Continuous poor decision-making has taken brand Sri Lanka to the wire
Sri Lanka is a classic example to the world where a tattered brand after a 30-year war was built with the nation coming together. Thereafter we saw how power corrupted power absolutely, and then the brand was destroyed. Today, we have become the laughing stock globally.
Sadly, Sri Lanka will be the discussion points at every business school for poor governance, defying economic theory and chaotic leadership. Let me try to bring this story together.
SL – a $ 23 billion brand
Way back in 2011, Sri Lanka was a mere 23 billion dollar brand with the economy worth $ 65 billion. By 2014 the brand value had almost tripled to $ 61 billion due to pent up demand in the areas of tourism, investment, exports and sports which are the key pillars of nation brand building.
A point to note is that we cannot build brand value in a country. How nation brand building works is Sri Lanka behaved in the global stage earned us this reputation and hence the value of the brand catapulted. I would summarise that we unleashed the brand Sri Lanka. The world experienced ‘The people of Sri Lanka’ and culture too which are the key pivots of brand building. The architect of the concept ‘Nation Brand’, a person whom I have a lot of respect for my good friend Simon Anholt, says that “people of the country must talk well of a country. They must be of value to the global citizen. It is only then that the value of the country brand experience.”
Simon beautifully says it like this: “If Sri Lanka was deleted from the celestial keyboard, the way it will be missed is what the real value of a nation brand is.” I love the manner in which he said this. Hence whilst the leadership was given by the political hierarchy, we as a nation built the brand with the responsible way we behaved globally is the best way to summarise the performance.
Decline – post-2017
Then we saw the emergence of a new trait of Sri Lanka ’power corrupting power absolutely’. Brand value growth started plummeting. The pillar that was becoming a drag was ‘Governance’. The government in power led by the Rajapaksas was plagued with governance issues and it was proved later on with almost 19 files opened by the attorney general. On 8 January 2015 the said government was rejected by the people of the country on the key criteria – Governance. The ripples had been felt across the world by this time and the icing on the cake was the alleged ‘Bond scam at Central Bank’. Even today, the people have not been taken to book after almost six years into the case that hit global headlines.
Then came the ‘Easter attack’ which took 259 people’s lives and once again the government in power was thrown out with just a one concessionary seat which showed the power of the people of Sri Lanka. The new government was voted in on the promise of ‘Good Governance’ and the person who won the LTTE war was given a clear mandate that includes a two-thirds majority to make things happen. The brand value of Sri Lanka was badly dented and countries like Algeria and Ukraine overtook with a performance of 27% and 24% on brand value whilst Sri Lanka was training at a low 8%. Sadly, none ofthe policymakers were data driven and they overlooked the reality.
Arrogance – post-2019
Then came the arrogance of the current administration under the leadership of the Gotabaya Rajapaksa Government where repeated decisions were taken against the grail of economics, agriculture and good governance. Let me share a few of them to give context to the argument.
The first sense of arrogance that the world saw was when the blatant decision to implement the election promise on taxation was implemented without understanding the ramification of the decision. In fact I would say it was the biggest blunder made where an unsolicited tax concession to income tax and VAT payers was made that cost the country Rs. 600 billion of a 4% of GDP. Many top policymakers advised the Government not to pursue this initiative but due to sheer arrogance of the new administration. The decision led to the country ratings being pegged down and finally we lost the ability of raising money from the global market.
The hit on the brand credibility of Sri Lanka cannot be quantified. This was also a reflection of the poor decision making that Sri Lanka demonstrated at the global stage. We who work for global companies have questioned our credibility and standing in the companies we operate globally. In fact, the IMF had mentioned to the former Minister Ali Sabry that the government coffers must be filled with proper economic policy for an IMF program to be implemented. A sad day for Sri Lanka.
The second key blunder that hit brand Sri Lanka, made by the Gotabaya Rajapaksa administration that disgraced the country was the wild float of the rupee. It was done without proper advice from the Monetary Board or following basic guidelines that one must follow in the country’s economy management with strategies like sequencing. The Central Bank Governor repeatedly mentioned that his road map was on track which was a blatant lie and went on to be arrogant that Sri Lanka demonstrated once again on the global stage.
As we speak there are many airlines awaiting their payments due to the dollar crunch. The country also announced at the global stage in the many interviews done by the policy makers that Sri Lanka will not go for the IMF program. I would call this economic terrorism which must lead to legal action just like what was done in Malaysia. Sadly this will only further dent the $ 83 billion brand value of the country.
The third key decision that hurt the brand was the artificial peg of the Sri Lanka rupee at Rs. 200 per dollar. Even though the IMF had suggested a planned float, Sri Lanka went on to pursue the dirty float and burnt out almost two billion dollars. This led to the foreign reserves falling from $ 7.6 billion in December 2019 to $ 1.9 billion at end-March 2022. As of today we have below $ 25 million which is essentially unusable. We do not have milk powder, fuel for the transport of vegetables, import of gas for cooking, medicine for the cancer hospital. The food inflation is at 48% but global research agencies state that inflation is as high as 125%. Speculation is that over 30% of the 5.8 million households are on the brink of falling below the poverty line. This leads to social unrest which is now hurting the brand Sri Lanka which no one is highlighting.
The fourth decision that killed brand Sri Lanka was the blatant decision of the President to ban the use of chemical fertiliser. This was against the fundamentals of good agricultural policy where phasing out of the decision should have been done. Over 30 agricultural experts had met the President but with absolute arrogance the decision was kept on force that ultimately led to paddy farmers revolting and the loss of production by almost 45% and tea production decking by 30% which has affected the Ceylon team brand. Today we have lost the Japanese market for Ceylon tea due to quality issues. The Government of Sri Lanka had to incur an additional cost of Rs. 40 billion as compensation for the paddy farmers which is the poor leadership that brand Sri Lanka has been managing.
Impact to the $ 83 billion brand Sri Lanka
Strictly from a Nation Brand perspective, we see that in each pillar poor governance has impacted and hurt the brand. On the ‘Exports front’ we see how tea exports worth 1.5 billion dollars have been impacted due to the bad decision of the President. Due to the social unrest and power generation issues we see how the apparel industry is seeing the movement of global orders from Sri Lanka to India due to risk issues. This is worth over $ 5 billion dollars.
In the area of ICT/BPO which is a booming global business. Here again we see that companies are seeing huge attrition. Youngsters are moving to other countries due to the uncertainties and this is impacting the companies that had plans of making this industry $ 5 billion. This hurt to brand Sri Lanka cannot be quantified. I guess time will tell.
2022 – Brand SL destroyed
The real hit on the brand Sri Lanka was last week when the Government-led group attacked the peaceful demonstrators at GotaGoGama and created mayhem. It led to virtual civil riots where 74 houses of the political hierarchy was burnt, 296 people injured and nine people killed. More importantly, the Prime Minister resigned due to pressure from the masses that hit all global media headlines which in my mind destroyed the little equity that brand Sri Lanka. 9 May will go down in history as the darkest day in the history of brand Sri Lanka that destroyed the already tattered brand due to the economic downturn. Most counties have announced a travel restriction on Sri Lanka and we are check mated on the key pillar of Nation Brand building ‘Tourism’. It was the nail on the coffin as Sri Lanka Tourism took hit by the ‘Easter attacks’ then on the ‘COVID pandemic’ and now manmade disaster – ‘Economic/political crisis’.
To summarise, a nation brand cannot be built. It happens to be the value one gets due to the way we behave on the global stage. Whilst we saw how the brand Sri Lanka was built during the years 2011 to 2014, thereafter we see how the growth of the brand declined and by 2018 we have a situation where countries like Algeria and Ukraine beat Sri Lanka on Brand value. After 2019, it has been an absolute disaster for brand Sri Lanka. The question is, what is reality and what we should do.
(The writer is a Brand Marketer professionally and works for a South Asian Artificial Intelligence (AI) company for brand mapping and strategy.)