Sri Lanka’s global image dented to $ 77 b

Wednesday, 25 October 2017 00:48 -     - {{hitsCtrl.values.hits}}

When the previous regime lost favour with the people on 8 January, the new Government was elected on the expectation of building a new Sri Lanka.

Based on the strategy of good governance and democratic freedom, the current Government’s key mandate initially was to win the world and thereby create a better Sri Lanka. This included making friends with the West that will lead to a new image towards Sri Lanka which can attract stronger FDI, higher quality tourists and more attractive export markets. However, when we look at the results, today we see a reverse trajectory taking form which is sad for Sri Lanka. 

Brand image dented – $ 77 b

The latest report released globally reveals that Sri Lanka has dropped one place in its rankings from 58 to 59, with just a 4% increase in brand value to $ 77.0 billion in the backdrop of the past performance averaging 30-35% increase year-on-year for five years (2011-2014) but from 2015 the growth declining (11-4%). Sri Lanka’s brand rating is AA- with a score of 67.2 which is down from last year’s score of 67.5 and does not hold in good stead for a country that is focusing on building its image for deeper links with the world. 

One of Sri Lanka’s top marketers and respected business personalities, Brand Finance Managing Director Ruchi Gunewardene stated: “Based on the last two years’ trend, we observe a stagnation of the country’s brand performance. Whilst we saw a jump in the indicators in 2015 following the change in government and the commitment to reforms and governance that was shown at that time, we have not seen this translate into a strong and compelling reason for investors to commit themselves to the country.”

This statement clearly spells out the way forward and it is sad for Sri Lanka given that the country expected so much when the new Government was voted in in January 2015.

What is nation brand building?

Nation brand building’s key architect Simon Anholt (who advises many governments on the nation brand building process) points out that respect is earned on the global stage with a series of actions over a long period of time rather than just orchestrated activity. 

In this ethos if we Google Sri Lanka today we have a mixed bag from attacks on SAITM students who have been protesting for over three months without a decision to repeated financial irregularities that includes the coveted entity in a country, the Central Bank. Two ministers have resigned with one being the Finance Minister of the country which we rarely see globally. 

Then we have reports of a Taiwan Bank hacking money linked to a chairman of a key Government entity which are news items that do not hold in good stead for a country trying to build a new image globally. In essence the brand value growth tapering down from 35% to 4% as at 2017 data means that drastic action has to be taken by the policymakers.

Six dimensions of national competence

The Anholt-Roper Nation Brands Index looks at a country’s image by examining six dimensions of national competence, all of which are treated equally with no weighting. This gives an overall sense of a country’s reputation as a whole. The six dimensions are:

1. Exports: Examines respondent’s image of products and services from each country and the extent to which consumers proactively seek or avoid products from each country of origin.

2. Governance: Considers public opinion regarding the level of national government competency and fairness and describes individuals’ beliefs about each country’s government, as well as its perceived commitment to global issues such as democracy, justice, poverty and the environment.

3. Culture: Reveals global perceptions of each nation’s heritage and appreciation for its contemporary culture, including film, music, art, sport and literature.

4. People: Explores the population’s reputation for competence, education, openness and friendliness and other qualities, as well as perceived levels of potential hostility and discrimination.

5. Tourism: Captures the level of interest in visiting a country and the draw of natural and man-made tourist attractions.

6. Immigration and Investment: Looks to attract people to live, work or study in each country and reveals how people perceive a country’s economic and social situation.

But a key point to remember is that nation brand building is not about painting a story globally with catchy advertising. It’s more about ‘implementing actions so that the people inside the country’ talk positive of the country and the world feels the vibes. This in turn attracts better FDI, higher spending tourists visiting the country and exports making a deeper penetration into markets.

CEO David Haigh made a strong statement post launching the 2017 edition: “A strong brand has become a defining feature of success in the current economic climate. Worldwide hyper competition for business, combined with an increasingly cluttered media environment, means that a clear message carried by a properly managed brand can provide the crucial leverage needed to thrive.”

Haigh went on to say that the role of tourism branding can impact nations brand image. Sadly, Sri Lanka has not seen any new creatives and strong multimedia campaign on tourism for the past five years. Haigh also voices: “Nations can adopt similar techniques to capitalise on the economic growth that comes with proper positioning of a nation brand that can add 1%-3% to GNP during a financial year.”

Hence it is very clear that a country like Sri Lanka must understand the importance of focusing on building the image of brand Sri Lanka as it has positive correlation to economic performance.

2017 – Competition performance +30% plus 

If we take a look at the competitor benchmark countries and their performance we see Indonesia growing by 34% to $ 845 b. Malaysia has grown by 35% to $ 489 b, Thailand by 37% to $ 483 b. High poverty-driven Bangladesh has grown by 22% to $ 208 b. Even with sporadic militant attacks Pakistan has registered a growth of 34% to $ 171 b whilst Myanmar is growing by 25% to $ 55 b.

A country recovering from the earthquake like Nepal is growing by 31% to $ 15 b, which clearly indicates that Sri Lanka is lagging behind the world with a 4% weak performance. By the way the corrective action must be a private-public partnership approach rather than just a State drive. 

Economic performance 

If one does a deep dive on the economy, the results today are also not encouraging. The GDP growth in the last three years are 7.4% in 2014, 4.8% in 2015, 4.4% in 2016 which means the overall economy is marginally explaining. 

FDI performance is 2013 – $ 1.3 b, 2014 – $ 1.5 b, 2015 – $ 0.9 b, 2016 – $ 0.8 b, which means year on year the attractiveness of Sri Lanka as a country for the future is declining. On the export front 2014 – $ 11.3 b, 2015 – $ 10.5 b and in 2016 – $ 10.3 b means that overall appetite for Sri Lankan merchandise is also declining that does not warrant on a country on the development agenda. 

Bond scam Rs. 20 b?

A key component of the Nation Brand computation being Governance, a key highlight in local and global media was the bond scam apart from the street protests and agitation that we see on a daily basis. The latest estimates on the value loss from the bond scam is estimated to be around Rs. 20 billion. The exact numbers will be revealed from the Commission in its report but the immediate loss to the Government by issuing bonds at a discount when the CB could have issued a part at par and the balance in a different mode instead of a 30-year bond has been estimated at Rs. 526 million. 

The loss to the Government having to pay interest at 12.5% per annum over 30 years adds to another Rs .10 billion. The losses on account of subsequent issues have not been estimated so far. A CBSL team has estimated the loss to EPF on account of the bond issue on 29 March 2016 was at a staggering Rs. 9 billion whilst the losses to State banks have not been estimated by independent analysts due to lack of data.

Hence we see the ramifications of the bond issue from a strictly financial sense apart from the criminal angle that led to a senior official of the commission calling the private sector business entity a ‘criminal organisation’. Specialists state that these issues together with the low economic performance have contributed to the Sri Lankan brand imagery to hit a $ 77 billion in 2017 with a marginal growth of 4% as against last year.

Luxembourg Govt. – Resigned 

A noteworthy example to the world in the recent past when corruption and alleged malpractice hit a country was the Luxembourg Government. The Government resigned on the damage that the country had undergone due to the spying and corruption scandal that shook the tiny country better known for wealthy bankers.

Media reports that Jean-Claude Juncker, Prime Minister since 1995 and the European Union’s longest-serving Government chief, tendered his resignation to Grand Duke Henri, the Royal Head of State, who himself has been implicated in media reports of espionage. The allegations levelled was that Luxembourg’s security agency had illegally bugged politicians and members of the public, purchased cars for private use and took payments and favours in exchange for access to influential officials. 

These are the actions sometimes countries do to protect their nation brand value. As at today Luxembourg as a brand is valued at $ 97 billion growing at 14% as per the 2017 Nation Brand Finance Report. Let’s see if Sri Lanka takes a leaf from this example.

Conclusion – Do the right thing 

The recent revelation by Brand Finance clearly points out that policymakers need to re-look the overall strategy of running the country, especially since 2018 and 2019 will be tough years given the stiff debt payments we have to meet. The only way out is do the right thing.

(The writer is a practicing brand marketer and CEO/President of an international property organisation. The thoughts are strictly his personal views.)

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