia that people wanted to live in. Karachi was unsafe, teeming, and not cosmopolitan enough. Dhaka you had to live in a “bubble” to enjoy its charms as an expat, and Bengalis arrived in Colombo as if deplaning in an urban wonderland (by their own confession!). 

Mumbai is intense and frequently overwhelming. Expatriates who knew the region, found Colombo’s multiculturalism, the stimulus, the proximity to water, the relative safety, the boutique hotels and design-laced restaurants, the warmth and friendliness, to be highly attractive. It is leverage we can’t afford to lose.

One “new economic model” would be to go up the value ladder as Singapore did all those decades ago, and become a service, IT, and human capital hub for the region. That will require real upgrades, focused investment, and not trying to have it all. 

Lee Kuan Yew raised the “minimum wage” in Singapore so vertiginously, that “value add” was the only way to compete, all the lower level manufacturing would be captured by their neighbours. 

I am not advocating that precisely, but it is a model at least in parts to consider step-laddering to for a small island nation. And there are precedents. Hong Kong was an icon of this as a bridge to China, Singapore did this for East Asia, for a time Dubai succeeded in doing this for the Middle East. 

The price you pay for any approximation of this approach though has to be predictability, clarity of rules and regulations, continuity, commitment to highly educated human capital, financial transparency to a large extent, strengthening the rule of law, and improving accountability in the public sector. And you equally do it by being a fun, flourishing, stimulating, enticing place for people to want to live, raise families, create and contribute. 

For 21 million people, 160 or so cases of COVID-19 infection (not death!) in their capital city is not “high risk”. Infection rate against Colombo’s population of roughly 750,000 as of this writing, is 0.02%! 

And as I have documented so many times, dense population cities like Karachi and Mumbai have had, against that population, a very modest death rate. Ho Chi Minh City has no COVID-19 deaths, Hong Kong has six, and Tokyo with 12 million people has 155. Could we please stop panicking and “maligning” Colombo?

It is the economic heartbeat of the nation, with about 40% of the GDP. It is one of Sri Lanka’s competitive levers. We must allow this city to begin to express itself again, we have to coax people out of hiding and tell them the truth: virtually everyone infected won’t even know they are infected, an overwhelming majority will recover and be largely immune as best we know, and let’s take particular care of the most vulnerable, and keep testing proactively and apply prudent measures for some time.

The fetish to control and be controlled

All spiritual practices teach us that, among other things, we must “surrender” the illusion of “control.” 

Those things we can control, and which can undermine life, certainly we should control to the extent that doing so doesn’t distort the nature of autonomous life itself. Life without a measure of freedom isn’t life and wouldn’t be “valued” in the same way anyway. 

We cannot “control” COVID-19 away, it has instead “controlled us” and we will be paying the economic price for some time. 

And those of us who yearn for someone to take care of us, should remember we were endowed with wits, and an immune system, and are fortunate to have superb doctors here, and we need to collaborate with our leaders in this rescue operation, not await some mystical, detached from reality, deliverance. 

We can’t just ask front-line heroes to show all the courage and take all the risks, for an illness with such a small fatality rate as a percentage of the population, particularly compared with ways we “naturally” and “normally” die anyway. We have to add our will, our courage, to theirs, so there is an economy that can say “thank you” to them and look after their children and families too.

Maybe it’s time to step out of and away from these constricted shadow lives we’ve been leading, and take courage from Vietnam, and Denmark, even Sweden, the State of Georgia in the US, New Zealand, Japan and Hong Kong, and have faith in data and applicable sensible medical guidelines, not wild projections and voodoo models.

Perhaps with much awaited clarity, our leaders here can give us a reliable framework we can rebuild lives and businesses on. And then maybe together, we can welcome our lives back, however amended, chastened or refocused. Surely, it is high time to live again.

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