|IIFA opened our eyes on seven fronts!|
|Cancer of Terrorism|
But I will be failing in my duty if I do not mention that from a macro end there are some fundamental changes that are required in the country. We have to reduce the fiscal deficit from the current 9.7% to below 5%. But the good news is that Q1 this year it is 2.1% which is encouraging. However, focusing on privatizing the loss making state enterprises that shave of 45 billion or 1% of GDP and curtail some of the subsidies will have to be high up the country agenda. But these changes need to be done gradually so that social unrest does not happen. I would strongly recommend that privatization must be started with the profit making state ventures so that with the momentum created the more difficult ones can be attended to.
On the other hand, we also need to move the country up the ladder in the ‘Global competitiveness index’ from the current 105 ranking to be within the first 50 so that we create the enabling environment for global companies to invest in Sri Lanka. However, we need to keep in mind that these are tough calls. However, it can be done now with the new found stability of the government which has a 2/3rd majority. But it must be done at the right time. If not there can be many social ramifications which can be harmful given the increasing cost of living.
Whilst these structural changes are in the pipe line, we need to also build Brand Sri Lanka. We should not wait for the fundamental changes to be done to start global brand building. This is where I believe IIFA helped set the stage. What is required now is for the private sector do the follow up initiatives. Namely inviting the celebrities for key outlet openings, new adventure tourism initiatives so that we ride on the relationship established. The good news is that the 1st step has been taken. Before writing these thoughts I checked around with my private sector colleagues and termed this piece "IIFA opened our eyes on 7 key fronts".
No 1: Being Pragmatic
As the great Mahathir Mohomed last week mentioned in Colombo, the essence of the success of Malaysia is that it took decisions with pragmatism rather than just following western business models. He went on to say that, it is only a Sri Lankan that can feel the vibes of the local community and the culture that it fosters. Hence, what ever decision that is taken must be in this perspective than pleasing global super powers.
If we were to examine the visitor arrivals for the first five months it is clear that India leads the board with a record 10,686 visitors at a growth of 87.6 percent. However, whilst Sri Lanka is an attractive destination for some Indians there is some apprehension in some quartets of India that needs to be neutralized. IIFA helped Sri Lanka reach up to them and make a statement. Vivek Oberoi been out spoken on this front said it is these kinds of events that can reach to the under privilege namely the IDP’s.
The 300 homes that Salman Khan launched was yet another project that can help change the attitudes of this segment of people in India.
The psychological principle called Congruity theory is what underlines how positive stimuli can move neutral or negative attitudes among people is exactly what IIFA helped Sri Lanka achieve.
No 2: Investing to gain
Currently media is highlighting the expenditure of hosting IIFA. Some even highlighted road improvements and room allocations and the like. The fact of the matter is that without investment one cannot build a brand. The good news is that the private sector sponsored some of the costs partly. We must also note that Sri Lanka is emerging after a long period of war and there are many improvements that will be required to make Sri Lanka conducive to be tourism friendly. IIFA was only the beginning. Let’s accept it.
If I may take a parallel, China incurred a cost of 40 billion dollars when it staged the Beijing Olympics. Almost 26 billion dollars was spent on improving the Transportation which included railway hubs, new railway lines, improvements to the Beijing subway and Tiajin expressway which actually had no links to the Olympics. But what China did was to strategically improve infrastructure to cater to the 540 million who had come into the city for work in the urbanization process. They used the Olympics as its vehicle for doing such infrastructure upgrades.
Sri Lanka must do the same, and use every event to make its infrastructure consumer friendly and event friendly. Some can argue that when the country’s borrowings are high should one follow this strategy. But as I see it, we are in a catch 22 situation. We have to do the improvements to drive business into the city whilst we need to bring down the fiscal deficit. It needs to be managed. By the way India’s fiscal deficit is also at a high of 86% of the GDP but the economy is growing at eight percent growth which is interesting economic model.