Tennis lessons for the Sri Lankan economy

Tuesday, 10 June 2014 00:16 -     - {{hitsCtrl.values.hits}}

With the French trade organisation Coface predicting Sri Lanka to be the second best performing economic growth country in Asia next to China, I was wondering ‘what next for Sri Lanka?’ In this backdrop, I was watching the French Open Championship 2014, better known as the Roland Garros, staged in Paris. Let me pick up some key ideas that went through my mind. 1) Pick-up 1: War crimes issue Cry baby Andy Murray – a term he earned after his outburst at the last Wimbledon – was up against the colourful and dramatic Monfils who hailed from France. Monfils had very strong crowd support. At one time the referee had to caution the crowd for being too loud. Murray kept his nerve and went on to win the match and meet Nadal at the semi final. Lesson for Sri Lanka: Even though the top 15 countries in the world are supporting a war crimes agenda on Sri Lanka, we need to align ourselves with the super power countries, namely India, so that we can ensure region support to the country. At the end of the day it would very be difficult for a global agenda to be implemented without the support of the regional superpower like India. Hence we have no option but to see how far we can implement the 13th Amendment in Sri Lanka. In fact we have no option now. 2) Pick-up 2: Consolidation of financial industry At the women’s single Quarterfinal match Petrova ranked 28 met Errani ranked 10. The reality was that with the fighting spirit of Petrova she beat Errani and made it to the semi-finals of the French Open 2014. Lesson for Sri Lanka: Whilst there can be many challenges in relation to the country’s financial consolidation initiative, the fact of the matter is that it has to be done, in the backdrop of speculation over the health of certain financial institutions. This is natural for a country which has had unprecedented growth in the last four years post-war. The reality is that some companies have done exceptionally well whilst others have not been really competitive. Hence, one way to stabilise the system is by way of consolidation and mergers, which is the route Sri Lanka has taken. Now we must make it work with a private-public partnership. This is the best for the country. 3) Pick-up 3: Correct the Indian FTA The darling at Roland Garros this year was Romanian Simona Halep. She made it to the women’s final to meet Sharapova, beating some of the biggest names of women’s tennis. Before the finals when she was asked how she felt, her response was: “I have nothing to lose and I do my best.” Lesson for Sri Lanka: Given that Sri Lanka’s exports are recording 20% plus growth, we have nothing to lose by exerting pressure on the FTA with India, which is not giving the desired results. As at February, it was at a negative 21% growth over last year but in March it rebounded to achieve a positive value, despite not being very encouraging. It’s time that Sri Lanka pushed for the non tariff barriers that are in play in India, namely at State level, to be lifted. This is one way that Sri Lanka can use the Modi win towards the growth of the country. 4) Pick-up 4: Oversupply of hotel rooms A visibly emotional Djokovic who lost the red ribbon event at the French Open men’s singles final at his interview commented: “I congratulate Nadal, but will be back next year and if I have to in another year and again and again to one day win this tournament.” Lesson for Sri Lanka: To me the pickup for Sri Lanka is our tourism business. I have been closely associated with this industry at the policy level and in running the business in the last couple of years. The fact of the matter is that during the most troubling times we have kept this industry alive. Today the industry has won over a million tourists coming into Sri Lanka. The industry is poised to be a $ 2 billion business in 2014. But there is a challenge ahead. Given the expansion of the business, we currently have around 23,000 rooms and in the years to come this number will increase by around 6,000 rooms. Hence the industry is concerned if there is an oversupply of rooms based on the demand that the country can attract. This in turn can affect the pricing, which is already challenged. Most conglomerates are faced with a poor ROI in their hotel sector, which is mainly due to the high cost-base. Hence unless the higher-end tourists are attracted, Sri Lanka will be up against a serious issue that must be addressed today. It has to be done on a private-public partnership approach and not in isolation. 5) Pick-up 5: Casino issue Rafael Nadal wins his record ninth Grand Slam title. He was one time at 3-6 down to Djokovic, but went on to win 7-5, 6-2, 6-4. Nadal proved that he is an undisputed clay court champion. Lesson for Sri Lanka: Sri Lanka is having a good run on GDP growth since 2006, on average over 6% in the last couple of years and specifically in the last three to four years of growth of almost 7% plus. Now the challenge is to identify where the next phase of growth will be from. Maybe the decision to drive growth by attracting the casino business may turn out right. At one time Macau was generating one billion dollars from the casino industry but today the industry is a 30 billion-dollar plus business. The challenge is how we manage the cultural aspect of this growth. 6) Pick-up 6: Ceylon Tea Maria Sharapova coming back from a shoulder injury to win her 2nd French Open title commented at the interview: “I thank all of those who were with me in my troubled times one year back.” Lesson for Sri Lanka: With five billion plus rupees in the Tea Board, it’s time that the policymakers sorted out the issues related to the global promotion and launched the first-ever Ceylon Tea campaign worldwide. A point to note is that these monies belong to the private sector. The private sector developed a global marketing plan and followed with a marketing communication strategy. It has to be implemented now with the able staff of the Tea Board. Sri Lanka cannot wait any more given the entrenched competition that is at play globally. (The writer is a sports enthusiast who sits on many private and public sector boards as a Director. He has a double degree in marketing and an MBA and is currently reading for a doctorate in business. The thoughts expressed are his personal views and not the views of the organisations he is attached to in Sri Lanka or internationally.)

Recent columns