Pricey Pachyderms – The Market for Captured Baby Elephants

Minneriya elephants during 'The Gathering', August 2012. Image by author.

Minneriya elephants during ‘The Gathering’, August 2012. Image by author.

So aside from today being International Youth Day, apparently it’s also ‘World Elephant Day’! Elephants have strong historic and cultural ties in Sri Lanka – from working elephants that carried logs or fought alongside kings in ancient Sri Lanka, to the present day parading of them in elaborate costumes at Buddhist peraheras. So on ‘World Elephant Day’ today my mind went back to some startling numbers on the ‘economics’ of domesticating wild elephants that I heard at an event I attended in June. The event was titled ‘Elephus Maximus Problemus’ and was a fundraiser to support a legal and advocacy campaign to stop the unlawful capturing and domesticating of wild elephants. The key speaker Vimukthi Weeratunga, a wildlife expert and activist, revealed that the going price for illegally procuring a single baby elephant from the wild was a staggering Rs. 11.5 million! And once captured and domesticated, you could earn between Rs. 250,000 – 300,000 a month by renting an elephant out for tourist fun rides and parades. Such is the unfortunate economics of captured baby elephants in Sri Lanka. Weeratunga told us of horror stories of instances across Sri Lanka where baby elephants had being captured and kept illegally and in terrible circumstances. Elephants belong in the wild. The only ‘economics of elephants’ I’m willing to tolerate is the tourism revenue brought from ‘The Gathering’ at Minneriya National Park. But that too is increasingly getting out of control, thanks to indisciplined and inconsiderate safari jeep drivers.

 

Bringing tech entrepreneurship to improve government

Just read about a fantastic programme of The White House called ‘Presidential Innovation Fellows’ which brings together folks from the technology entrepreneurship and ‘start-up’ community to address national issues and improving people’s interaction with government. Although I just stumbled upon it, it seems to be running for the 3rd consecutive year.

As noted in this article about the Fellowship programme,

The program, which pairs fellows ranging from venture capitalists to all kinds of “geek” types with government agencies, launched two years ago and aims to leverage the tech industry’s lean startup know-how and creative thinking to improve Americans’ lives and government process.

It’s a clever way of providing the tech community an avenue for ‘service’ – beyond the traditional routes of military service or typical public service. Harnessing the best of talent, creativity, and disruptive innovation, this programme seems like a great way to infuse new thinking into how government and governance can function better with practical technology interventions that take advantage of the mobile and data revolution.

President Obama with a batch of Innovation Fellows. Image courtesy whitehouse.gov

President Obama with a batch of Innovation Fellows. Image courtesy whitehouse.gov

As the official website of the Fellowship notes,

The Presidential Innovation Fellows (PIF) program brings the principles, values, and practices of the innovation economy into government through the most effective agents of change we know: our people. This highly-competitive program pairs talented, diverse individuals from the innovation community with top civil servants to tackle many of our Nation’s biggest challenges, and to achieve a profound and lasting social impact. These teams of government experts and private-sector doers are taking a “lean startup” approach and applying methods like user-centered design to achieve results for the American people in months, not years.

Hope this type of engagement can be looked at in Sri Lanka, too. For instance, bringing in app-developers and big data junkies to use some of the valuable information that is being gradually made available on the government’s Open Data portal. While much needs to be done to improve the “readability” of the data, it’s certainly a great start.

For instance, data on crimes (by type, severity and location) can be used by Sri Lanka Police to better allocate resources and identify critical points. A mobile app can help both the Police force and citizens easily access geotagged information and make better choices. The same goes for the rich data on prisoners maintained by the Prisons Department, as highlighted in this blog. Just one of many possibilities. But it requires a basic recognition that improving ‘government’ doesn’t have to follow traditional paths. Let’s open it up to new ideas and infuse new creativity for solving national problems.

292,706 A/L Sitters: But What Next?

MIT Global Start Up Labs Colombo 2013

A team of Moratuwa University students demonstrate their e-commerce product to academics and industry leaders at the MIT Global Start-up Labs Launch Day 2013 at the Kingsbury Hotel, Colombo, Sri Lanka (image courtesy guest contributor)

The MIT Global Start-Up Labs project had it’s launch day last week (1st Aug), where dozens of bright young Moratuwa University students displayed their techno-entrepreneurship prowess. Talking to them, hearing their ambitions and ideas, watching them confidently present their products to industry leaders, was truly inspiring. But I couldn’t help but say to a couple of them – “work hard, don’t screw this up! – you’re the lucky few who got in to uni”.

On Monday this week (5th Aug), 292,706 applicants sat for their first day of the 2013 GCE Advanced Level (A/L) exams. As each of the boys and girls take their seats at the exam centres this week, open up the question papers, and draw on months of exhausting revision to frantically write great answers – they must all have one thing on their minds – “will I do well enough to enter university?”. Their anxiety is not misplaced. Going by statistics from 2010, only 6 out of 10 of all of them would pass the A/Ls with sufficient results to be considered to enter university. But what must make them most anxious, and indeed most frustrated, is that they could qualify to enter university but never get the chance to pursue their ambition. Why? Because less than 20 of every 100 of those who qualify will actually get admitted to state universities – just not enough capacity to cater to all. This means that each year Sri Lankan universities shut out around 100,000 bright young boys and girls, who have gone through the rigors of national exams and achieved the right results, but simply cant be accommodated. In 2012, 40,000 more of them were shut out than in 2011. Best case scenario – from the batch that is sitting their A/Ls this year, around 32,000 of them will get the chance to pursue university education, leaving behind another 140,000. The hallmark of a knowledge-driven economy is that more people are following higher education and tertiary training programmes, gaining the critical skills that a new economy and a globalized world requires of them.

Leaving behind hundreds of thousands of our brightest minds to figure this out for themselves – often unable to afford expensive private programmes – surely this cannot be compatible with our ‘Knowledge Hub’ aspirations? 

Sri Lanka’s Growth in 2013: Forecasts Aplenty

President Mahinda Rajapakse (Minister of Finance) and Nivard Cabraal Central Bank Governor at the launch of the 2012 Annual Report of the CBSL

President Mahinda Rajapakse (Minister of Finance) and Nivard Cabraal Central Bank Governor at the launch of the 2012 Annual Report of the CBSL (Photo courtesy Yahoo News, Dinuka Liyanawatte/REUTERS)

Yesterday, the Central Bank of Sri Lanka (CBSL) released it’s 2012 Annual Report, revealing that the economy grew by 6.4% last year. Last year was not an easy year for the Sri Lankan economy. The country had to make some difficult choices on adjustment policies. The fuel and electricity price hikes in early 2012, to bring cost reflectivity in energy prices and help CEB and CPC consolidate losses. The interest rate hikes to curb rapidly rising import demand that put pressure on the Balance of Payments, and the rupee as a result. Adjustment is costly and painful in the short-term, but it’s needed for medium to long term stability and strength. Added to the adjustment costs were the pressures from unfavourable weather that affected agriculture – this also contributed to the growth slowdown. So 2012 was a bit clearer.

Now for 2013 the GDP growth forecasts are all over the place. All entities besides the CBSL give growth in 2013 as below 7%.  Let me recap a few that I have come across so far. The most pessimistic of the lot is Business Monitor International (BMI), a London-based independent research and credit rating agency, that forecasts 2013 real GDP growth at 5.4% (down from their earlier 5.9%). Meanwhile, at the conclusion of an IMF Staff Mission to Sri Lanka earlier this year, the IMF forecast 2013 growth of 6.25%. The Asian Development Bank, in its Asian Development Outlook (ADO) for 2013-2014, put Sri Lanka’s 2013 growth at 6.8% (edging up to 7.2% in 2014). Meanwhile Standard Chartered Bank, in a comprehensive review, is forecasting 6.7% (down from its earlier 7.2%). The two forecasts that come closest to the CBSL one is by the Economics Intelligence Unit (EIU), a part of The Economist Group (publishers of the newspaper, The Economist), and RAM Ratings, an Asian credit rating agency with a Sri Lankan presence. Both EIU and RAM indicate their 2013 forecast for growth as be 7.0%.

At the Annual Report 2012 launch yesterday, the CBSL declared that the government’s projected growth in 2013 is 7.5%, substantially higher than all the forecasts by others we’ve seen so far. The government appears confident that consolidation measures on the fiscal front, growth generated from public investment projects in infrastructure  booming tourism, etc., will carry growth forward, despite declining export growth. Nevertheless, 7.5% is ambitious. Especially in the midst of a global economic downturn that’s still persisting – affecting our export demand in key markets. Sustained growth for a small economy like Sri Lanka’s needs to come from export growth.

Meanwhile, the impending electricity hikes will no doubt put additional pressure on industries, tourist establishments, and consumers. This could affect growth. However, if inflation eases towards mid-year, it is likely that the CBSL would pull down interest rates, giving somewhat of a boost to the economy. Most banks are reporting that credit demand (i.e., demand by businesses and consumers for loans) has been quite slow in the past few months, mostly attributable to the high interest rates prevailing. So any cut in rates would certainly be a stimuli for both consumption and investment borrowing.

While I am surprised at the widely diverse forecasts, many of them have similar underlying bases for their lower projections. Domestic adjustments in the next few months – energy prices, interest rates, etc., the economic health of our export markets, progress on the fiscal consolidation (tackling the budget deficit) front will be some of the key determinants of how 2013 will eventually pan out.  Many of the forecast reports acknowledge these very factors, and importantly, so does the Central Bank.

Growth forecasts for 2013 are aplenty. But to place all the forecasts in context – two things. 1) We grew at between 5-6% even during the years of the armed conflict and 2) the industrialized West would do anything for growth above 2-3% right now.

The Sri Lankan economy has an “X-factor” that continues to surprise…

(updated 9.40am, 10/04/2013)

Unpacking Tourist Arrival Numbers: Is Maldives vs Sri Lanka a Fair Comparison?

Sri Lanka welcomed its 950000th tourist arrival for 2012. Image courtesy www.sundayobserver.lk

Sri Lanka welcomed its 950000th tourist arrival for 2012. Image courtesy http://www.sundayobserver.lk

Two days ago Sri Lanka welcomed its 950,000th tourist for the year 2012, a Polish graphic designer. According to tourism officials, this means the country met the annual target set for 2012. These officials have also been quick to draw a comparison between the Maldives and Sri Lanka. According to official numbers, tourists to Sri Lanka up to November were 883,353 while to Maldives it was 866,310. Now at first glance this might seem impressive. Maldives, with its offering of pristine beaches, magnificent underwater scenery, exquisite hotels – an overall veritable tourism paradise – has performed poorly than Sri Lanka in terms of attracting foreigners to its shores. But I would argue differently. The tourism numbers being reported don’t only capture the Germans, the Indians, the British, the Chinese who come to Sri Lanka on holiday, but also the Sri Lankan diaspora who come to Sri Lanka during festive periods. Even if you are of Sri Lankan origin, but live in Australia, Britain, Canada and elsewhere (essentially have a foreign passport) you still get captured in the “tourist” category. Especially in the season of November and December, arrivals of “tourists” of this type are pretty substantial. I overheard a conversation the other day that some Sri Lankans from Australia are chartering an entire flight to come down in December because there were so many of them and it would be more economical.

This is why a direct compare and contrast with the Maldivian performance can be misleading. Much of the “tourist arrivals” to the Maldives are real tourists – flying out to exquisite resorts, spending big bucks. It follows, then, that nearly all of the Maldives tourism arrival numbers translate into a substantial “tourism spend” – spending as much as US$ 2,500 a night on a room night in one of the many high-end resort islands. Whereas in Sri Lanka, particularly during festive periods like December, there maybe thousands of “tourists” who are adding to the official “tourist arrivals” numbers, but are in fact members of the Sri Lankan diaspora – a substantial proportion of whom may not even stay in star-class hotels in the city and elsewhere and spend the big bucks – instead staying with family.

So comparing our tourism performance with the Maldives must bear in mind this important caveat. Besides, what really matters – and any Sri Lankan hotelier or tourism professional will agree – is not just the straight up “number” of tourists coming in, but rather how much they actually spend while on holiday here. So far, the vast majority of tourists Sri Lanka attracts are to package deals with overall average daily spends of as low as US$ 70 at times. Compare this to the Maldives, where often you can’t find a resort with a room+breakfast deal south of US$ 300.

(Lanka Business Online also has an interesting take on it – http://lbo.lk/fullstory.php?nid=1626596202)

Nine Things from Nine Experts on the Sri Lankan Economy

The 2012 Annual Sessions of Sri Lanka’s top body of economists, the Sri Lanka Economic Association, was held over the weekend on the theme ‘Export Growth for Sustained Development’. It isn’t easy to capture all of the rich discussion, but here are nine interesting facts that The Curionomist picked out for you, from presentations and speakers of the experts at the Sessions.

1. Sri Lanka’s Exports to GDP ratio has declined from around 33% of GDP in 2010 to 18% of GDP in 2011 – Dr. Saman Kelegama (Executive Director, Institute of Policy Studies of Sri Lanka)
2. The Sri Lankan economy has been increasingly trading with the world less than before. From a trade (exports and imports) to GDP ratio of 80% of GDP in 2000, it had halved, to around 44%, by 2010 – Sarath Rajapatirana (Fmr. Economic Advisor, World Bank and Senior Visiting Fellow, American Enterprise Institute).
3. Sri Lanka spends only around 0.11% of its GDP on R&D, whereas in a middle income country like Malaysia it is more than 0.6% and in a high income country like USA nearly 3.0% – Anushka Wijesinha (Research Economist, IPS and Editor ‘Talking Economics’).
4. Sri Lanka will have massive infrastructure needs in order to grow at 8%+, and the infrastructure sector will need a total investment of around 3.3% of GDP over the 2013-2020 period by middle income standards, and 6.1% of GDP to be on par with advanced middle income standards – Dr. Indrajit Coomaraswamy (Fmr. Director Economic Affairs, Commonwealth Secretariat).
5. The Sri Lankan apparel industry has lost around US$ 1 billion due to the loss of the EU’s GSP Plus concessions afforded to the country – Rohan Masakorala (Secretary General, Asian Shippers’ Council and Fmr. Secretary General, Joint Apparel Association Forum).
6. The annual cost of corruption in Sri Lanka could be around 9% of the country’s national income (calculated at 2006 GDP) according to a report by the Sri Lanka Economic Association – Lloyd Yapa (Vice President, Sri Lanka Economic Association).
7.  As Sri Lanka’s tourist industry gears itself for rapid growth, 90 new hotel projects have received approval from the country’s tourism authorities adding 4,524 new hotel rooms of varying star classes – Dr. Srilal Miththapala (Immediate Past President, Tourist Hotels Association of Sri Lanka).
8. Sri Lanka’s IT sector is showing strong growth with 3-4 new companies joining the membership of SLASSCOM, the country’s premier body of software and IT services firms, each month. Most of these new firms are small start-ups, employing less than 20 people – Sujiva Dewaraja (Chairman, SLASSCOM and Vice President, John Keells Holdings).
9. Sri Lanka ranks low in respect of technological sophistication and firm level technology absorption – of 102 countries examined, the country is placed 66 and 62 in comparison with India’s 25 and 31 and Singapore’s 6 and 5 respectively, and a symptom of this is that of the total manufactured exports from Sri Lanka only around 1.5% comprises ‘high-tech exports’ Prof. A D V de S Indraratna (President, Sri Lanka Economic Association).

 

 

The media have already highlighted more extensively the comments by some of the key speakers

‘Sri Lanka can up exports by moving to complex products: economist’ – http://www.lbo.lk/fullstory.php?nid=1313848190

‘Sri Lanka Economic Association Annual Sessions highlight poor focus, productivity, competitiveness, governance’ – http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=64254

‘Citizens losing control of public finances – Eran’ – http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=64257

Predicting Election Outcomes and Sports Games: Any Different?

In an interesting and enlightening new book on the interaction between statistics, predictions, data and human behaviour, Nate Silver (of the New York Times) asks the question “Why is baseball easier to predict than presidential elections?”. It’s just one case study among many that he looks at to try and understand whether humans have got better at predicting outcomes as data and stats have got better, and whether human behaviour trumps all at the end of the day or if the biggest skewing factor in predictions made by humans is humans themselves.

Meanwhile, some ‘events’ are easier to predict, or at least work on statistically, by virtue of the type of data they throw up. For instance, Silver’s comparison between baseball games and Presidential elections. While US Presidential Elections come around only every four years, there are around 162 baseball games in just one year alone. So the frequency of data to work with is much better, and finding patterns may be easier.

Try get a copy of this statistician and New York Times contributor’s book ‘The Signal and the Noise: Why So Many Predictions Fail – But Some Don’t’. For a quick intro, watch this – http://www.bbc.co.uk/news/magazine-19982180

(featured image courtesy The Guardian UK Data Blog)

 

Update (23/10/2012)

Here’s an interesting piece by David Brooks of NYT on the addiction to Polling data:

Poll Addict Confesses – http://www.nytimes.com/2012/10/23/opinion/books-poll-addict-confesses.html?smid=tw-share

Northern Province Growth and the “Base Effect”: Was Minister Amunugama Correct?

At the recent launch of the 2nd National Human Development Report (NHDR) 2012 of the UNDP, the Chief Guest at the occasion  Dr. Sarath Amunugama (Senior Minister for Int’l Monetary Cooperation) was unusually dismissive about such a report. He remarked that there are many reports that have come out by many entities and they must be looked at carefully and objectively. He pointed to research and reports done by the Central Bank, think tanks, and research divisions of banks. This was somewhat in response to the main findings of the NHDR 2012 (theme is ‘Bridging Regional Disparities’) which noted significant gaps in human development that Sri Lanka must address, particularly in war torn Northern and Eastern Provinces where indicators were quite weak. In the midst of this, one of his remarks was most curious. “the Central Bank is doing a lot of research studies. One of these studies has looked at the growth of the regions in Sri Lanka. Their analysis has shown that the growth rate of the Northern Province last year was WAY AHEAD of the rest of the country”. Yes, much has happened in terms of reconstruction and recovery in the North that would certainly translate into enhanced provincial income of the Province. Yet, his assertion was quite a strong one – and it turns out, is somewhat misleading. What the Hon. Senior Minister didn’t tell the audience about was the “base effect”.

First, lets look at the growth numbers. Yes, the Northern Province showed the fasted growth rate in GDP when we look at the Provincial GDP statistics released by CBSL in August. Clearly, the Northern Province grew its GDP by 27.1% – the highest growth rate among all the other regions. One could compare this to the growth rate of another, more prosperous province, lets say the Western Province – which grew at just 15.6% and say “wa-hey! the war torn North grew even faster than the capital province”. But what we miss here is the “base effect”.

Lets illustrate this with a different example – inflation. If the Colombo Consumer Price Index (CCPI) was extremely low last October, even a modest rise this October will arithmetically give a high rate of inflation year-on-year. If the CCPI which was at 100 goes to 150, and then to 200, the initial increase of 50 gives the percentage increase as 50% but the subsequent increase of 50 gives the percentage increase as 33.33%. This happens arithmetically as the base on which the percentage is calculated has increased from 100 to 150.

The same argument is true of the Northern Province growth figures. In 2010, NP GDP was a low Rs. 190 Bn (the lowest GDP among all the provinces). In 2011, it was Rs. 241 Bn. The increase was of Rs. Rs. 51 bn. So an increase of Rs. 51 Bn in 2011, from the low “base” of Rs. 190 Bn, gives a growth rate of 27%.  But lets now take the Western Province. In 2010, WP GDP was a whopping Rs. 2,513 Bn. In 2011, it was Rs. 2,905 Bn. The increase was of Rs. 392 Bn. The absolute increase of the WP is over 7 times that of the NP. But because the WP started off (in 2010) with a high “base”, the actual growth rate you see (year-on-year) is a modest 15.6%. Lest assume that this year (20120), Northern Province GDP increases to Rs. 300 Bn, it is an increase of Rs. 59 Bn from 2011. Even though the absolute increase is more than between 2010 and 2011 (which was Rs. 51 Bn), the 2012 vs 2011 growth rate would be at about 24.5% – lower than the 27.1% observed earlier.

So going back to the main point of all of this – the “base effect” matters. And as a fellow social scientist, the Hon. Minister should not have made such a sweeping assertion without pointing out the critical analytical caveat in it.