Sri Lanka will become a $ 100 billion plus economy in 2025

Sri Lanka’s economy crashed to $ 74 billion in 2022 with the financial crisis hitting the country. However, with the structural changes that took place and the resiliency of the private sector, the country is poised to cross the magical $ 100 billion mark in 2025. Research reveals that similar countries that were termed small economies and grew to cross $ 100 billion have been valued as a nation brand to be worth a $ 100 billion and they turned to be strong economies globally.

South Asia – crashing?

 What makes Sri Lanka special is that if we analyse the details – Maldives is heading towards a financial crisis next year with the shutters already put up. Pakistan is still in political turmoil and fighting to manage the financial crisis. Bangladesh is picking up the pieces to bring back the lost glory but politically is lacking leadership. Nepal is showing signs of an economic recovery but is reliant on one sector – the tourism industry.

The only economy charging ahead in the South Asian region is India with a $ 3.7 trillion GDP base and poised to be five trillion dollars by 2027 growing at 6% plus.

The good news is that Sri Lanka has the opportunity for a deeper integration with over 84 flights operating out of Colombo weekly and another 14 flights daily from Jaffna. With the ferry service coming to play shortly, we will see how the spill over of the strong Indian economy has a positive impact on Sri Lanka.

Nation brand – $ 100 bill

 In this backdrop, we see that Sri Lanka is poised to cross the $ 100 billion magical mark which means that chances are that the value of the brand Sri Lanka will also hit $ 100 billion as per imperial data.

The good news is that lessons from other emerging nation brands reveal that when an economy becomes valued as a brand at $ 100 billion plus, the country has the propensity to attract better quality tourists, find higher yielding export markets and attract stronger FDIs. This is what the nation branding guru Simon Anholt summarises with his hands on practical workings across different countries.

But a point to note from Simon Anholt is that he advocates that the real essence of nation brand building is when a country does a series of actions over a long period of time that will result in a clear positioning in the minds of the global citizen. He goes on to highlight that this distinctive brand positioning creates a wave globally where people’s share of voice becomes stronger and sharper on this uniqueness. The best case in point of strong nation brands is Japan. They build an identity for quality and value for money based on consumer benefits. People inside the country also talked positively about the country that further strengthened the identity. It went on to penetrate the global consumer with commercial brands like Toyota, Nissan and Sony. We saw a similar story emerge from South Korean brands like Kia and Samsung that hinges on the dominance of the powerful nation brand.

We now see a similar brand identity emerging in the powerful nation China. The brand pillars include building a sharp identity with consumer friendly brands like BYD on automobiles, clothing brands like Li Ning, Peacebird and Shein whilst on smartphone brands like Huawei, OPPO and Vivo.

Nation brands and tourism

 One of the key pillars of a strong nation brand is tourism. Research once again reveals that when a nation's brand becomes strong the first sector to benefit is tourism given that decision making is quicker and the need for “Desire to visit” gathers momentum.

A point to note is that the market size of global tourism is very large with the industry value at $ 11.7 trillion growing at around 3-5% in 2025. This performance will account for around 10.3% of the world GDP that the World Tourism Organisation states. Which means that Sri Lanka’s share of the global market is negligible at $ 4 billion. It also tells us the potential this industry has to grow but, be mindful that we understand concepts like “over tourism” and the need to do “carrying capacity” studies in key attractions like Sigiriya, Yala and Minneriya as a case in point.

SL tourism $ 12.1 bill?

 Once again a study done on tourism revealed that in the years 1966 to 1982, if a trend analysis is done on the Sri Lanka Tourism numbers on the backdrop of the global trend we would have had around 8.2 million visitors coming into Sri Lanka by now with a revenue of $ 12.1 billion a year (this would have been a four-fold increase to the current average).

The number of people that the industry would have employed would have been 1.4 million people. Which means that the tourism sector would have equaled the export sector and the foreign remittances of the country. Which is the power of tourism to the Sri Lankan economy.

The key issue facing the country’s tourism industry is the policy inconsistency. Let’s take for instance the tag lines that have been used. “Paradise Island” (1970 – 1980), “The Pearl of the Indian Ocean” (Late 1980s to Early 1990s), “You’ll Come Back for More” (Late 1990s), “A Land Like No Other” (2005 – 2009), “Sri Lanka: Small Miracle” (2009 – 2011), “Wonder of Asia” (2011-2018), “So Sri Lanka” (2018 – 2023), “You’ll come back for more” (2023). This performance comes in the backdrop of a campaign like “Incredible India” that has been consistent by the Indian Tourism Board even though there has been four new administrations in the last 12 years in India. This is the power of consistent policy.

Lesson from Maldives – 4 plans in 35 years

 If we take Maldives as a case in point of exemplary policy consistency. The country has had only four tourism master plans in a 35-year timespan. The first was in 1982, the second in 1995, the third in 2007 and the fourth came to the market in 2013 and is said to hold ground up to 2017 and beyond.

What they do is the best brains get together and develop a plan and then the policymakers make space for it to be rolled out to the market. The other day when I met the Maldives Tourism Marketing team, what they shared was that many adjustments had to be made to the plans on the run but strictly speaking, the strategy was allowed to kick in for a minimum of six to eight years. This gave time for the results to be analysed before a new campaign and if need be new skill sets to be introduced to the team. The Sunny Side of Life campaign by Maldives Tourism is a testimony to the fact of consistency of policy.

Sri Lanka Tourism – 5 chances?

 If I track back Sri Lanka Tourism has got six chances in the last two decades to launch a global communication campaign just like many other countries globally that are focussed on tourism to drive the economy. But all five attempts have been a non-starter. Let me capture the essence.

In 2009 we got the first chance – after the cessation of hostilities with the LTTE. A fully-fledged advertising tender was rolled out, with top professionals in the technical committee.

The second chance came in 2015 – when the Yahapalanaya Government came, where we all believed that the hierarchy was professional in nature, and people like us decided to take responsibility to lead such key institutions like tourism. The top seven global advertising agencies were shortlisted to submit proposals with a clear brief, which was done in just three months, with the team working past midnight, given the urgency of the campaign. A month before proposals were submitted, the Board was dissolved in October 2015, whilst the tender was cancelled two days before the submission date of the proposals. All seven ad agencies were up in arms. The minister had other ideas outside the tenderer process sadly.

The third chance was post the 21 April Easter attacks – Sri Lanka tourism got the third chance, and that too was squandered when the AG’s department did not approve the proposal submitted to the PR agency to drive a global marketing initiative due to the irregularities identified. The decision by the AG’s department was valid.

The fourth chance – post when the war veteran taking over as the President of the country in 2019, gave birth to a golden opportunity given that the tourism sector was classified as an export industry. It was a brilliant move given the tax breaks that the industry was entitled to will be similar to the companies attached to the EDB. But the industry folded when COVID-19 hit the world and Sri Lanka tourism once again got affected. It was very unfortunate.

The fifth chance was post COVID in 2022 – we got a golden opportunity to “Re stage” Sri Lanka tourism by way of a new campaign that will start to attract tourism from scratch. We could have practiced the ethos of strong marketing – “Be brilliant in the basics.” This is exactly what Maldives is doing in driving the tourism sector. Segment, target, position. Thereafter, derive the marketing objectives and key actions; that must be scaled down to a powerful creative; that then can be hosted on traditional media and emerging digital media platforms. But sadly we blew that chance away and then we walked into the financial crisis that took Sri Lanka tourism to the wire. A point to note is that it was a man-made crisis that happened due to poor leadership.

6th chance – strong governance in 2025

 Given the current ethos of the strongly governance led NPP a brand, we have a final chance to make the global campaign a reality and the industry is very positive. But we see that from January 2025 there have been many attempts in March 2025 and then on 26 June 2025 by the authorities but all did not materialise. The reason is very justifiable as there were irregularities of the tender process that had been initiated around two years. Latest data is that fresh tenders will be called for by next month and the process will take a year to come to play.

Structural reforms

 Apart from the much needed “Global branding campaign” there are many other reforms required in the tourism industry. Sri Lanka must focus on the basic infrastructure required on the tourism key sites – hygiene and sanitation issues, launching of new products to cater to the needs of a ‘Fullnest 3 segment of a family life cycle’ – parents with children ages 8-15 years. Theme parks are the most popular for this segment.

Supply chain development so that Sri Lanka can cater to the needs of a visitor base of 5-6 million is key. Currently most day-to-day products are imported. If we are serious a policy maker must study the value chain and determine the net results of importing food and high quality spirits as against the revenue earned by the incremental foreigners that will visit the country. We also need to focus on a carrying capacity study of the key tourism sites so that over tourism will not happen to Sri Lanka. We also need policy consistency on approval and basic utilities if not the only profit one makes is through asset enhancement.

Next steps

Whilst we see that Sri Lanka is on the threshold of a massive milestone of a 100 billion dollar economy, what is required is a coordinated effort to make the best of the opportunity for Sri Lanka not only from a tourism front but also from exports of merchandise and service exports. We can make these to generate a revenue of around $ 35 billion. Currently we stand at around $ 20 billion. We must not let this opportunity go given the strong governance of the NPP Government that Sri Lanka has been crying out for years.

A point that we must not forget is that unless we have $ 9 billion in foreign reserves by the end of 2026 and $ 13 billion by 2027, we are heading towards another default. Hence, unless we drive the dollar income by way of tourism, exports, foreign remittances and FDIs, the current efforts of the Government on governance (which is a key pillar in nation brand building), will go to waste.

 

(The writer is a former Chairman of Sri Lanka Tourism and Sri Lanka Export Development Board and is currently the Vice Chairman of the World Rural Tourism Council for Asia Pacific. The thoughts are strictly his personal views and not the views of the organisations he represents.)