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‘Aggressive vaccination drive’, vital element in Sri Lankan economic revival

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John Keells Holdings PLC Chairman Krishan Balendra

‘An economic revival in Sri Lanka will be aided by an aggressive vaccination drive, initiatives aimed at strengthening the country’s reserve position through the attraction of foreign investment, strong expatriate earnings, better worker remittances coupled with fiscal support and an accommodative monetary policy stance to increase domestic activity, John Keells Holdings PLC Chairman Krishan Balendra said.

On the challenge faced by the state of reviving the economy while containing the pandemic, an economic and healthcare response based on a balanced and evidence-based analysis and a participatory and consultative approach, particularly with healthcare officials will prove beneficial, Balendra said in an interview with The Island Financial Review.

The interview:

By Lynn Ockersz

What are the main business challenges faced by JKH in these economically volatile times?

The continued impacts of the COVID-19 pandemic on consumer behaviour, is currently the biggest challenge being faced by economies and businesses worldwide, to which JKH is no exception. Subdued sentiment and periodic disruptions and challenges to business activity in the short-term to contain the pandemic is envisaged until a critical mass of Sri Lanka’s population is vaccinated, particularly in high-risk areas. The Government’s aggressive ramp up of the vaccination drive across the country in view of its target of vaccinating 13 million people by September 2021, which covers the population of adults over the age of 30 years in the country is expected to drive recovery, as witnessed in other countries.

The experience with the previous outbreaks and the subsequent recovery post easing of restrictions has resulted in the Group better navigating the ongoing outbreak. Although our businesses, excluding Leisure, continue to recover and better navigate through these volatile times, the performance of the Leisure businesses continue to be significantly impacted.

Do you expect the current decline in the per capita income of Sri Lankans to negatively impact sales growth in your supermarkets?

Although a decline in per capita income of Sri Lanka will have a bearing on overall spending patterns and purchasing power of individuals, the impact on sales growth in the Supermarket business is somewhat insulated given the nature of operations, as consumer baskets primarily consist of essential goods, personal and other daily household items. In addition, the growing popularity of modern trade due to the convenient shopping experience and access to diverse product categories at attractive prices is expected to off-set this current decline in per capita income, to an extent.

There has been a net foreign outflow of Rs. 63.5 billion from our stock market in recent times. What are the main reasons for this development and how could it be curbed?

Although the Government has honoured its debt servicing obligations to-date, the country has witnessed multiple downgrades in Sri Lanka’s sovereign rating in the recent past on the back of a sharp rise in the sovereign debt-to-GDP ratio, increasing challenges in lieu of external debt repayment, weakening local currency and liquidity constraints. Such macroeconomic challenges have also raised concerns surrounding a potential depreciation of the local currency which continue to be a primary concern for foreign investors. An increase in the number of COVID-19 infected cases and related deaths, especially with the onset of the Delta variant in the country, as witnessed in other countries, have also exacerbated this situation thereby impacting doing business and dampening investor sentiment.

In addition to continuing the aggressive vaccination drive, initiatives aimed at strengthening the country’s reserves position through the attraction of foreign investment, strong export earnings, better worker remittances coupled with fiscal support and an accommodative monetary policy stance to increase domestic activity will aid revival.

Currently, the state is facing the challenge of reviving the economy while containing the pandemic and its ill consequences. How best could this be achieved?

The twin imperatives of safety versus the economy is a conundrum that is common to all nations. Striking a balance between public safety and economic viability, has various practical complexities. We have witnessed varying responses from developed as well as developing nations from across the globe; Sri Lanka must leverage on such learnings and experiences in addressing these challenges. Sri Lanka is well geared with access to various expertise both on the economic front and the healthcare front, which the country should leverage on to implement and explore innovative and wider range of policy interventions.

As such, I believe an economic and healthcare response based on a balanced and evidence-based analysis and a participatory and consultative approach, particularly with healthcare officials, will aid the Government in reviving the economy while containing the pandemic.

In what main ways could the fortunes of the hotel and leisure sectors be turned around?

The hotel and leisure sectors continue to be significantly impacted by the COVID-19 pandemic, particularly in response to new outbreaks and increased travel health and safety protocols such as mandatory testing and quarantine requirements. Whilst we have witnessed rapid vaccination drives in countries such as the USA and UK, the relatively slower pace of the vaccination roll out in many other countries continues to hinder a full resumption of international travel.

The performance of Sri Lankan tourism will also largely depend on the revival of regional and global travel when travellers regain confidence. We expect Sri Lankan leisure market will recover with the aggressive ramp up of the COVID-19 vaccination programme in the country similar to the recovery trends we witnessed in the Group’s hotels in the Maldives, where the occupancies at our hotels are higher than anticipated and the continuous momentum of forward bookings in the Maldives is also encouraging. This also reflects a significant ‘pent up’ demand for leisure travel once revival commences.

Focused destination marketing efforts by the SLTDA and the Government coupled with a plethora of initiatives aimed at reviving the industry is also expected to aid a turn around. The destination’s close proximity to two of the largest outbound travel markets, India and China, coupled with improving flight connectivity and investment in infrastructure will spearhead growth beyond the pandemic. In this regard, ‘Cinnamon Life’ is also uniquely positioning to aid Colombo and Sri Lanka, in positioning itself as a tourism hub given its multi-use facilities and iconic design.



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Sri Lanka Tourism returns to Spanish market after pandemic

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Spain is one of the fastest recovery markets for Sri Lanka Tourism after the pandemic and participation in FITUR argues well for the much-needed exposure for Sri Lanka as an attractive tourism destination for Spanish-speaking countries, contributing in a substantive manner to its overall growth strategy. Sri Lanka Tourism made the presence with the 28 private sector companies at 43rd edition of FITUR International Travel Mart which was held from 18- 22 January 2023, Madrid, Spain. FITUR is the largest tourism event in the Spanish Market where all the sectors leisure, business and MICE tourism meet under one roof.

Sri Lanka Tourism stall was ceremonially opened by Mr.Chalaka Gajabahu ,Chairman of Sri Lanka Tourism Promotion Bureau and Honorary Consul of Sri Lanka in Barcelona, Mr. Agustin Llana and representatives of the leading private sector members of Sri Lanka.

Sri Lanka was able to attract high level of attention from the trade and travel visitors attended at the event. The Sri Lanka pavilion highlighted many aspects of its potential culture, beauty, Ayurveda and many more which Sri Lanka would offer as a tourism destination. Sri Lanka stand optimized the “So Sri Lanka” and “Visit Sri Lanka” vivid sights to attract the potential visitor segments. At the Sri Lanka pavilion, Ceylon tea was served for the visitors with a view of promoting Ceylon tea in the Spanish market.

On the sideline of the FITUR travel fair, Sri Lanka Tourism Promotion Burau officials participated at the events organized by the UNWTO. During the events, SLTPB officials met with the Mr.Harry Hwang , Director of Regional Department for Asia and the Pacific, UNWTO.As a result of discussions, Mr.Harry Hwang has shown the interest to hold the UNWTO Joint commission in Sri Lanka in 2024.

Meantime, the SLTPB and Sri Lanka Embassy of France also took steps to arrange Business Meetings, exclusive media interviews, Air Line meetings at the FITUR 2023. The Media gathering conducted during the fair created the great opportunity to highlight the updates on the destination and create awareness on the destination.

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Airtel enhances its most popular unlimited offering with the launch of Rs. 888 Freedom Plus

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Building on its promise to continuously add value for its customers, Airtel Sri Lanka unveiled the latest in its range of prepaid Unlimited Freedom Packs, delivering more value, more freedom and unlimited access to 6 of the most popular social media platforms among Sri Lankan youth.

The newly introduced freedom unlimited pack, priced at just Rs. 888 – offers consumers complete unlimited access to an even larger selection of social media apps, including TikTok, Instagram, Facebook, YouTube, Messenger and WhatsApp.

The pack also comes with all the perks of Airtel’s popular Freedom packages, including 30GB data (1GB/day), unlimited calls to any network as well as 1,000 Airtel-Airtel SMSs and 50 local SMSs for a validity period of 30 days.

“The Airtel team has been continuously challenging itself to find new and innovative ways of unlocking more value for our customers. The launch of our Rs. 888 Freedom Plus pack, and the major expansion in social media that it enables is another powerful example of our value-driven, customer-centric approach in action.

“With the launch of Airtel Freedom Plus 888, we are now offering by far the best deal in the Sri Lankan prepaid market in terms of pricing and unlimited access to the most popular social media platforms.

We also continue to hold up our promise of a simple and streamlined experience by offering all of these values in a single yet most affordable pack that can easily cover consumer’s monthly mobile needs while continuing their usage habits, instead of managing the complexity of separate purchases for different apps. That is why no other product in the market can match the value of the Airtel Freedom packs,” Airtel Sri Lanka MD/CEO Ashish Chandra said.

Airtel’s rollout of groundbreaking value-focused products follows on the telco’s substantial investments into further enhancing its 4G experience. Through the installation of state-of-the-art infrastructure and continuous efforts in boosting mobile-broadband network, Airtel now offers coverage to more than 90% of Sri Lankan telco users island-wide.

Following the completion of its nationwide 4G rollout to provide island-wide coverage, initiating a series of industry-firsts such as data-rollover facilities and unlimited calls to any network, the telco has received a strong positive response from Sri Lankan mobile users. With unprecedented numbers now signing up for Airtel Freedom packs, the telco now has one of the fastest growing user-bases in Sri Lanka.

Drawing on its extensive global presence and expertise, Airtel has been steadily consolidating its presence in Sri Lanka over recent years, launching a flurry of market-disrupting products, engaging in socially-driven partnerships aimed at empowering Sri Lanka’s youth, and advocating for progressive industry policies to ensure a more vibrant future for the Sri Lankan telco sector.

To activate the Rs.888 package, customers have the option to either directly reload Rs.888, activate through the My Airtel App, recharge via recharge portal / https://recharge.airtel.lk / Airtel Sri Lanka Flagship Store.

About Airtel:

Airtel Sri Lanka commenced commercial operations of services in Sri Lanka in 2009 and was the fastest operator to reach 1 million customers. The Airtel Sri Lanka offering of technology innovation and service excellence has driven rapid adoption rates among the Sri Lankan youth. Today Airtel has established its state-of-the-art 5G-ready 4G network across all parts of Sri Lanka, and is continuously boosting its network capacity to deliver maximum value.

For more information, connect with Airtel on social media, check the MyAirtel App, or visit www.airtel.lk

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‘Upholding the spirit of privatization essential to unlocking the true potential of RPCs’

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By Planters’ Association of Ceylon Chairman,
Senaka Alawattegama

Despite the remarkable resilience of our people, industries and enterprises, Sri Lanka’s economic outlook in 2023 – along with approximately 1/3rd of all countries according to the IMF – appears bleak. Worse yet is the fact that this economic fall from grace was entirely predicted for many years, even prior to the onset of the COVID pandemic.

The fact that Sri Lanka’s policy makers chose to do nothing to avoid economic catastrophe despite being clearly, forcefully and repeatedly warned about this inevitable outcome has been a source of shock to many.

But to those in the plantation industry who have been grappling with systematic ineptitude from policymakers for decades, their consistency in making the wrong decisions is an all too familiar pattern that only helps to illustrate the root cause of these issues, namely the absence of credible and informed stakeholder consultation in policy making.

One of the best examples of this dynamic has been the disastrous decision to convert Sri Lanka into 100% organic agriculture overnight. Implemented with zero consultation or consideration of the interests of the industry and its stakeholders, almost every expert agrees that this decision was the proverbial straw that broke this nation’s back.

Nearly 500 million missed opportunities

From the time it was first announced, the plantation and agriculture sector, including tea smallholders and Regional Plantation Companies (RPC) alike were unanimous in their opposition and scientific criticism of this policy.

Yet instead of taking these accurate perspectives into account, logic was discarded in favour of agri-policy derived from election podiums, leading to a total ban on the importation of all synthetic agri-chemicals. Based on the performance of Sri Lankan tea alone, we now have a minimum dollar value to illustrate the size of that mistake.

Today the Sri Lankan tea industry has been set a target of US$ 1.5 billion in precious export revenue. A shortage in supply of quality Greenleaf means that Sri Lankan tea has also benefited from some of the highest dollar prices on tea exports since 2017. Coincidentally, Sri Lanka’s export earnings from tea at that time stood at approximately US$ 1.5 billion, meaning that our current target is simply to do as well as we did in 2017.

However, despite having regained the same favourable prices that we enjoyed in 2017, in 2022, our nation was only able to produce approximately 250 million kg of tea, where in 2017, we had produced 307 million kgs. The result is that we only generated just under US$ 1.1 billion in tea exports last year, as compared with US$ 1.5 billion in 2017. The shortfall was worth approximately US$ 466 million – funds that could have been utilized for the purchase of fuel, gas, and medicines and other essential items.

Given the rapidly deteriorating global economic climate that we all face in 2023, all Sri Lankans must now appreciate that as a nation, we have no margin of error left. In that spirit, on behalf of all RPCs, we wish to once again reiterate our industry’s core policy priorities over the coming year.

Wage reform towards productivity-linked earnings

The debate surrounding wages has been a longstanding one, and has once again come under the spotlight with the increase in the cost of living. Two years ago, our industry was compelled for the first time since 1992 to enter into litigation as a result of the ill-advised decision on the part of Trade Unions to abandon the terms of the Collective Bargaining Agreement by involving the Wages Board to pay a daily wage of Rs. 1000 per day.

Despite challenges faced within the industry, we must reiterate that we have been able to honour our commitment even at present, to pay the said amount amidst certain factions having falsely accused RPCs for not doing so.

While certain parties demand limiting the pay to Rs. 1,000, The Planters’ Association of Ceylon have time and again advocated for a model that will allow a worker to earn beyond this. We believe it is long past time to move away from the archaic colonial era daily wage model and into a system that will incentivize workers based on performance. A productivity linked wage model has seen a positive impact on many estates and has proven its effectiveness among tea-small holders who contribute to 70% of the tea production in the country.

Typically on estates where it has been tested, harvesters have, on average, increased their output from 18kg to 24kg and have earned over Rs. 65,000. While some trade unions and other groups continue to offer knee-jerk opposition to these reforms, workers with actual first-hand experience with the productivity linked wages are overwhelmingly in support of them.

This is because, on average, they have the potential to increase their earnings by 80% -100% relative to the current fixed daily wage of Rs. 1,000 that was forced on the sector through the Wages Board. Moreover, productivity-linked wages offer flexibility to harvesters in the time spent on the fields and are incentivized based solely on performance and output.

We believe this could also provide a solution to the shortage of labour experienced in the industry at present. For the RPC sector, our workforce has reduced from 300,000 down to approximately 100,000 to date, and shows no signs of stopping. Especially if Sri Lanka is to achieve its national production targets our first priority is to implement every viable measure to reverse the migration of labour out of the plantation sector.

Land use policies and diversification – our way forward

While tea and rubber have put Sri Lanka on the map, we believe it is an opportune time for Sri Lanka’s plantation sector to diversify its product offerings to the world. It is absolutely critical for Sri Lanka to harness its resources and assets in the most optimum level possible, however to do this RPCs need to be given a free hand to determine its own land use policies should it be beneficial for the economy.

In instances where the land has become unsuitable for crops like tea or rubber, plantations should be looking to instead produce other valuable crops like coffee and spices which most of our RPCs have been successful in doing so, however, there is more that can be done. Companies are already experimenting with crops like avocado and berries which have yielded successful results, and valuable new export opportunities.

In that regard, another crop with strong export earning potential is Oil Palm. We cannot overlook the economic benefits this golden crop could offer Sri Lanka, especially at a time when the country requires dollars to purchase essentials like fuel, medicines and gas. At present Sri Lanka produces approximately 25,000 MT, where Sri Lanka imports 200,000 MT of palm oil for domestic usage. The value of those imports is now over Rs. 24Bn.

Like the 100% organic strategy before it, the campaign against oil palm cultivation has long been proven to be completely lacking scientific facts, and PA has since the beginning provided evidence as to how this crop can be grown in an ethical and sustainable manner without causing harm to the environment.

Diversification is not merely a revenue growth strategy – it is a de-risking strategy, which ensures that even when one industry experiences a downturn, others may be able to continue, ensuring the financial viability of the whole. However to do this successfully, RPCs require support from the government by enabling and providing the necessary assistance to grow crops that are financially viable and freedom to utilize the land in the best possible way.

Crisis as an opportunity for greater collaboration

Since the privatization of the plantation sector in 1992, RPCs have come a long way, with the past two years being incredibly challenging for all. This has pushed the sector become innovative and use technology to unlock new potentials in the industry – an example to this is the online auction system which was implemented during a short period of time.

RPCs have also been experimenting with precision agriculture, in order to optimize plant nutrition and effective utilization of agri-chemicals following the ban with some even going into producing their own fertilizer to cut down on cost and to be able to meet their requirement.

These promising advancements are a testament to the plantation sector’s ability to adapt and find innovative methods amidst crisis. However if we are to unlock the full potential of this billion US dollar industry it is imperative that we learn from the mistakes of the past, and work together to prevent any further repetitions of the kinds of policies that got us to this point.

Privatisation in its true form is therefore the only way forward, to allow business to do business, while the government should stay focused on policy that is led by individuals who understand and are focused on commercial realities. It is safe to say that the spirit of privatization is the spirit of democracy where collaboration is essential to securing the best outcome for all.

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