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economy

   

    If one Googles Sri Lanka…


RIO ice cream that could offer a challenge
to other well known brands

By a Special Correspondent

In 1983 there were 247 industrial SMEs in Jaffna but today there are only a meagre 45 of them. The daily catch of fish exceeded 3000 metric tonnes at one time, but it is only 200mt today.  This has resulted in many hardships to the 4000 fishermen whose only livelihood is fishing. Only 30% of the agricultural lands are being used which explains the challenges that need to be addressed.

If one were to ‘google’ Sri Lanka, almost  83% of the news about the country is of a negative nature. This needs to be corrected by a collective effort by everybody in Sri Lanka, if we are to re-build the country and not the government machinery. This was pointed out by Director Economics, Government Peace Secretariat Rohantha Athukorala addressing the elite Burhani Council last week.

‘If this does not take place at least now, we will not be doing justice to attract tourists and investment that this country requires to spruce up the economy and drive GDP growth.

We have to remove the global perception of a War Economy, given the victory the country achieved in defeating one of the most ruthless terrorist organisations in the world, to a Peace Economy so that we can tell the world we are open for business. If this is not done Sri Lanka will once again lose another opportunity of making the country a growth hub, Athukorala noted.    

Economic War begins

Sri Lanka as a nation has been resilient despite major external shocks to the economy such as the severe drought of 2003/4, the devastating impact of the tsunami in 2005/6, or the severe security issues that the country was bogged down in, in 2007/8. Despite all these factors the growth of the economy by 5-7% baffled even the top economists.

Athukorala recalled a top World  Bank official had once commented that God may be a Sri Lankan. It was pointed out that this year too, even though export earnings have declined by 15% in the first quarter, the import bill had also declined by almost 40 percent which resulted in the trade gap closing considerably.

Even with the remittances coming into the country declining by five percent, the balance of payment has remained positive which is a healthy situation. If the oil prices do not over shoot the chances are that the trade deficit which was at 5.9 billion, will drop to around 2 billion or less in 2009.

However, Athukorala pointed out that the issue was the debt that needed to be serviced and if more loans were to be taken for north-east development it would severely impact on the economy which perhaps could have been the reason for the down-grading of the country to ‘negative’ by the rating agency S&P.

Tough fight

It is evident that Sri Lanka has had a tough fight on its hands fighting against the most ruthless terrorist organisation in the world and every Sri Lankan who fought this enemy in the different fronts must be commended said Athukorala, adding that the four barrel air defence guns, the belt bed weapon known as the 14.5 mm Quad that can attack armored vehicles, submarines that were submerged to connect land ponds to the sea, surface to air missiles, fixed wing light aircraft, the 16 metre long wave rider craft backed by an international network that can even bring the President of the United States to the North Lawn to talk in favour of a ceasefire, bears testimony to the width and depth of the LTTE globally.

The dedication of the security forces in eradicating this menace which wiped away over 200 billion dollars from the Sri Lankan economy must be commended.  

The UNHCR victory for Sri Lanka further justifies its fight against terrorism but the challenge now is changing global perceptions from a War Economy to a Peace Economy and hence the war celebrations need to be toned down so that energies can be directed to the more fundamental issues. If this is not done; as some analyst say, another organisation similar to the LTTE, will emerge.

This view can be justified by the high unemployment levels in Jaffna as well as the falling attendance of the youth for secondary education in the recent past. Some hypothesise that it is the Sinhalisation of the education system in 1956 that caused the birth of the separatist movement of the LTTE which may be the reason why the world did not congratulate Sri Lanka even after it defeated the terrorist organisation that had been banned by many countries, observed Athukorala who added that this response should be an eye opener for the policy makers that more fundamental changes were required to be done if Sri Lanka is to insulate itself from history repeating itself. 

Strategy shift

The Director Economic Affairs of the Peace Secretariat who was instrumental in staging one of the most successful industrial and trade exhibitions in Jaffna together with the security forces, that attracted over half the population of the peninsula, said that many countries around the world have been dogged by bad perception globally, but that it had been possible to make a turn around with strong and effective communication.

One such country is Rwanda which had transformed itself from a “genocide era” and was now renowned for its “Rwandan coffee” and the mountain gorillas. Athukorala said that if one googles Sri Lanka in five years we should have stories of new brands being launched, the dolphins in Kalpitiya, a new tea brand or for that matter nano technology, and the apparel industry rather than the war victory that was being touted as brand Sri Lanka.

He said visiting marketing guru Peter Drucker had stated that the country should even think of changing its brand name to ‘Ceylon’ which has a positive perception. The challenge however is if this strategy shift happens quick enough so that the country can benefit in the near future. The key issue is the policy reforms that are required to make this work and if these bold decisions can be made the same way the fight against the LTTE was done.

The reality

Whilst  successive governments  had been focusing on presenting a pretty picture highlighting that in 1996 the overall poverty indicator stood at 24.3% whilst in 2002 it moved down to 19.2% and in 2007 it went down to the magical mark of 15.2%,  reality was somewhat different.                        

 As per the 2003/2004 socio economic indictors access to pipe borne water in the Northern Province is only 3.1% whilst in the east it is recorded at 17.4%. The national average stands at 30.8%. Even though Sri Lanka could not be proud of the national performance, the fact remains that for a majority of people who live in the north east, life is not as comfortable as the people in the neighbouring regions.

Lack of access to toilets which is a stronger indicator on the quality of life of a household, the northern region registered 14.4% and in the east it is a staggering 29.2% whilst the national average stood at a respectable 5.6% which gives us an idea of the disparity that exists at a regional level even though the top line reflects a healthy situation.

Even though there has not been much studies done on the implications of the social indicators on terrorism, the insight is that these factors create social tension that in turn can lead to conflicts. This can end up in aggressive behaviour resulting in extreme behaviour like terrorism, Athukorala said.      

If we move on to indicators which are related to income and health in the north east, may be one can develop associations on the root causes of terrorism. As per the labour force survey of 2002 the labour force participation number is at 50.3% nationally whilst in the north it dropped to 33.8% and  40.3% in the east which can directly be reflective of the health gaps in these regions.

46% of the children below five years of age in the north east are underweight compared to the 29% in the rest of the country.  The percentage of babies born underweight in the country is 18% but the reality is that in the north east it is as high as 26%. These figures are worse in the districts like Batticaloa and Vavuniya, where one-half of the children are under weight which reflects the challenges that Sri Lanka is up against in the years to come.

War to Peace Economy

Athukorala outlined the steps that can move the Jaffna peninsula from a War to a Peace Economy and the importance of the private sector to support the government efforts whereby rebuilding can take place effectively.

1. Infrastructure

The current electricity requirement is around 33 MW whilst delivery is around 24 MW which results in a one and a half hour power cut in the peninsula that creates the first barrier to a peaceful environment. This needs to be corrected urgently so that the fruits of peace are felt by the Tamil community that at one time supported the LTTE.

Drinking water is another area to focus on given that due to a shift in the geological plates sea water has penetrated the water bed affecting the drinking water system in Jaffna. One option recommended by the specialists is to draw a water line from the Iranamadu Tank which needs to be strategically evaluated and speedy action taken, which further identifies the challenges the country is faced with to drive sustainable peace into the country. 

In Jaffna a  brand of ice cream that is locally manufactured called ‘RIO’ can give a strong challenge to brands like Elephant House and Cargills which is the opportunity that exits for private sector partnerships between the north and south.  

2. Governance structure

Research done globally has revealed that even though elections are a popular way of communicating peace due to the democratic process in place the insights are that an effective civil administration system can stabilise a system better.

In Jaffna the roads require maintenance, private lands acquired for high security zones need to be formalised and compensation paid so that people believe in the system which the private sector and the chambers must support commented Athukorala.

Another area that needs focus is sports in Jaffna. Sri Lanka Cricket has invested Rs.10 million to develop the sport in the peninsula after a lapse of almost 25 years with global brands sponsoring programmes like the Cricket Pathway but there is now a need for swimming, badminton, athletics and sports like tennis so that youngsters are engaged after school time. Athukorala invited the private sector to be part of brand building as there are almost 2100 retail outlets to service the 598,000 people who live in the peninsula.

3. Fair Trade

In 1983 although there were 247 industrial SMEs in Jaffna, today there are only a meager 45 which explains the issue at hand that requires urgent attention. The daily catch of fish exceeded 3000 metric tonnes but today it is only 200mt.

Once again a point to note is that security must be maintained specially in the peninsula as most terrorist attacks in the world happen in such places as seen in Mumbai. The opening of the A9 will be a crucial step in the process of bringing in normalcy as many Pettah traders comment that the charge of Rs.125,000 one way to Jaffna is exorbitant given that it can be done at Rs.30,000-Rs.50,000.

Atukorala said that one large personal care multinational company dealer had mentioned at a chamber meeting that business can be increased from Rs.35 million to around Rs.60 million in the Jaffna peninsula if there was free access to Jaffna.

Economic hub

Given the support Sri Lanka enjoys in the region we must push for economic hub status by developing the tea, apparel and tourism sectors with focused strategies whilst serving the SME sector so that positive stories can emanate if one googles Sri Lanka. There are many strong initiatives that are on line to put Sri Lanka on the world map as a global consumer.

The BPA Diaspora Investment Conference in June, the popular Hikkaduwa Beach Fest in July, and the global apparel fashion shows in October need the private sector support to make it a reality. The challenge now is how Sri Lanka unites to fight the global enemy — the economic down turn..


 

 
 

 

 
 
 
 

 

 


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