Around five years back when I was invited to read for a doctoral degree by a university, I thought simultaneously working for the country. I remember my father asking me if the decision was right as none of my family members are into politics or the civil service. Coming from a sports background, I always like taking challenges and thought to my self that all the performance awards of the world are useless unless we serve our motherland. At one time in the US it was mandatory. Working for the public sector is one of the best experiences that one can have. Working on Export strategy to driving economic growth at the highest level and then being selected to be part of a larger team on the war against the LTTE has equipped me with new set of skills that I strongly advocate that every private sector individual must acquire. Contrary to the thoughts that I had, the middle management of the public sector easily surpassed the private sector in the quality of thinking and commitment towards work. After all most of them are 1st class honours graduates from university. I strongly feel that Sri Lanka is well poised to be the emerging new Miracle of Asia provided that there is a strong working relationship between the public and private sector.

The challenge for the private sector is how one works through the Political Economy and grows one own business, whilst contributing to the growth of country. A point to note to understand is that due to constitution in most South Asian countries the governments in power are of coalitions in nature. This is the reason for the political economy that is in play and, unless one accept this reality and learn to work around it growth will be stunted. This holds ground not only in Sri Lanka but across many of the countries in South Asia.

Sri Lanka - today

The latest estimates coming in from organizations like IMF state that the Global economy is reeling at a minus 2.3%. However, economic experts like Prakriti Sofat from HSBC Singapore say, that Sri Lanka will achieve a 4% GDP growth in 2009 and a 6% growth in 2010 which justifies the thinking that Sri Lanka is in fact is the emerging new miracle of Asia. This theme fits into our nation as a brand, given that even with all the macro economic shocks in the last couple of years we have demonstrated a GDP growth of an average 6% that depicts the resiliency of Economy. I remember when I was heading the Government Economic Council (NCED) a top World Bank official once mentioned that God Is a SriLankan as economic theory cannot sometimes explain Sri Lanka’s growth performance. Strange but true – Sri Lanka is in fact the emerging new miracle of Asia.

As at end April even thought Export revenue has declined by 16.2% due to the global economic down turn, the import bill had also decreased by 36.9%. With the remittances declining by only 1.6% the BOP was at a +288 million which is encouraging. This means that Sri Lanka is somehow keeping the home fires burning but the challenge is how recurrent expenditure should be managed whilst servicing the debt component. The Ministry of Finance and planning in the mid-year fiscal report stated that in the first five months of 2009 the revenue collection had declined by 9.6 percent to 190.1 billion rupees as against the 210 billion in 2008, with contraction in domestic manufacturing and the service sector. The deficit in the current account of the budget had risen to 118.2 billion in the first four months of 2009 as against the 18.8 billion in 2008. This explains the issue at hand and the strong fiscal management required. A point to note is that India was in a similar situation some years back but with a clear way forward strategy has become a very strong economy driving for a 9% GDP growth in 2010. If Sri Lanka can also ride this wave with controls, we sure can be the new miracle of Asia.

Sri Lanka –the challenge

On the backdrop of this positive ness, the reality in the business world is that as per the QLFS 2009, the ILO reported last week that 96,000 job losses have been recorded in the 1st quarter of 2009 with the apparel sector loosing 60,000 and 36,000 from the construction sector. This is reflective in the overall GDP drop of 1.5% reported for the 1st quarter of 2009. The worrying trend is that month after month the export drop has increased given the global economic down turn and in April the drop has been as high as 28.2%. With the latest forecast coming in reporting that the global economy will only taper out in 2011, means that Sri Lanka will have to be prepared to manage higher job losses due to the decline in global trade. Hence it becomes important that this issue be addressed in the budget of 2010 as we saw in the Indian budget of 2010 early this week. The Manmohan Singh budget has provided for wider social nets and deeper relief measures together with a strong export drive so that a 9% GDP growth can be targeted by India in 2010. Sri Lanka needs to plan on the similar lines as strategically, Tea production has dropped by 39%, Tourism sector is registering a drop of 19.8% as end April 2009 whilst the overall export earnings have declined by 16.2.

The ILO reported that the Sri Lankans’ leaving for foreign employment dropping from 82,282 to 73,264 people in the first four months of the year will add to the declining numbers on the remittances which are currently at a minus 1.6% against last year. This is a serious challenge that Sri Lanka will have to address with strong strategic decisions so that the overall BOP can be managed. The good news is that the foreign reserves has increased by a 12.8% to 1.7 billion dollars as at end may 2009 and that the agricultural sector saw 203,000 new jobs being generated whilst the service sector has also experienced an increased job take of 129,000 which once again goes with my theme Sri Lanka – the emerging new Miracle of Asia.

Lessons from India – slow on reforms

At this juncture it’s important to closely examine the Indian Government’s budget that was proposed early this week and pick up the learning’s. Even with the strong position politically, with the congress party securing almost 204 seats not much economic reforms have come into play. The logic being most reforms normally benefits the urban markets which hurts the rural mass. This was the major reason for the sudden exit of the BJP and its ‘Shining India’ campaign in 2006. This is especially true when there is an economic down turn and it is estimated that poverty of the word will shoot up to almost 1 billion people. This forces governments around he world to adopt a pro-poor strategy with many safety nets targeting the lower income households. This is a replica that we saw in the Indian budget but with the exception of a strong push to drive exports and industry. May be Sri Lanka can take a cue from the above in this years budget whist the private sector will have to be sensitive to the macro economic realities even though economic reforms are a urgent need in Sri Lanka.

Tourism – 2 years to recover

As I sit on many national committees in the Ministry of Tourism, I can feel the positive vibes from the industry, especially after the relaxation of British travel advisory last week. However, a fact that we need to be cognizant of is that research reveals that it will take 1-2 years for this sector to recover. The logic being that 75% of the visitors into Sri Lanka come on vacations. Hence, for Sri Lanka as a destination to get into a traveler ‘Consideration Set’ in the purchasing process takes time. Currently, tourism is at a -19.8% vs last year as at April. The way forward is to drive up the positive stories that emanate out of Sri Lanka and drive an increased share of voice on a global traveler. Of the 14,793 hotel rooms that are being operated almost a half of them needs to re furbished to be in line with the standards required for an international traveler. Once this is done, we can target 800,000 tourists into the country which has the potential of propelling this industry to a 1 billion dollars. Given the increased geographical terrain accessible for a traveler we need to drive up the stay per traveler to at least 11 days from the current average of 9.5 days registered in 2008.

It’s also important that we target the 20-29 year old target age group, which has declined from 33% in 1999 to 14.8% in 2008 with new products like the Hikkaduwa Beach Fest. The good news is that most of the rooms in Hikkaduwa are already sold out for this year’s event which means that the growth momentum has begun. The challenge is to maintain it with a strong public-private-people partnership. We need to market future events like this, to the Diaspora community so that a new wave of image building happens. The BPA biz-pact Diaspora investment symposium that was staged last month which was very successful, opened a new era of engaging the Diaspora into the Sri Lankan economy. Mr. N. Wimalendran who runs a travel company in London who came for the symposium told me that he intends investing on the famous Nelli Crush company in Jaffna ‘Vesta’ on its expansion to the rest of the country. I strongly recommend that a focused Diaspora investment forum be organized only for investment is the Jaffna peninsular.

Sri Lanka must also drive up the western traveler visiting the country, which has declined from 284,440 visitors in 2004 to 167,189 visitors that came into the country in 2008. Given the dynamism of the Ministry and aggressive strategies that are in place that I have been part of conceptualizing, I am very confident that Sri Lanka is poised very strongly to attract a 1 billion dollars in revenue in the near future. Global PR agencies are in place together with an able advertising agency that was selected after a competitive global pitch. A research study is been commissioned – the 1st of its kind to understand the insights of a global traveler. Sri Lanka’s road to recovery is on track with the June numbers from all destinations being positive which is good news that we need to now take the high ground.

Apparel – New Miracle

As per ILO data the unemployment levels in the U.S. has shot up from 4.9 to 8.5% and UK 5.0 to 6.6% which justifies the drop in Sri Lanka exports by 16.2% in the first four months 2009. The exports to the US has declined by 7.9% but given the resiliency of businesses in Sri Lanka, the Apparel industry has increased its overall export earnings by 3.4% to 1009.92 million which is once again in line to the Sri Lanka- the emerging new Miracle of Asia.

What we need to do is to take the high ground by moving the industry to ‘Ethically manufactured fashion apparels’. Being part of the cross functional team organizing this event the good news is that this will happen as early as November which once again will be a powerful story for the country. The different facets of the industry like the designers, Nano technology, the Garment without Guilt tag, the top quality manufacturing facilities together with the high quality support services like washing plants etc will be show cased to the best buyers of the world. Sri Lanka is once again poised to making this industry a 4 billion dollar income in the near future. Once again bringing out the ethos of "Sri Lanka – the emerging new miracle of Asia"

Tea – Sri Lanka Miracle

It is a fact, that Sri Lanka’s miracle to the world has been the high quality ‘Tea’ that it produces. However, the reality is that we as a nation has not done justice to this industry like what Rwanda has done to its coffee or what Switzerland has done to its chocolates even though not a single cocoa plant is grown in Switzerland. Being on the President appointed committee on Tea, the data that has been unearthed reveal that the state and the private sector needs to get together and make this industry a 2 billion dollar income for the country. The only way out is to plough back the 1.2 billion cess moneys that gets collected by the industry for the development of the industry. Since I sit on the Tea Board promotions committee, the new opportunity for Sri Lanka tea that has, has been identified in the US specialty tea market. This must be focused and developed as a matter of priority as we already have a business models that has been successfully tested. The regional brands that has been developed by the private sector has proved its market value last year at the test market run.Now all that is required is the setting up of a office and driving growth. Sri Lanka must have 10 big brands of tea just like Dilma, Mlesna, Impra and Akba’s within the next 5 years so that we are know around the world as the ‘Ethically Manufactured clean tea nation of the world’

Sri Lanka– New Miracle

Whilst the current strategies are at play to making of the Emerging new miracle of Asia –Sri Lanka, already can boast of having one of the best stock exchanges in the world and an administrative structure that has one time LTTE members that has come through the democratic process that no other nation of the world can boast.

The challenge is where Sri Lanka should now focus on to catapult the Sri Lanka’s growth trajectory. One option is the IT- Soft ware sector that has the potential to be a 2 billion dollar revenue to the country. May be we need re look at the ‘Sriya’ Jewellery collection that we can marketed globally- the test market done in the Maldives was encouraging. We can also drive the high quality latex brand ‘Lanakaprene’ into the US given that the first order was well received. Sri Lanka must drive the North/East so that it can be the 15% of the GDP with the fisheries sector and the potential this region has on the agricultural sector that companies like Haleys and CIC has so well integrated and developed. We have to revive the 745 industrial SME’s in Jaffna that existed way back in 1983 with the support of the Diaspora, so that sustainable peace can be achieved. This can only be a reality if a Private-Public-People partner ship is achieved. I strongly believe that we as a nation just like any other country can have its own issues but Sri Lanka has the potential of being the New Miracle of Asia.