French Open lessons for Sri Lankan economy

Last week I was in Karachi, Pakistan, tasked with the responsibility of addressing the Karachi business community on the positive dividends of peace in Sri Lanka and the pickups for Pakistan.

It was a very interesting challenge as it involved understanding the obstacles that Pakistan was up against in developing the economy as we get exposed only the local issues. From another perspective, I got a view of the new challenges faced by a country which is landlocked by China, Afghanistan, India and Iran.

 First take

The first take from the Karachi experience was the armed guards that I was given when wanting to go out of hotel in which I was staying. The guards were fully armed with a revolver.

Apparently, it was common to any foreigner and businessman living in Karachi given the poverty issue that the country was facing and secondly the recent infiltration of terror groups and political rivalry that had taken a turn for the worse in the recent past in the financial capital of Pakistan.

Pakistan vs. Sri Lanka

Apart from the security challenge that I was surprised to encounter, which to be honest I had not experienced even in Jaffna at the height of the ground offensive in 2008, I also observed how far ahead the development agenda had taken Sri Lanka as against the rest of South Asian countries.

Whilst Pakistan had got entry into the WTO, it was just negotiating with the EU on a possible trade agreement by 2014, whilst Sri Lanka was way ahead by not only progressing on the EU and US GSP arrangement but also shaping the apparel industry to become the ‘First Ethically Manufactured Apparel Sourcing Destination’.

On the tea front, the recent budget in Pakistan had given a duty reduction for imported tea whilst Ceylon Tea has moved ahead to a joint private-public partnership to launch a 10 million dollar global Ceylon Tea single origin advertising campaign whilst also taking the high ground globally to be the first globally certified ‘Ozone Friendly Tea’. It just tells us the sophistication of the Sri Lankan economy, to which the benefits will accrue in the years to come.

Another key point that amazed me was how Sri Lanka has developed the power sector with a combination of hydro and renewable so that we can meet the 100 billion dollar economy that Sri Lanka will become in the next three to five years whilst Pakistan is challenged with a severe power crisis where in the 2012 alone the probable impact is a loss of 1.2 billion only from textiles.

I also observed that Pakistan was just negotiating for a deeper trade agreement with India where the non tariff barriers were just getting addressed whilst targeting to wipe away the 1,200 negative list items only by 2013, whilst Sri Lanka has forged ahead to make trade account for almost three billion dollars between the two countries, which once again gives us an idea of the strong linkage that exists between the private and public sector of Sri Lanka.

 

French Open

Given the security situation in Karachi, I was confined to the hotel and I used the opportunity to closely watch the French Open Tennis Tournament that was in progress. It is better known as Roman Garros, the 2012 Championships was memorable on many fronts, as I penned this piece the Mens Final was suspended due to rain with Nadal two sets up with Djovik fighting back in the third to win the set and now leading the forth.

I guess tomorrow evening we will know if Djovik makes history to be the greatest Championship winner. Let me pick up the key moments and link them to the Sri Lankan economy.

French Open 1: Sharpova comes back after eight years

The queen of tennis today is undoubtedly the six-foot-tall Russian Maria Sharpova. Plagued by injury and bad luck the last she made it in the coveted French Open was way back in 2004 when she came up to the quarter finals and then crashed out.

She tried many times thereafter as she had won all grand slams except the French Open but at every attempt proved otherwise. Maybe she would have earned more money in the last eight years if she opted to pursue a modelling career. But she remained focused on the passion that she had set her eyes on she went on to capture the Women’s Singles crown, beating Senna Errani of Italy and securing a championship that eluded her in her career.

French Open lesson 1: The pick up to Sri Lanka is the Ceylon Tea brand. An industry hit by many issues from different front just like the tennis champ Sharpova, it has continued to be driven by a set of passionate people over time going back to the time when the plantation industry was nationalised in the 1970s.



Then in the 1980s a decision was taken to make Colombo Auction control the demand chain by breaking away from the great London auction system, making the Colombo Tea Auction command the highest values for tea globally. Thereafter in the 1990s when the supply chain was privatised, new thinking was infused to the industry with strong R&D that has made Ceylon Tea to become almost 43% on value addition.

Today, with the Ceylon Tea conforming to global standards on MRL levels has resulted in Ceylon Tea being the first certified ozone friendly tea globally that no other tea producer has received. With the new 10 million dollar promotional campaign that will be unleashed this year with the unique private-public partnership will be the latest, proving that with passion one can become the best in the world. We must find ways to make this industry a five billion industry with such options like the tea hub concept that is hotly debated at the moment.

French Open 2: Djovik ousts the great Federer

One of the greatest players in the tennis circuit is the Swiss born cool temperament Roger Federer. However, Serbian six footer Novak Djovik proved that with focused training one can beat a technically perfect Federer and that’s exactly what he did in straight sets that clearly indicate that we must learn to give an ear to the young kid on the block who is leaner, fitter and may be more aggressive.



French Open lesson 2: Parallel to me is the apparel industry of Sri Lanka. Whilst it is true that it has survived many testing times from the time that the MFA fell apart in 2005 and thereafter GSP to the US and then the probable challenge on GSP+ in the EU, the fact is that this industry continued to innovate. From a modest start in the 1980s as a mere contract manufacturers – some even used to refer to the industry as tailors – with some brilliant strategic thinking by the industry, it has given leadership by making Sri Lanka the fashion apparel of the world for ethically manufactured clothing. Today this noble industry is targeting five billion dollars in export revenue by making Sri Lanka an apparel hub in Asia for R&D, technology and becoming the key to fast fashion. But we must not take the emerging competitors like Bangladesh and from 2014 onwards Pakistan with the possible EU GSP+ activation. Sri Lanka must take the high ground and protect this five billion dollar industry. If not just like the new kid Dojovik we can get beaten in the long term. I strongly recommend that a study be done on how the 20 per cent depreciation of the currency has helped the apparel industry of Sri Lanka.

French Open 3: Andy Murray booed

The crowd booed British player Andy Murray as the Frenchman Richard Gasquet was the favourite of the crowd. But Murray was unmoved by the hostile reception he received at the start of the match but in fact it invigorated him to beat the Frenchman 1-6, 6-4, 6-1, 6-2. Murray after the match said: “It’s almost like playing in a football match – and I like football. I enjoyed myself today. It’s the most fun I’ve had on the court in a while, so I wasn’t shying away from the fact that the crowd wanted me to lose.”

French Open lesson 3: The business community must not be worried about the agitation by the West. We must continue our thrust on promoting exports at each and every relevant exhibition and export promotional opportunity. The alarming issue is that as end of March 2012 Sri Lanka exports are at -2.7% and it’s not a good momentum given that in the EU and US is slowing down on their economic growth. We must understand on which markets and products we are being challenged and develop a solution with some new thinking. This must be done jointly with a public-private partnership with strong support from the chambers, namely the NCE.

French Open 4: Serena losing

The bigger story at Roland Garros was when Serena William lost for first time in her career in an opening-round match of a Grand Slam tournament. Coming into the tournament Serena had an undefeated record on clay this year at 17-0. Her oponent Virginie Razzano ranked No. 111 in the world played hard in the first set and Serena was pulling away from her in the second set (5-1) before the rug was taken out from underneath her. She went on to lose 22 of the next 24 points and finally lost the game and exited the tournament for the first time in round one.

French Open lesson 4: We need to be also careful with our tourism industry that has performed outstandingly brilliant today with 2012 going to reach one billion dollars in earnings. But a point to note is the low numbers in the five-star belt. We must carefully examine these numbers and develop a strategy with a private-public partnership. At the end of the day it’s the private sector that earns the money and investments must come from the private sector for promotions.



A case in point is that almost half the bottom line of the JKH has come from the leisure industry, which means that the capacity is there. A commendable strategy is the last two travel marts organised by the Government was outstanding. These were the views of the private sector. But may be a focus to attracting the five start tourist must come to play on a PPP partnership.

French Open 5: Isner battled for five hours and 41 minutes

One cannot expect an audience to be captivated with a match that could last over three days, like what happened to John Isner at Wimbledon 2010 over Nicholas Mahut that lasted over 11 hours. But this time around it was no different with the American at it again. Isner played another marathon and took five hours and 41 minutes to beat Paul-Henri Mathieu with a 6-7, 6-4, 6-3, 3-6, 18-16 performance. The final set took two hours and 28 minutes to complete. It takes a great deal of stamina and concentration to win at this level.

French Open lesson 5: We will have to do a similar marathon performance on the development of our Industrial Estate business across the country. We must launch the Vavuniya Industrial estate as well as the Mannar zone given that this will address the Northern economic integration agenda. The Atchchuvely Industrial zone phase 1 getting off the ground with almost 52 investors wanting to invest is a positive development but now we must develop phase 2 given that we can only accommodate a maximum 20-25 investors in stage one. We must then develop the Eastern Province agenda for industrial estate development so that the SME sector is given an incubator option of development.

Concluding thoughts

Whilst picking the top five moments in the French Open 2012 and linking it to the key initiatives of the Sri Lankan economy we get a feel of the areas of focus, but the challenge is the attitude required to address the issues and solve it speedily given the world is moving very fast. Sri Lanka must become a top 30 country in the World Economic Forum ranking. If not we are not doing justice for those who sacrificed their lives to bring peace to Sri Lanka.



(The author is actively involved in the economic agenda of the country on trade and commerce and is an alumnus of Harvard University, Boston. The thoughts expressed are his own and not the views of any organisation he serves in Sri Lanka or internationally.)