ATP lessons for Budget 2013

Tuesday, 20 November 2012 00:00 -     - {{hitsCtrl.values.hits}}

I always believe that sports can teach many lessons to the world of business and trade. The recently-concluded ATP World Tennis Championships at the O2 stadium in London was when I believe the world saw the best tennis.

The Men’s singles final between Roger Federer and Novak Djokovic was a classic. Let me pick up the key lessons from the ATP finals to the Sri Lankan Budget of 2013.

ATP 1: Long-term partnership

Last week ATP announced that the partnership with the sponsor Head was extended for another five years, which included the official tennis ball of ATP world tour as well as the official ball for the Barclays ATP World tour finals right through to 2017. The agreement marks the extension to a partnership which began way back in 1994.

Implication to Sri Lanka Budget 2013: The Budget proposals 2013 were somewhat thin on the development of the export industry to be 20 billion dollars by 2020. The fact is that even though our total market share is below 1.5% globally on trade, we are declining by 6-8% as at now.

The issue at hand is that in strategic markets like the EU, the decline is very steep. The industry mentions that it is due to the GSP+ withdrawal that is coming to play but the fact of the matter is that long-term partnerships must be pursued by Sri Lanka even though theses partnership are tough in a political economy.

If one gets feedback from the apparel industry for instance, the company performance is strong given the business generated out of Bangladesh and India or Vietnam. But business out of Sri Lanka is challenged. Top shipping companies comment that business to EU has halved as against 2010 value. I feel we have to look at developing long term partnerships especially on trade and business.


ATP 2: Get celebrity endorsement

ATP early exit Maria Sharpova stopped by in India to promote her new deal of the UL-based real estate company Homestead, which is in the process of constructing a celebrity themed and branded lifestyle living spaces. This will be the second powerful brand that has endorsed the lifestyle living product, the first being Michael Schumacher. The Gurgaon Tower apartments in India will be branded under Maria Sharpova’s name.

Implication to Sri Lanka Budget 2013: Whilst we are driving towards a 6.5% GDP growth when the world is crashing on performance. We must also critically analyse the issue that we are up against and the celebrity endorsement that we are getting.

For instance, in the World Economic Forum report on competitiveness for 2012/13, on the attribute of innovation we have dropped in rank from 42 to 58 which is not healthy given that we have a constraint on resources. We have to drive towards not only just setting up a Nano Park and a triple deduction in research but also working on the value chain so that the supply and demand chains merge.

The best example of this is Sri Lanka Design Festival, which used innovative design infused to rural SMEs in hamlets like Divulapitiya that commanded top dollars from buyers at last week’s SLDF edition 2012. Lingerie queen Michelle More endorsed the project and promised to develop the demand chain in the UK, which is a case in point that can be captured for large-scale diffusion by way of a budget proposal.


ATP 3: One million fans

The famous O2 stadium celebrated the one millionth fan who had come through the gates of the venue in the last four years to see the top fans of tennis battle it out in one of the most fiercely-contested games in the world of tennis. The Chairman of ATP commented: “I thank you sincerely for the incredible support you have extended to the game.”

Implication to Sri Lanka Budget 2013: At the Daily FT Post Budget Forum, the feedback from the chairmen of the top corporates was very supportive of the Budget 2013 proposals. One point highlighted by a Chairman of a supermarket business was on the 12% VAT on the retail industry and its ramifications. I guess this needs to be addressed given that Sri Lanka cannot have two MRPs to a consumer and any prices cannot be passed down to a consumer.

A point to note was a comment made by the said Chairman was that almost 90% of the bills are below Rs. 1,000 and only 3% of the bills are above Rs. 10,000, which means that supermarkets are growing in popularity among the middle income to lower middle income segment, may be due to quality of goods and the standard price across the country. It will be interesting to see how this will get ironed out given that globally almost 40% of business in the FMCG business comes via supermarkets and in countries like South Africa almost 80% by the modern trade business (supermarkets)


 ATP 4: World cup victory

During the ATP finals, the Washington Tennis and Education Foundation, which provides academic support to underprivileged children and teaches them to apply the life lessons learned on the tennis court, announced that it will dedicate its long-awaited $ 10 million tennis education and community centre in DC to this cause.

Implication to Sri Lanka Budget 2013: The Budget proposal on reducing duties on super luxury vehicles and go-karts is an interesting idea. I feel Sri Lanka should do justice and focus on a few developed sports where we have secured a global image for the country. In that light the World Cup Cricket victory in 1996 should have been the foundation to take this game to the rural area and done justice to the game that has put Sri Lanka on the world map.

But unfortunately we keep wandering around sports which have a slight chance to succeed for Sri Lanka globally given the Sri Lankan athletes’ body structure and resources. We need to be more focused on hardware on the development of the sports economy rather than the demand chain incentives offered. The best case in point of a successful model is China, which is worth emulating.


ATP 5: Recharge battery

After fulfilling a couple of exhibition commitments in South America, ATP Champion Novak Djokovic said he would take a well deserved two-and-a-half weeks off in a tropical and beautiful place with no racquet, to just recharge his batteries.

Implication to Sri Lanka Budget 2013: The Budget proposal of dedicating 2013 to be the year of service excellence in the public sector is a timely proposal. But a point to note is that financial incentives alone do not motivate a human being and there must be strong leadership and governance like what we saw in Singapore to really boost the public sector. After all when we have been averaging at 4% GDP growth in the last 30 years, when we suddenly move to a 7% GDP growth, the pressure on the public sector system can be heavy and needs a soft skill solution.


ATP 6: Comeback

At various times of Djokovic’s life he has been eclipsed by his three major rivals. Rafael Nadal beat him on clay earlier in the year, Federer won the Wimbledon, and Murray won the US Open, beating him in a cliff hanger. But the fact of the matter is that Djokovic keeps fighting back over and over again, which is the character of this great champion.

Implication to Sri Lanka Budget 2013: The tea sector Budget proposal of a subsidy of 300,000- 350,000 per HA from 2013 for the small holders is a welcome move given that most tea stock even in the smallholders are ageing. The allocation of 25,000 HA of land for small holder cultivation is the correct way forward. Now the challenge is implementing these proposals at the grass root level.

I would have liked to see the Ceylon Tea branding campaign to have been included in the Budget proposal. The funds currently collected by the private sector in the custody of Sri Lanka Tea Board must be secured. Inclusion in the Budget proposals of 2013 would have achieved this objective.


ATP 7: Dedicate to Srdjan

Dojokovic dedicated the ATP 2012 world award to his ill father Srdjan, who remained ill with a respiratory condition. The champ went on to say that coming into a tournament when one’s own father is fighting for his life is a tough challenge emotionally, “however, I want to go and see him now so that with this trophy I can make him smile.”

Implication to Sri Lanka Budget 2013: The implications of this are that we must not forget the 30 years of conflict with which Sri Lankan was plagued. We must allocate funding for the security of Sri Lanka but more over arriving at a peaceful devolution of power in the provinces. If not the hard-earned peace will not be sustainable.

The recent agitation by the different segments of people like teachers, medical staff, and university students are indications of the displeasure to the current governance structure. This must be addressed if we are to really become a nation that will not get caught up in the middle income poverty trap.


ATP 8: Almost lost

The ATP Champ of 2012 was a set down to 6’6” inch Juan Martin Del Potro and he was commanding early on in the second test but Djokovic fought back and broke serve to win 4-6,6-3,6-2 to reach the final at the O2 stadium which was a turning point in the tournament.

Implication to Sri Lanka Budget 2013: The tax proposal to reduce income tax by 12% on renewable energy is commendable. The only issue is unless the implementation modality at the ground is ensured, especially from the local political economy.

I know of a project that has been invested by a blue chip company that is on standby mode due to protests from the local community that is political personality driven. So whilst the Budget proposal for a green economy means Sri Lanka is on the right track, there are a lot of governance issues that need to be addressed so that these proposals can be implemented on the ground.


ATP 9: History

There had been some history to the cold war between the two players when Federer had once commented that Djokovic’s parents need to pipe down in the stands, which created some tension in a previous tournament. The victory was sweet revenge for Djokovic, commented some reporters. But for the champ it was business as usual and the usual pleasantries was shared at the end after beating Federer that I believe was one of the best matches of the season.

Implication to Sri Lanka Budget 2013: The continuation of high taxes on the imported milk powder was expected as a Budget proposal given that we must promote the local dairy industry on the platform of fresh milk at farm gate. Maybe the Rs. 50 per litre proposal would have been stronger if we geographically allocate regions to the top dairy companies globally to develop the total value chain. This would have sustained the 160,000 dairy farmers that are to be promoted in the program.


ATP 10: Getting closer

When Andy Murray commented that he was getting closer to winning at Wimbledon 2012, the match with Federer at ATP 2012 was a mind-breaker as most considered the pair as the most high profile rivalry in the home town in London for Murray. But Federer who lost to Murray at Wimbledon held on to his nerves to win the encounter.

Implication to Sri Lanka Budget 2013: The SMEs granted a total tax free environment is hailed by the private sector, given that 73% of the current Sri Lankan economy is SME-driven. But to really get the benefit from this proposal, we must develop the demand chain with strong export promotions.

The 2012 edition of SLDF is a classic case in point given that Sri Lanka saw how artisans from Divulapitiya were trained with an infusion to business savviness where the demand chain was developed to the global market via the buyers. So, unless the value chain is developed at the global end, we are actually not getting closer to the SMEs.

(The author is an award winning business personality and is an alumnus of Harvard University, Boston. The above thoughts are strictly his personal views and not the views of the organisations he serves in Sri Lanka or internationally.)

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