Sri Lanka captured world attention

Rohantha ATHUKORALE

My karate sensei who has been trained in the famous Shaolin Temple mentors us once a week and the theme last time was 'Talent is not enough'. The underlining ethos was that if one is brought up in a competitive sporting landscape then, when life throws that usual wicked blow all that is required was to pick the pieces and start and go after the challenge once again with more passion and drive.

When I look back at 2010 from a country perspective, I see this same ethos holding ground where we saw groups of people who made it in 2010 with out-of-the-box thinking after having picked up the pieces from a disastrous economy and a low ebb business confidence that existed in May 2009.

The Jetliner, a major thrust on tourism in the next year

I guess it's true. Talent is not enough. There has to be a strong drive to support this. The reality today is that some companies have almost trebled their bottom line business performance whilst from an economic perspective the country has recorded a commanding eight percent plus growth trajectory which captured world attention in my view.

In simple words we have demonstrated to the world that a home grown economic and business model can bring back the past glory even when it comes to a country. I am in no way being blind to the issues in the country such as the electricity tariff hike that is taking away the shine off budget 2011.

However, let me single out the top ten achievements of Sri Lanka from a very critical angle that caught world attention in the year gone by.

SEC on the roll

While the stock has given birth to a new super rich in Sri Lanka, in the year gone it crossed the all time 7000 mark making it the best performing stock exchange globally. Some might comment on how pension funds were injected but, the reality is that it was an innovativemethod of bringing in excitement and demand into the market and may be, it can be a new model that the world can learn. Provided that it does not create a bubble, we need to continuously innovate with such initiatives so that Sri Lanka stays ahead of the game.

GDP pick up

Once again I hear critiques questioning the accuracy of the numbers. It may the fact is that Sri Lanka's economy is growing at seven plus when most economies globally are struggling.

Our focus should not be in dissecting these numbers but more on how the gap between the Western Province and the rest can be bridged.

Using such initiatives like the setting up of industrial estates and the development of micro enterprises and SME, Sri Lanka can drive development in rural Sri Lanka.

Separately we must also make APTA a reality by pushing India to sign the ground breaking agreement. This can open new markets that will help drive supply chain from Sri Lanka. A key things to focus is that provided that 65 percent value addition exits the effective tax rate will decline as per budget 2010. I would also strongly push for greater integration with the Indian and Pakistani markets by expanding on the current FTAs and developing on the proposed CEPA agreement so that we are poised to drive for a ten percent GDP growth. At the current performance even we sure made a mark in the world.

Best tea auction

In the last three years I have heard many stories that Sri Lanka's tea industry will be doomed either by the wage increase or certain key markets facing severe challenges globally.

However, the Sri Lankan tea industry has continued to perform and continues to fetch the highest prices globally. Sri Lanka is sure to cross the 1.5 billion magical mark in 2010 even though the most economies are heading to a double dip.

It's an interesting business model that may be Kenya, India and even Rwanda can learn.

Tourism - 600+

Even though we know that there is no rush in hotels setting up even with the peace dividends that has come into Sri Lanka end of the day Sri Lanka crossed the 600,000 mark in the number of tourist arrivals that I guess silences the critiques who are yet skeptical if Sri Lanka is actually safe.

We now need to see that the Shangrila property is coming up and business confidence increases. A point to note is that even with this brilliant performance which is essentially private sector driven the earnings will be just 0.5 billion dollars. The projections for next year is around 0.6 billion which means that there has to be a focused drive to make this industry a one billion dollar industry for Sri Lanka. If not it cannot join the billion dollar club of apparel, tea, rubber, jewellery, ICT and BPO or for that matter food and beverage.

This indicates the thrust that is required.

Even with the guest houses being counted our carrying capability is below a 16,000 rooms in Sri Lanka which explains the change at hand.

Infrastructure spruce up

Once again we hear many schools of thought. Some argue that Sri Lanka's interest payments on debt was seventy billion in 2000 while last year it topped 302 billion. The fact of the matter is that be it today or tomorrow these are costs that had to be incurred if we were serious about making Sri Lanka tourism business-friendly.

Now the challenge is how these assets can be best used so that Sri Lanka can double its GDP from the current 42 billion dollars to say 80 billion.

Then we can demonstrate to the world that Sri Lanka used a novel home grown developmental model that has made the economy become a ten percent GDP growth economy.

For this to happen, we must implement the Ease of Doing Business recommendations so that we can become No. 65 from the current standing of 105. This is the challenge that once achieved can set Sri Lanka be in a totally new league.

MDG achievement

The poverty level registering a 7.6 percent and unemployment at 5.3 percent makes Sri Lanka right on track on many of the MDG's dash board. Whilst there is many a debate the reality is that in many a sectors Sri Lanka is grappling with the need for manpower.

Be it tea, construction, apparel, rubber or cinnamon or even the BPO sector the constant complaint is more manpower to meet the demand patterns. I guess this clearly explains the 5.3 percent unemployment mark.

While we have demonstrated to the world that Sri Lanka can fight a war and also focus on the overall quality of life indicators the bigger challenge is how we are going to meet the needs of the bubbling tourism industry when a million tourists come to Sri Lanka. I am sure more people will opt a career in a star-studded hotel than in a garment factory or a tea plantation. This is the challenge.

Lesson in politics

Whilst South Asia can boast of an eight percent plus GDP growth opportunity to global brands the fact of the matter is that the most unstable political economy exists in South Asia.

India's parliament is in turmoil on the 2G spectrum scandal. Maldivian parliament is atloggerheads. Pakistan is challenged with terrorist issues and flood havoc, Bangladesh is up in arms on the industrial riots that occur weekly whilst Nepal has the constant issue of the Maoists.

In this backdrop Sri Lanka shines with one of the most stable governments at play with the budget being passed in parliament.

Now the challenge is to make the necessary reforms so that the public sector can be made efficient. This will require some iron-fisted changes that I guess only a stable government in power like in Sri Lanka that can administer. The challenge is how this can be made to unfold.

Company profits

Whilst any number can be challenged the only number that cannot be challenged are private sector profit numbers. After all they areaudited numbers. The latest is that the private sector listed company profits has registered a 268 percent growth. I guess now the challenge ishow the reduced interest rates can be ploughed back into R&D so that a company can be sharper in the marketplace.

Another challenge is how the private sector engages with the public sector so that the Ease of Doing Business indicators can be corrected to facilitate FDI inflows into the country.

Budget 2011

Whilst many can be critical that the Budget caters to a minority cross section of Sri Lanka's population the cutting edge very unpopular budget that was presented itself shook the world given that no one expected it.

The next step is how the overall strategic plans can be cascaded to clear priorities on a monthly basis with clear expenditure planning.

I would go one step ahead where by we need to move into result based activation which is the next level of delivery that Sri Lanka must move into.

The good news is that one Ministry has already activated this with the support of ADB while another key Ministry that I work closely with has developed a calendarised docket that will become the working document for 2011.

Next key challenge

From the above ten highlights which are from my own experience we can see that Sri Lanka captured world attention in 2010. Thesupply chain improvement driven budget adds to the strong economic agenda that Sri Lanka is working towards.

But a key point to note is that the domestic market of twenty million people cannot absorb the supply chain development that Sri Lanka has in store.After all be it tea, rubber, apparel or cinnamon almost ninety percent of consumption takes place by a global consumer.

This means that we have to engage with the world and have more friends especially in the US and EU. We have to have strong marketing and promotional support to drive Sri Lanka trade into these overseas markets.

Locals in the key overseas markets must be employed as middlemen who can drive the Sri Lankan portfolio in each respective country.

We will have to invest moneys on Nation Branding with specific initiatives to build linkages with the diaspora which to be honest is a tough challenge from my experience.