Time to raise our standards

Absolutely, commit to talent, to human capital development. Make Lanka the easiest place for a talented person to live, work in, contribute to. Let’s be the easiest place for great businesses to develop and to thrive 

Let me suggest that we have been overtaken by a toxic brew of complacency and machismo fetishism. 

“Good enough” has been “good enough” for too long, even when we saw social and economic cracks and fissures forming here in Lanka. Even when insane policies were undertaken during the COVID period, with lunatic lockdowns galore, recurringly inflicted and withdrawn – everyone teetering on the brink of shutdown – with nary a reliable, data-based explanation. 

The various Chambers were mum, cowering away in some pandemic bunker, when it became increasingly clear these were hyped up numbers from illicit and unreliable “tests” and all-cause mortality hadn’t surged.

Only when the economic and social damage stockpiled to proportions that the most ardent reality-denier could no longer avert their gaze from, did the initial, still tenuous, lukewarm, bureaucratically deferential statements from various quarters get cautiously released.

And now when there has been utter meltdown, we get weekly screeds from “experts” from all quadrants, business titans, lawyers, sector spokespeople and more, rightly if belatedly indignant, screaming bloody murder, long after the collateral damage has been emphatic and irrefutable. 

On the cusp of the Gotabaya Presidency, chagrined by the seeming inability of the previous government to execute, with their communication meltdown between the “collaborating” parties, the overall economic ineptitude seemed galling. 

And then the charismatic nationalist swagger of the proposed new government, stimulated the latent desire to be “led” by a “strong man”. An era of prosperity was surely around the corner.

Alas, what we got were slogans and empty rhetoric, terrifyingly incompetent people, a chronic inability to execute, and tax cuts mystifyingly imposed when we already had dwindling foreign exchange reserves with escalating debt commitments looming. There was of course the handy Rupee printing press to prime, which COVID handling was to stimulate the infatuation for, even further.

“Meeting crisis early” is a key demonstration of mental health. And therefore, we instead have national neurosis, whereby you either deny the problem, or claim someone else is responsible, and you are not accountable – but simply a victim of life’s vicissitudes. 

Let us take a tour

February 1948, Lankan independence, a country handed over from colonial rule with true prosperity and no debts. The first development project undertaken back then, the Gal Oya Project, was fully funded with the surpluses that were handed over. 

How mindsets corrode! 74 years later, down many confused socio-economic and ethnic alleys and byways, this once blessed land, has been ravaged by those entrusted to serve it. 

Complacency though has infused so much of the underperformance. Without wishing to generalise too profusely, too much fascination has gone to “volume” and not enough to “value.” 

Let’s note that borrowing to finance imports picked up from 1978, it’s not a new entrant to the sweepstakes. It has since escalated.

Compared to other countries, the export sector has not kept pace with national appetites much less aspirations, though local industry could well be stimulated in line with this and should be.

Industries like apparel made exceptional showings, but stayed in a “volume” paradigm, not a “value added” or design paradigm, and doing so, eventually other countries like Bangladesh and Vietnam supplant you on a cost and even execution basis. 

The COVID protocols in Lanka were so onerous that we could not be nearly as competitive as our neighbours. The unpredictable and extensive “lockdowns”, and the economic collateral costs, more recently with power issues and more, have encouraged garment leaders to migrate their production to other jurisdictions, and they are unlikely to return. 

In those other locations, they don’t have currency restrictions, the labour market is more fluid, the operating theatre more predictable, and the costs even more competitive. 

In tea as well, overall, the auction paradigm prevailed. And tea as a product where Sri Lanka could have commanded premium space, could have offered design and packaging, is disdained because of the scrupulous rigor demanded in terms of the international market in terms of quality assessment along the entire supply chain.

But that is surely an opportunity when you have some of the best tea, objectively, in the world. And if we went that route, as coffee has done, we could help spawn a new generation of aficionados and connoisseurs, stoke a “tea culture” and reap rewards from being a pilgrimage site for this treasure.

Cinnamon finally has been identified for the distinct quality and sourcing we have here, a controlled “appellation” at last. But we come late to this party, having let others control the high ground with ersatz offerings. 

This was the mentality Lee Kuan Yew displaced by almost trebling the minimum wage (we are overdue to meaningfully provide some increase here now in these desperate times). When told, “We can’t competitively manufacture then,” The Senior Minister simply said, “Exactly.” And so Singapore had to climb the value ladder to being a service, banking, IT and human capital hub for the region. Nothing but will and vision stop Lanka from being such a prosperous, leading-edge hub for South Asia.

Shortage of will

But shortages of “will” and “vision” manifest themselves in very material ways. I was sitting in the lounge of our building with a newly arrived expatriate, who was taking over the just established retail division of a major overseas company. Up to this point this company only had production facilities here and outsourced retailing. 

They realised the opportunity of retailing, offering the atmosphere and vitality associated with their lifestyle brand. The head of operations here, hired a British specialist in the UK in May 2021, and he decided to move here with his family. Again, Lanka is so beguiling, when he hesitated, everyone he knew told him not to miss the experience. 

I was speaking to him late September 2021, and despite having been hired in May, by a major global company, and seeking to live here with his wife and children, he had only just landed. His visa was “stuck” for over four months! 

Exasperated, the head of the company happened to be speaking to the relevant Minister. 

The Minister said, “Why don’t you open your own retail here?” She replied, “I was about to, but I’m considering shutting everything down in frustration instead!” When she shared the inscrutable, protracted visa malaise, the very next day the visa authorisation was issued, and this expatriate was “liberated” to finally move here with his family. 

Multiply this by how many cases ripple through the economy. It becomes clear why more of the SAARC country companies don’t establish regional bases here, and why so many multinationals don’t, though many would prefer to live in Colombo, and avail of its charm, cosmopolitanism, the access to Lanka’s beauty and cultural bounty, the multi-ethnic diversity, and so much more. 

But in India, they could have an entire company set up in a few weeks, leaving aside how quickly a license can be issued in a UAE Free Zone, or how quickly you can register a company online in Singapore. 

Shouldn’t we be leading with this, with ease of set up, with a permeable membrane for talent? Instead, the uncertainty, the costs, the delays, lead people to find more predictable places to establish their operations. Multiply these decisions by the amount of investment foregone, or not realised, families that don’t locate here, whose foreign currency could help endow the expansion of Colombo and environs. When it happens, it becomes a virtuous cycle, as readily witnessed in other parts of the Asian neighbourhood.

A matter of priorities

To some extent, Lankan investment priorities reflect our lapsed economic state. This was exacerbated by the multiple madnesses of lowering taxes, imposing unsustainable and recurring “curfews” rather than targeted “lockdowns” (which the government was finally, ultimately prevailed upon to consider…zonal, targeted, focused, brief and sane “restriction” not total economic eclipse), ever more frenzied currency printing, public sector salary increases, organic fertiliser Armageddon, holding the currency unmanageably at 201 or so since April 2019 and then detonating it in one day. The litany continues, delaying IMF engagement until we were in the most extreme straits and with the least bargaining power…

But even before we consider that, recall around 18% of Lankan youth are malnourished, and the military budget in relative terms is second only to Israel(!) We can see a detachment from social, economic and humanitarian realities that cannot simply be blamed on the current Government…though they have zealously rendered it more acute.

And yet at the granular level, the national character bespeaks remarkable generosity. Both stranded Ukrainians and Russians are being looked after by Lankan hosts, fed, enveloped in the surreal warmth of the local hospitality here. We saw this in the aftermath of the Tsunami, locals having lost everything, nevertheless extending themselves for those stranded and devastated from abroad, temporarily marooned here. Such character and care deserve at least competent leadership.

We need global standards

All the “ways out” of the current quagmire though need more than money, they even need more than expertise, they need genuine discernment and a set of standards.

One clear avenue to pursue is tourism. Let’s recall that even pre-COVID in the “glory” days (and tourism numbers had essentially rebounded by January 2020) annual numbers were around 2 million. If you contrasted that with Thailand at 39 million and Malaysia at 26 million, you saw there were no grounds for complacency and magnificent opportunity. Particularly today as those countries are still a relative nuisance to enter and navigate through post COVID.

Our tourism though is beset by woeful standards compared to these comparison points. Roads are improved but many are still tortuous. Our stunning public sites require ridiculous paperwork to get in, and sometimes simple public facilities, like clean lavatories are unavailable. 

Hotel service standards are not up to the upper tier traveller’s requirement, even those coming to “rough it.” Roughing it actually requires elaborate infrastructure, and “standards” have to be excellent, even for more ecologically friendly or spartan arrangements. 

Our very top hotels may compete, but we need to seriously enhance the variety of cuisine, quality of wines and liquors, amenities, concierge services, customised tours. 

And if you say this, people will say, “But we have all this.” I would invite a brief field trip around the region, and we will see if we do, except at the very few, very best here, we only have a smattering of what’s expected. 

Here it is often uneven, not sustained, without the complete aesthetic and service experience required to not only grow numbers of tourists but increase “spend per tourist” (one million backpackers wishing to drink local beer is certainly, genuinely heartening, but not the “breakthrough” that will deliver us).

I know it can seem tonally deaf and morally preposterous to be speaking of thread count in sheets and quality of hygiene in rooms, or effectiveness of air conditioning, when people currently don’t have essential medicines, or can’t buy rice, and are persecuted by multi hour blackouts. But we are discussing these things, because paradoxically, they are an avenue to their deliverance. 

This would provide more employment, woo back Sri Lankans who have taken even second tier hospitality jobs in the region just to get solid income, and create opportunities for Sri Lanka to be a more attractive conference hub, corporate meetings hub, as well as a tourist destination finally prospering from the range of its cultural gifts and able to avail of the seductiveness of its people’s warmth as well as its natural beauty.

The point though is that “tourism” has been crippled by lack of vision, lack of standards, blinkered ministerial megalomania, ineptitude in terms of marketing and communication in overseas markets, lack of partnering with premium holiday providers, and not galvanising the network of Embassies and Consulates for this national “moonshot”. 

There are other opportunities in this value space, again they need a reality check and standards, and I once more apologise for taking us into the upper stratosphere of spending. But if that foreign exchange can be incoming, not outgoing, why not?

An EU interlocutor suggested to me that Lanka should aim to use its developing marina to entice billionaire yacht owners to berth here, as their primary hub, or at least en route say between Asia and Europe.

The “party line” in government circles is the usual litany of confusion, self-deception, and obliviousness to global standards. The reply is: “We have a professional manager (true), we have awarded a contract to a yacht/marina specialist (likely true), they will build a clubhouse.” 

When you ask about facilities and the ability to buy things to enhance that lifestyle, answers are “We already restock cruise ships, and they can have access to the new Duty Free.”

These are not encouraging responses. When someone berths in Monte Carlo, they advertise “front row” seats to the Grand Prix. One of the most successful such locations is Barcelona, where the Concierge lets you the know the art exhibits passing through town, arranges top music venues, reservations at rare multi-Michelin starred restaurants, organises luxe adventures in neighbouring Europe and more. And of course, everything is available to restock with.

Yes, we can offer lower rates and taxes, but in that lifestyle, that is important yes, but secondary to quality of experiences that can be tapped. By comparison to the above, or even Singapore or Dubai, what are we going to offer in Hambantota or even Colombo? 

They don’t want to traipse through a generic Duty Free, but rather some offshore equivalent of Harrods in terms of retail experience. We would need to create an “ecosystem” for such travellers, a place with chic restaurants, unmatchable access to food and wine, music, bespoke retail, and they will pay for it. And travellers not on yachts with the means will come to experience it, as will indeed Sri Lanka’s most affluent and discerning. 

And if there’s any justice to the undertaking, some of those profits can go back into the communities, and build schools, and provide micro-finance, and give banks the means to lend to SMEs, and draw service stars from overseas here who can mentor Sri Lankans. 

Beware the vanity projects

So if investment went into such projects, investors could readily see an ROI. These wouldn’t be nearly as extrapolatory. The experts we are bringing on board can only promote what there is, after all. If a hotel were built as part of this, a boutique one, an Aman standard or Shangri-La standard, locally run or overseen by them, that adds to the allure. We could hook up with other world class berthing locations and more. 

Then, many times we are told, “All this is being considered.” Wonderful, then why not communicate it and present it as part of the plan and detail it? The multiple “vanity projects” as some dub them, or large-scale investments were all premised on developmental milestones that have not been realised. 

We have to answer, even with an impressive tax-free zone for example, why people would want those concessions here, rather than in multiple other locations, when there seems to be so much volatility, corruption and uncertainty here. 

Again, Port City could contribute a great deal, but progress, aims, thresholds, payback have to be communicated urgently. Much good work is afoot there, unseen by virtually anyone, because the notion has been, “Get it done, then communicate.” 

But imagine 10 years of the moonshot, if there were zero communication, until Armstrong took that “giant leap for mankind”. I cannot imagine it would have happened, without support for the interim efforts, even reversals, progress, sacrifices, the entire continuum of vision, will and collaboration that ultimately delivered it. 

Our national communication of intentions and progress has been appalling. And we pick fights with everyone with a swagger we cannot underwrite. We have too many gifts and capabilities to need to be so petty and prickly with the UNHRC, with the EU, with donors, with institutions like the IMF. 

And reversals of announcements from “lockdowns” to “no more blackouts” to “no medicine shortage” have rendered any official declarations to be beyond dubious.

Hence institutions with independence, furthering national mandates, need to take the communication high ground, take the public and other stakeholders into their confidence, engage in a national dialogue, create enthusiasm and consensus, and stop cowering behind “protocols.”

Moving on

The idea fielded of a Commission for National Recovery, answerable to Parliament, with subject matter experts as commissioners, continues to appeal. 

We have to prioritise not “freeze” expenditures.

Public sector spending in terms of cost of running government needs a significant shave. Proposals and a clear action plan need to be presented. Any pending military or defence expenditure should be deferred.

No more new projects. Any projects that are “dead” need an autopsy and an assessment, including of lessons learned and some standards for authorising any such projects in the future. Any that are “live” but “pending” need to reveal their milestones, their standing, and if they are to be “frozen” for some time (prioritising), then that should be clearly explained, as well as the rationale for reignition.

Debt restructuring must be the commitment of any government.

Promoting and sustaining tourism or leveraging of national assets already in place must be the commitment of any government, interim or otherwise. Let this area increasingly migrate to private sector accountability.

We have to relook at taxation and VAT. Proposals though, carefully thought through and communicated, not knee-jerk, overnight spasms posing as “policy.”

A merit-based system for Ministerial roles, with some educational scaffolding (as Singapore had done) should be established. A “scorecard” for each such ministry for public service to be scrupulously monitored. 

Strategies for increasing export income and short-term bridge financing, consider privatising loss-making state-owned enterprise (as India did with Indian Airlines).

Elementally, repeal the 20th Amendment, dethrone the heightened Executive hubris of the Presidency, while leaving it a key role in managing Parliamentary leadership. Look at value-adding amendments to the Constitution that allow the Cabinet to reflect the tapestry that makes up Sri Lanka. Absolutely, commit to talent, to human capital development. Make Lanka the easiest place for a talented person to live, work in, contribute to. Let’s be the easiest place for great businesses to develop and to thrive. 

These are paradigm evolutions; they make the IMF “medicine” easier to take. Otherwise, instead of deliverance, we will be flagellating ourselves unconstructively. Time to break free.