January 21, 2011
By Vijay Eswaran
I have never shied away from articulating my faith and confidence in the Sri Lankan economy, in both the good times and bad. My significant investment in Asia Capital is not the only example I can show to support my claim.
It is a well known fact that I have been steadily investing in Sri Lanka through this last decade in prime industries such as hospitality, finance and even in conglomerates like John Keells Holdings. But what I find amusing and at times perplexing is how I am seen as a foreigner invading Sri Lankan territory, by local businessmen, due to my substantial shareholding.
I have repeatedly tried to explain that my roots are in Sri Lanka – my grandfather Saravanamuthu Pillai migrated from Jaffna to the then British Malaya to work in the Malayan Railways in the early 1920s and I have grown up on stories of this beautiful and brave island. My wife is Sri Lankan and her family continues to live in Colombo. I have been visiting Sri Lanka since I was a young boy and consider it my ancestral home.
My investments in Sri Lanka have always been made on the basis of my strong belief in the fundamentals of this country. And as anyone can see, I have been proved right once again, considering the remarkable results posted by Asia Capital PLC (of which I hold 87%). For this, I commend Mano Nanayakkara, Chairman and MD of Asia Capital and his team for their excellent work in resurrecting a company which was tottering on the brink of collapse – a job well done.
I very strongly believe and I had said this before – Sri Lanka has the potential to be an international hub like Hong Kong, Singapore and perhaps even Dubai. All of them are natural geographical hubs on the map, with the ability to grow and develop simply by virtue of being hubs. The nature of these hubs is such that no matter what happens, they have the ability to bounce back relatively quickly, after a negative turn. A key component in the success of small countries like Hong Kong and Singapore are its people. I can say the same for Sri Lanka, as I see this tiny island begin to rise like a shining star with the spirit of entrepreneurship bursting at its seams.
It is now time for Sri Lanka to gear itself for the next step; to model its business infrastructure to attract the right investors. The facts speak for themselves. The Sri Lankan economy has been remarkably resilient in recent years despite the conflict. The country’s GDP expanded by 7.1 per cent year-over-year in the first quarter, driven largely by its strong agriculture and services sectors, robust industrial production and soaring tourism. Despite the 26-year-old civil war and the ravages of natural disasters like the tsunami, Sri Lanka has registered a strong growth in the first decade of the 21st century, averaging about 6.4 per cent in the last six years and has a GDP of $48 billion with a per capita income of $5300. Notably, the nation’s per capita income doubled in a period of about five years while war was raging!
A key factor behind this development and economic growth is government spending. The end of the civil war has opened up the north and east of Sri Lanka to increased crop production and has reduced the cost of food products and rapid development projects are taking off on the ground, such as the construction of the massive Hambantota Port.
Most importantly, peace and expectations of rapid economic growth have already started attracting foreign investment. Last year Etisalat, UAE’s largest telecom services provider divulged plans to invest approximately $163-million over six months to expand its 3G network in Sri Lanka. A few months ago, Minor International, Thailand’s biggest hotel operator, acquired a controlling stake in Kani Lanka Resort & Spa, at an estimated US$ 22 million to take advantage of increased tourism to the island.
Sri Lanka does not need any large billboards to advertise its potential because the whole world can see it, but businesses need an entry point and a conduit to operate through. If these channels are blocked by red tape and unnecessary regulations, the opportunity created in this last year could be all but lost.
We must also not forget the vast network of the Sri Lankan Diaspora that is spread across many countries, but has its roots firmly entrenched in the motherland. In recent times inflows of remittance payments from Sri Lankan émigrés living overseas are soaring and will likely continue. The Diaspora are perfectly positioned to partner with Sri Lankan businesses, looking to go international. This not only helps smooth the road to business opportunities, but also helps forge cultural and aesthetic ties with the brethren living outside the island.
Speaking of culture, I was delighted to be part of a recent project by Asia Capital that helped showcase the land of my ancestors in all its glory. A beautiful coffee table book titled Glorious Jaffna, a pictorial representation of the splendours of the peninsula was put together by two talented employees of Asia Capital with our full support. We hope to use this book as a tool to raise funds for an education project in the North.
According to the University Grants Commission (UGC) of Sri Lanka, the country’s youth literacy rate stands at a remarkable 98%! The United Nations Development Project (2009) report on ranking of countries by literacy rates shows Sri Lanka at No.94 with a literacy rate of 90.8%, way ahead of its neighbour India at No. 149 with only a 66% literacy rate. The high literacy rates, low mortality rates and the steadily declining population growth, reflect the country’s progress in the sphere of social development as well.
We are now in a brand new year that is brimming with exciting opportunities and endless possibilities. In the Asia Capital Annual Report 2010, its Chairman Mano Nanayakkara says that 2011 will be the year of consolidation, recovery and growth. The company is undertaking a restructuring exercise in order to reposition itself as an investment firm. I believe that the Sri Lankan economic strategy would benefit by following this cue. 2011 should be a time for consolidation, for gathering up forces, marshalling energies and bringing together the many aspects that are necessary for positioning Sri Lanka as a world class economy.
(Entrepreneur businessman Vijay Eswaran is the founder of multimillion-dollar global conglomerate QI Group. Eswaran is also a philanthropist who has generously donated to several institutions in Sri Lanka, including providing the country’s only paediatric laparoscopy machine to date to the Lady Ridgeway Hospital. He is the majority shareholder of Asia Capital and a significant investor in the Colombo Stock Market.)