SL to reach nine percent GDP:

Poised to achieve $ 10 b export earnings in 2011

*Fundamentals right in growth agenda

*Rural Lanka must latch on to cycle of growth

*Divi Neguma a pillar on driving inclusive growth

*Tea industry must select key markets and focus all efforts on them

*Exports to focus on South Asian appetite for consumption

*Mannar has potential

by Lalin FERNANDOPULLE

Sri Lanka is the driving economy in Asia, with a growth trajectory to reach nine percent GDP growth, said former Export Development Board Chairman and Executive Director of the National Council for Economic Development, Rohantha Athukorala in an interview with the Sunday Observer.

Rohantha Athukorala

Excerpts of the interview

Q: What are your views on the economic climate in Sri Lanka?

A: When the economy grows at 8.6 percent GDP in the last quarter and 8.1 percent at year end, it communicates a signal to the world that we are the driving economy in Asia. A point to note is that over seventy percent of the economy is driven by the private sector which means that the strong profit growth reported by companies in the financial year 2010/2011 mirrors the overall macro picture which is a strong grounding that the fundamentals are right in the growth agenda of the country.

Q: Any notable performances?

A: The hotel and restaurant segment growing by 41 percent in Q4 2010 is reflective of private sector performance. The transport sector has grown by 11.9 percent which once again demonstrates the upturn in logistics of the country given the overall drive on business and trade.

It is fair to state that Sri Lanka is definitely on a growth trajectory to reach a nine percent GDP growth.

Hence the challenge is how rural Sri Lanka can latch on to this cycle of growth so that we can achieve inclusive growth rather than a lop sided performance like today, when the Western Province carves out almost fifty percent of GDP which is not very healthy. The new strategy Divi Neguma is a pillar on driving inclusive growth.

Q: How about exports?

A:In the backdrop of the 17.3 percent growth trajectory of exports in 2010, in January 2011, exports have unleashed a commanding 74 percent growth which demonstrates the resilience of the Sri Lankan exporter who has adjusted to remain competitive even though are have been dropped GSP+. Apparel earnings have grown by 21.9 percent to $385 million with cutting edge innovation and marketing initiatives stands strong for Sri Lanka's export strategy. For instance the innovation of the carbon neutral bra is one such initiative Sri Lanka can showcase to the world, the R&D talent of Sri Lanka.

Q: What about the rest of the sectors?

A: Overall, industrial sector performance has continued to grow which means that overall business strength is positive. It is not only the apparel sector that is doing well.

The rubber sector has grown by 18.7 percent with solid tyres and tubes making a salient contribution.

While we have a strong performance we must take note of the ramifications of the Japanese tsunami nuclear issue on the vehicle market. Agricultural products have continued to perform with a 28.9 percent growth agenda which means that Sri Lanka for sure is within the $ 10 billion export earnings mark for 2011.

Q: What is your view on Sri Lanka tea?

A: A very strong performance once again with a commanding 1.4 billion dollar revenue. With the 10 million dollar promotional campaign that will burst out globally soon Sri Lanka has got its tea on a clear forward strategy.

I would strongly urge the industry to select some key markets and focus all its efforts on these markets just like what India has done so that we make Ceylon Tea the symbol of high quality tea.

We may expand to the rest of the markets on a roll on approach of communication. I accept this is a tough call to make given that many stakeholders are involved and operate in diverse markets. But these are the cutting decisions that can propel the new economic growth agenda of Sri Lanka.

Q: Any key issues?

A: One key issue is that Sri Lanka's share of global exports has declined to 0.6 percent from the 0.8 percent which is alarming. This means that we are falling behind.

One way out to arrest this situation is to focus on the South Asian appetite for consumption where Sri Lanka accounts for just four percent of overall exports.

The style and designs will have to go through change to meet the new customer that is focused but this is the challenge for Sri Lanka and it must be supported with strong policy. The 100 stalls that have been offered at the Kumning Fair for Sri Lankan exporters is a good start to commence this new strategy.

Another key issue is the probable impact of the La Nina phenomenon on the agricultural economy of the North East as well as the tea industry.

The reason why I am highlighting this sector is because of the food security issue that can be a burning problem which has to be addressed.

Tea pluckers at work. Tea brought in a $1.4 billion revenue last year

The one million economic units branded as Divi Negumu can support this cause and a more fully-fledged agricultural drive with a strong infusion of technology can benefit Sri Lanka.

The latest numbers reveal that the FDI performance in 2010 is one of the biggest issues the country is up against given the performance of neighbouring countries like Cambodia and Vietnam.

We have to improve our performance from the current rank of 105 to be within the targeted top 50 countries of the world. For this to be achieved a careful orchestration of variables will have to be done as a matter of urgency. Sri Lanka is struggling on this front.

Q: Coming from a sports background what is your view of the recently concluded WC 2011?

A: Sri Lanka performed extremely well at the World Cup 2011. It's just that India was a better side. Now it's a matter of picking up the lessons and focusing on the 2015 championships. Let me highlight some of them and link them to a business situation.

Electronic

ICC CEO Haroon Lorgat said that the accuracy of decision making had improved in WC 2011 due to the use of technology. The pick up to us is the increased use of the PC and mobile phone in our daily lives. Current research reveals that only 30 percent of the features are on average, used by a modern day business executive. If we can increase our productivity by just 5 percent as a nation the aggregate can be considerable.

28 years

If we examine the Indian victory it has taken the country 28 years to bring the WC back to the country. Sri Lanka's attempt was to bring it in 14 years. As far as the Sri Lankan cricket team is concerned, it was the oldest team in the tournament.

This needs to be changed in the next four years. For this to happen a strategic development of the game must happen at district level so that talent can be identified. This same ethos holds ground in business. Young blood has to be introduced.

Next captain

If we examine 'Team India', Tendulkar held the team together but it was Yuvraj that won the Man of the Match four times over. Meaning that a new leader was identified and nurtured to take over after Dhoni.

Even at the finals, once the two stalwarts were out, it was the youngsters that guided India to victory. This once again highlights the importance of having youngsters in the corporate hierarchy.

Risk

Pepsi Cola took a calculated risk and bought media rights across the WC 2011 to announce the 'Change the Game' campaign.

It worked from the semi-final onwards. The ratings improved to 20+ and the media was 350 percent more expensive as India was into the last four and then in the finals. We need to do the same in the world of marketing and business. Life is all about calculated risks

A wild card

After the victory, when Dhoni was interviewed a comment made was that he had to prove that his decision to bring in Srinath into the final had to be justified. I guess as a leader you must be courageous to pick up wild cards which are sometimes shunned by others.

Take opportunity

Whilst India and Pakistan have been waging war for ages, internally the fight on poverty and home soil terrorism was at its peak in both countries. The two leaders used the opportunity for public diplomacy even though the public was strongly against 'Cricketing Diplomacy' planned. The leadership pursued the bold strategy and the result was that brands India and Pakistan were mentioned across all news bulletins of the world. Even though Pakistan was not ready, India used the WC 2011 to build its flagging global image highlighted for corruption. Sri Lanka needs to take a cue from such brand building decisions.

Q: What next for SL?

A: Sri Lanka lost a golden opportunity to market to the world the new economic order that has set into the country. The lesson is that we must not let this happen again for Brand Sri Lanka.

Sector specific brand strategies

Given that we have regained our pride with our team coming into the finals, we must now roll out some strong media in key markets sectorally. The 'Ceylon Tea' brand campaign is set to roll out globally with some focused work done by the industry on a successful private-public partnership. We must launch a similar IT/BPO campaign. Brand strategy for 'Ceylon Cinnamon' is shaping up too and some seed capital must be infused.

The apparel industry image building campaign is already working out well.

SL Premier League

The stage is set for Sri Lanka to launch an IPL version on home soil. What's unique is that Pakistan can also be part of the tournament.

Every facet of the IPL agenda must be mirrored and bettered to ensure that the Sri Lankan version brings in the vibrancy to Brand Sri Lanka.

This should include the after parties, the use of viral media across the world and getting Brand Finance to value the championships. IPL is worth $4.2 billion with each team valued at 40-45 million dollars. We must develop a similar model.

Export Bazaar

For the 1st time Sri Lanka got exposed to almost all export products that we market to the world at the Export Bazaar. Let's now talk about them positively as this is part of Nation Branding.

New business model

It's time Sri Lanka develops a new business model for corporate Sri Lanka by venturing into sports.

The Ambanis did the same with Mumbai Indians as did many other corporates. Sports is a thriving business globally and Sri Lanka is now ready for this wave.

Competitive ranking

Starting a business is a key challenge that needs to be addressed by improving competitive rankings.

There is an internal plan that from the current 105 rank we can achieve No. 65 without taking a hit on the revenue model.

This needs to be implemented as a matter of urgency so that we can attract the FDIs.

Why not Mannar?

Just like brand Hambantota I can see that there is a lot of potential for Mannar to be developed on a pure demand model.

Be it the Industrial zone or access to India via the new ferry service, Mannar's growth potential is very strong. The challenge is focused investment.