Why take the shine off Sri Lanka?

Tuesday, 24 June 2014 00:01 -     - {{hitsCtrl.values.hits}}

A person who has one of the best insights into Sri Lanka’s economy in my view in Dr. P.B. Jayasundera, not only due to his experience but also his power of conceptualisation and understanding of the issues of the micro economy. The other day I was listening to him present the Ministry of Finance and Planning Annual Report of 2013. Some very interesting data from the grass root level was analysed and conceptualised, which made me think on the strong performance of ‘Brand Sri Lanka’. If I pick up some insights, mobile phone user ship in 2004 was at 2.2 m, whilst today this number stands at 20.3 m, which indicates the communicative society that we live in. It also indicates the connectivity that a Sri Lankan has with the outside world with platforms like Facebook or website access. Private radio channels have increased from just six to 35 whilst TV channels have increased to 18, which are also indicators of the overall quality of decision making that has increased in the country. The vehicle stock has increased from 2.3 m vehicles to 5.2 m, which reflects the increasing quality of life of a Sri Lankan. I guess the 7% GDP growth number that we see being flashed in the media can be justified with the above close to life changes we have seen between 2004 and 2013. The million dollar question is, why do always want to take the shine of Sri Lanka? Shine off The incidents in the last one week and namely the actions of the BBS organisation that has created negative media in Sri Lanka and globally is very unfortunate. We have not only made the script of Navi Pillay come true, but also driven away the Middle Eastern tourists who were coming into Sri Lanka, that ideally fits into the off-season time period that we experience from the Western visitor cycle. Tourism is essentially a private sector agenda and the private sector has innovated its business model by bringing down chefs who cater to the Middle Eastern guests’ palate as well and developing excursions that cater to typical interest patterns so that the overall benefit of tourism can penetrate all walks of life. But these plans were not to be a reality given the issues faced in Beruwala and Aluthgama that has in fact dented the overall numbers to the south of Sri Lanka. The sad situation is that with timely action the above situation could have been managed but now it has become a complex issue that includes foreign policy interventions and political ramifications that will take time to heal. It sure has taken the shine off Sri Lanka given the overall economic performance of the country that is essentially fuelled by the private sector that accounts for over 78% of the economy. Let me highlight the key pickups from the Ministry of Finance and Planning Annual Report 2013. Sri Lanka – reality If we are to compare countries, let’s look at the access to basic facilities as at 2013. The electrification level is at 96%, which gives us an indication of the penetration of products like a fridge and a TV. The access to drinking water is 88.7%, whilst paved roads in the total network stands at 85%. Telephone density is at 112.4% which means we are in fact an over-communicated society and a day will come where the whole of the country can be on a Wi-Fi modality that can lead to 100% penetration on internet. This might revolutionise marketing communication in the business world where the Rs. 70 billion of advertising spend will get directed to the mobile phone. The primary school enrolment ratio is at 98.4% whilst the teacher student ratio is at 18, which questions the logic of the many schools in Colombo that have almost 40 students in a class. Life expectancy is at a high 75.1 years, which means that the retiring age can in fact be increased from the current 55, is my view. The maternal mortality rate per thousand is at 0.3, which gives us an indication of the overall medical infrastructure of the country. We don’t have to go very far: the Lady Ridgeway Hospital service quality is way above the luxurious facilities of any of the leading private sector hospitals in Colombo. In this background the crazy behaviour of organisations like BBS and the negative vibes that has resulted in unruly behaviour that Sri Lanka has not seen in the last 20 years can sure question the governance of the country. If I am to take an international KPI, the Human Development Index where Sri Lanka is ranked the best among SAARC countries and globally at the 92nd place among 186 countries. Exports Whilst we can be proud of the $ 10 billion export performance in 2013 as against the 5.2 billion dollars that was done in 2004, a point to note is that countries like Bangladesh and Vietnam was hovering around two billion dollars way back in 1990 when Sri Lanka was also registering the same value in export revenue. But today, Bangladesh is at 24 billion dollars and Vietnam touching 97 billion dollars in value. This clearly indicates that the push on exports has not happened in the last 20 years and the outcome is very clear. However, a point that needs to be highlighted is that in the exports of services-related products like IT, BPO and other knowledge-related services, Sri Lanka has been ranked by AT Kerney at 21 among the top 50 leading service locations and this business accounts for $ 720 million, which means that within two years we will be having a billion dollar business next to apparel and tea. Apart from the numbers, if we take the working environment of the organisations in this industry, it benchmarks global companies like Google and Microsoft that is fast-changing the business landscape of Sri Lanka. In my view the biggest failure for ‘Brand Sri Lanka’ was the non-implementation of the Ceylon Tea campaign, which has a five billion rupee fund that is just collecting dust. Tourism Whilst the tourism industry is booming at 1.2 million as at end 2013, the real performance is the performance end April 2014, which is at 534,132, almost touching the guest arrivals for the full year of 2008. The beauty of this industry is how the rest of the economy benefits with such growth numbers, be it the cabs operating to and from BIA and the handicrafts business that is done by the micro business sector of Sri Lanka. Foreign guests to the Cultural Triangle in 2013 numbered 504,699 whilst to the Zoological gardens it was 305,860. The Botanical gardens captured 293,454 foreigners and finally for wildlife parks the number stood at 325,153. The challenge is how the industry players can make the business of running a hotel profitable give the wage increase of 40% that came into play in 2013 and the price of electricity, which increased by 22%. The backlash last week in Beruwala and Aluthgama dented the Middle Eastern market that was being developed by the industry and the poor PR management that broke out in global media, namely Aljazeera. The cancellations that are flowing into the industry from this market are sure taking the shine off Sri Lanka. Northern Province Apart from overall infrastructure development, the provincial GDP of the areas Jaffna, Mullaitivu, Kilinochchi, Mannar and Vavuniya caught my attention. In 2012 the number has increased to 305 billion an increase of 25.2% which is incidentally above the national average of 16.2%. The poverty number has dropped to 12.8% and overall access to electricity is at 72% and water at a commanding 89%, which is a strong recovery post a 30-year war. The target for 2016 is set at 787 billion on GDP and poverty to come down to 6.9% with projects like the Atchchuvely Industrial Zone development whilst access to water and electricity is to be 100%, which is once again some positive data given the Geneva debacle that will be unfolding in September and March 2014. But, once again the unwarranted incidents of last week sure take the shine off Sri Lanka, which is unfortunate. KPIs In a typical private sector spirit, the area that fascinated me was Key Performance Indicators (KPI). Let me share Sri Lanka’s performance, which is essentially a private and public sector performance score as 78% of Sri Lanka’s economy is driven by the private sector. 1. MPI: Better known as the Multidimensional Poverty Index which ranks a company on multiple attributes like education, health and standard of living; the rating for Sri Lanka was at 1.9%. In 2006 it was at 3.9% 2. NRI: This is termed the Network Readiness Index, which is the propensity of a country to exploit the opportunities offered by information and communications technology; Sri Lanka is ranked 76th. India is at 83 and Indonesia, a BPO powerhouse, is ranked 78 – ahead of India but below Sri Lanka. This ranking is done by World Economic Forum. 3. Coface: The world leader in credit insurance has identified Sri Lanka to be a one of the 10 emerging economies next to BRIC, which is very interesting given that we are ranked on par with countries like Philippines, Peru and Indonesia. 4. GCI: In the Global Competitive Index (GCI), Sri Lanka has moved up three places to number 65 out of 185 countries. The World Economic Forum has identified Sri Lanka to be a country in transition from stage one to stage two, which is very positive vibe. 5. Economic Freedom Index: In the ECI, the Wall Street Journal and Heritage Foundation has ranked Sri Lanka in 2013 at 81 out of 185 countries, better than Indonesia at 108, India at 119 and Bangladesh at 132, which is interesting given that India is ahead on the IT/BPO industry whilst Bangladesh exports are at almost 25 billion dollars and Sri Lanka is trailing at just 10 billion dollars. Conclusion With all the issues, some perception-driven and others real, we see the footprint Sri Lanka is making on the global template. But the issue is as per the thoughts of Simon Anholt, the global expert on nation branding: “A nation earns a reputation based on its actions and not on promises and catchy advertising.” It’s a pity that we are taking the shine off the country. (The author is a business personality and doctoral student in business administration. Writing is a hobby he pursues. The thoughts are strictly his personal views and not the views of the organisations he serves in Sri Lanka or internationally.)

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