During a recent visit to the renowned architecture firm ‘Foster + Partners’ in London (of ‘Gherkin’ building fame), I was struck by how interdisciplinary their team was. And it was a reflection of how interdisciplinary their projects – in 70+ countries – had needed to become, marrying the built environment with concerns around mobility, sustainability, and society. It was not just about architects designing a building anymore, but it was now also about – what place did that building have in the city and community that it was located in?; what was its place in the local economy?; how would it interact with people and how would people interact with it in return?; what was the building role in recognizing and solving the environmental challenges that a place is faced with?… All complex questions that clearly require interdisciplinary answers and solutions. So, the Foster + Partners team of nearly 1,400 staff is now comprised of a ecclectic mix of behavioral psychologists, urban planners, acousticians, design thinkers, data scientists, environmental engineers, sustainability modelers, anthropologists, workplace strategists, etc. In particular, thinking of environmental sustainability throughout their projects seemed to be a key focus, and something that one of their senior team said to us was quite poignant – “There is 3 times as many people on the planet as when our practice began and that drives what we do”.
During a recent visit to Dubai, for the World Economic Forum’s Annual Meeting on Global Future Councils, we visited the Dubai Future Foundation that is at the cutting edge of driving innovation and foresight in the emirate. We were fortunate to have the final group session of our Council (the ‘Global Future Council on Innovation Ecosystems’) at a very special venue – the world’s first functional 3D printed office building, pictured here. It was made in just 17 days. The real innovation, we were told, was the materials science – developing a concrete mixture that dries super fast, in order to have the ‘layers’ print one after the other. The aim was to go from talking about the concept to demonstrating that it’s possible. The leadership had declared a goal that 25% of all buildings in Dubai must be 3D printed by 2025, to cut down on time and waste of resources. So the Dubai Future Foundation (which sits under the ‘Cabinet Minister for the Future of UAE’) wanted to show that it’s possible and practical, not just a concept. So, they made this. Pictured below is the CEO of the Dubai Future Foundation – Khalfan. A fantastic guy, who is leading a lot of this work.
The IPS held the ‘Saman Kelegama Memorial Conference’ recently, which had a bunch of thought provoking sessions exploring a number of topics anchored to the theme of ‘post-conflict development’. The session on ‘Smarter Development for Sustaining Peace’, which looked at the strategies Sri Lanka adopted for economic recovery and development, post-war, has been nicely recapped on the IPS’s blog here. While the session was very insightful, particularly the perspectives of Ramani Gunatilake, Udan Fernando, Dilani Gunewardena and Ganga Tilakaratna, I felt that a couple of pertinent issues were missed in the session and I chose the Q&A segment to highlight these. Especially since the session was about exploring ‘Sri Lanka’s strategies of post-conflict development’.
The first remark was of the ‘model’ or approach of post-war development that was followed by Sri Lanka, and the need to interrogate the consequences of that approach. I would argue that the defining feature of Sri Lanka’s post war recovery approach was that building of, or giving away of, assets. On one hand we had the Government at the time focussing almost entirely on building assets – it was connective infrastructure (like roads, bridges, causeways, etc) and social infrastructure (hospitals and schools). On the other hand we had some NGOs that were giving assets, for example donors who were giving families cows. (I did a podcast about this ‘cow dropping syndrome’ previously on the blog).
Of course at the time, the reconstruction of built assets would have been priority and no-one is faulting that. But from an academic and research perspective we never really got around to interrogating that post-war recovery approach. What were the factors that led to that approach at the time? What were the drivers of that approach and what did that mean for the way in which it was done? Could it all have been done differently? What lessons did that approach throw up for the for other governments and for donors, in other post-war or conflict-affected settings? What are the consequences today of that particular approach followed then?
Unfortunately, this kind of interrogation has just not been done by economists in Sri Lanka, and sadly this session too disappointed on that front.
There was another notable element that the session did not cover, and yet again is something that economists in Sri Lanka have failed to interrogate, while political science, sociology, and human rights researchers have done a creditable job of covering extensively. That is, what I called in the session “the elephant in the room, or rather the ‘camouflaged elephant’ in the room”. I was referring to the role of the military. This was yet another defining feature in Sri Lanka’s post-war recovery and development journey and there hasn’t been a strong discourse among the economics fraternity on this.
Both of these issues were issues that Dr. Kelegama did deliberate on and from time to time did articulate in different forums – publicly or in private groups. I hope that in next years edition of the ‘Saman Kelegama Memorial Conference’ we can have a more pointed and more systematic interrogation of the defining features of Sri Lanka’s post-war development approach, with a special emphasis on the two elements highlighted above.
Cover image copyright Anushka Wijesinha, Batticaloa 2009.
During her recent visit to Sri Lanka for the launch of the National Export Strategy, the head of the International Trade Centre*, Arancha González, held a session for the business community. I was fortunate to have chaired that session during which she shared some very interesting perspectives on the current trends in the global economy. Here are some of my key takeaways:
She emphasized that “We are in a turbulent landscape” where there are dangerous trade winds; “probably even a hurricane – the hurricane of unilateralism”.
She asked, how can we protect our countries? and went on to argue that in order to do so, countries must focus on “Facilitating trade, not blocking it”. She added that we must focus on “creating jobs, not just protecting existing jobs” and asserted that protectionism is actually self-harming and wont protect jobs.
Arancha emphasized the importance of improving competitiveness of our economies – “everyone has to up the game and every player is constantly changing, constantly on the move”. As part of this, countries need to ensure inclusiveness of trade – in particular do more to support youth entrepreneurship for men and women.
The ITC chief observed that in Sri Lanka, the proportion of firms connected to global markets is low and the country needs to invest more in regional cooperation and integration. She credit Sri Lanka’s ongoing trade reforms, and said “It is intelligent to build up a network of trade agreements”.
She made an important argument that it is actually technology, not trade, that is causing the stress to workers during this era of rapid globalization, and asserted that, “If governments had done better on helping those who lose out – better social policies – there would be less opposition to trade”.
In concluding, Arancha called on Sri Lanka to support multilateralism and multilateral institutions, especially as smaller countries would need it to buffet against the wave of unilateralism. She said, “Frankly I don’t see who wins in a world where might is better than right”.
*The ITC is is a multilateral agency which has a joint mandate with the World Trade Organization (WTO) and the United Nations through the United Nations Conference on Trade and Development (UNCTAD). The ITC supported the development of the National Export Strategy in Sri Lanka, under financial support from the European Union Trade Related Assistance Project.
Recently I was invited by the Asia-Pacific Alliance for Disaster Management (APAD) to deliver remarks at their annual regional forum, held in Colombo. I focussed on the economic imperatives of disaster resilience in cities, and possible initiatives and systems that can be fostered to strengthen urban resilience through innovation and a private sector approach.
Keynote Address at the Advocata Institute and Fraser Institute ‘Economic Freedom Summit 2017’, 12th October 2017.
In my remarks today I will highlight some aspects of economic freedom – from my own perspective – that might find some resonance with you and try and provide some food for thought to take forward the discussion on economic freedom in Sri Lanka.
It is by no means an exhaustive investigation of economic freedom in Sri Lanka – and I’m sure you’ll find many things you felt I didn’t touch on and felt I should have. Rather, I’ll aim to give you perspectives to ponder on.
My keynote will be in three main Parts. Part 1 is one some thoughts on policy orientations and the role of the state. In Part 2, I flag a couple of examples of contradictions in our economic debate, where I think the lens of economic freedom needs to come in very strongly. And Part 3 is about creating a popular narrative around economic freedom.
This week Sri Lanka and India held their latest round of negotiations on the India-Sri Lanka Economic and Technology Cooperation Agreement (or ‘ETCA’). I thought it’s a good a time as any to recollect some ideas I shared at the Daily FT Forum last month on ‘Growing with Giants’ (referring to India and China) during the session on enhancing trade linkages with India.
We Know the Potential, We Know the Pitfalls
So, here’s what we already know.
We know that India is seeing strong economic growth and has a large consumer base, and boasts a growing consumer base. Indian consumer spending is on the rise, with big opportunities for sellers in and into that market. The Indian middle class is set to be 250 million by the end of the decade; that is over ten times Sri Lanka’s entire domestic market.
We know that trade between India and Sri Lanka has grown over the past decade and a half (albeit slower than one would expect for two bilateral FTA partners – but more on that later). According to an excellent presentation by Dr. Kelegama, which he shared with me days before his untimely demise (can be accessed here), Sri Lanka’s exports to India have grown from 505 product lines in 1999 to 2100 product lines in 2012. We also know that 70% of the exports by Sri Lanka to India are under the FTA (i.e., benefit from the FTA preferences). While imports have also grown over the past decade and a half, most of these imports are outside of the FTA – only less than 10% of Indian imports come under the FTA (see the table below, extracted from Dr. Kelegama’s presentation).
We also know that the FTA has not always worked smoothly for both sides. From the Sri Lankan perspective, there are a lot of issues that businesses face in doing business with India. This is especially true of non-tariff barriers, customs and other border facilitation issues, and state-level hindrances (including a multiplicity of taxes, which have now been flattened after the introduction of nationwide GST in July).
So, we know all this. We know what the opportunity or potential is, and we know what hasn’t worked for us and why. What we now need to move towards is practical measures to boost Sri Lanka’s entry in to India and make most of the opportunities, and breakthrough the challenges, alluded to earlier.
At the recent Colombo International Tea Convention marking 150 years of Ceylon Tea, I was asked to speak on a panel on ‘Trade and Finance’. Amidst all the discussions around ethical tea, branding, and supply chain, I was keen to add a new perspective. I was also very conscious that I was one of only a handful of non-tea industry experts speaking at this event. Yet, with that disclaimer, and asserting that I would draw from around the tea industry to provide some implications and ideas for the tea industry, I made three points – one on finance, and two on trade. I’ve captured them here – expanded and extended from the original remarks.
1. Ceylon Tea – First to Launch a Blockchain Transaction in Tea?
After 150 years, the tea trade today is ideally placed to leverage on the blockchain revolution taking place today. Blockchain is a virtual transactions process that has huge potential for trade finance, and is already being piloted. It works on a distributed ledger technology system, where end to end transactions are done seamlessly and with greater transparency and predictability. We are seeing this with several commodities already and many pilots blockchain transactions have been done recently. Last year, Barclays Bank was the first to do a blockchain letter of credit (trade) transaction between Ornua (formerly the Irish Dairy Board) and Seychelles Trading Company. The Commonwealth Bank of Australia and Wells Fargo did one for the cotton industry, HSBC worked with Bank of America Merril on replicating a letter of credit on a distributed ledger, and it has been used in the grain and fisheries industries.
It’s definitely something for our banks and our big tea trading houses and commodity brokers to look at. Having marked 150 years of this traditional industry, Sri Lanka should now be at the cutting edge of it – we must be the first country in the world to do a blockchain transaction for tea. This will also add to our repositioning globally as a modern beverage brand. While local banks may take time to get onboard, international banks like HSBC and SCB operating in Sri Lanka should lead the way in making this happen.
Things are certainly moving fast in the world of blockchain pilots. This week the largest blockchain consortium, R3, announced that thirteen global banks have built a prototype trade finance application on R3’s Corda platform. According to Global Trade Review, the app, hosted on distributed ledger technology (DLT) will streamline the processing of sight letters of credit and is one of a number of trade finance apps R3 will be piloting on the platform this year. Eleven of the banks involved are Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB and US Bank.
– from GTReview, ‘R3 Corda reaches trade finance milestone’ https://www.gtreview.com/news/fintech/r3-corda-reaches-trade-finance-milestone/
I was shared this excellent white paper on how blockchains can help enhance transparency in product supply chains, by R3’s Niki Ariyasinghe. With Sri Lanka wanting to strengthen the Ceylon Tea value proposition of being an ethical, clean tea with high quality, discoverability and transparency in the supply chain becomes ever more important. Blockchain can help with that, as shown in this paper.
AmEx has this useful primer on the application of blockchain specifically in the trade finance space.
2. Ceylon Tea – Not Just a Beverage, But a Lifestyle
We often think that tea is competing in the hot beverage market, or more accurately, in the highly competitive beverage market. I think we need to change that. Tea should be playing in the lifestyle market. During the whole Tea Convention we heard many speakers extoll the virtues of Ceylon Tea – in terms of health, wellness, cleanliness and purity. It is then a logical extension of that that our tea should play in the lifestyle market – ‘its not just a beverage, its a lifestyle’. This proposition can also be aligned to Sri Lanka’s new push on wellness tourism as a new export sector (under the new National Export Strategy).
Increasingly the healthy lifestyle segment is a growing consumer segment around the world – especially among young people. More and more people care about what they eat and drink (organic, all natural, pure, clean, poison-free, environmentally conscious, etc.), and what beverages complement those smart choices. They should be seeing tea as an integral part of that lifestyle, and be choosing tea as a lifestyle choice rather than a beverage choice.
This also then means policy makers and trade promotion agencies need to reorient how they see the tea trade, or the trade aspect of tea. While it used to be that in Sri Lanka the tea export sector was looked at by the Tea Board or the Export Development Board, under this new positioning, tea needs to be promoted much more holistically.
In the opening session of the Convention, Tea Board Chairman Dr. Rohan Pethiyagoda mentioned that there is little empirical research on the medicinal benefits of tea. This was reiterated by the head of Twinings who spoke later and noted that, “There is no body of excellence for research on tea’s health benefits’. If we are to play in the wellness and lifestyle space we need to change that. Part of Sri Lanka’s tea promotional budget (that’s unfortunately already stuck in Government) should be unlocked to not only spend on ‘version 1.0’-type promotions like tea trade fairs, but to spend on commissioning medical papers from influential academics in prominent international universities or health research institutes.
3. ‘Your Ceylon Tea’ – Artisan, Curated, Delivered
Looking at the twin themes of the Tea Convention, I noted that one of them was ‘Spontaneitea‘.
A friend of mine is a banker in London, and whenever he wants to give a unique gift to a client, he orders a special bottle of wine from his favorite wine growing region of France. On demand, through e-commerce. We should be doing that in Ceylon Tea. When a consumer in London would order a speciality tea packed exclusively for him, personalized with his name, from his favorite of the seven tea-growing regions or from a single estate, with a note from the head tea maker at the factory, and delivered to his desk in 72 hours.
A millennial consumer – who increasingly wants to make unique and authentic choices – sees a video about a particular elevation of Ceylon Tea – say, Dimbulla – being used by a chef on a cooking show, and decides right away that she wants to order that speciality tea right from Sri Lanka and in time for the weekend when she has time to cook. E-commerce and logistics enables her to do that, and our tea brands must cater to it.
This also strengthens the link between tea and and tourism. If a honeymoon couple on holiday in Sri Lanka visited a Uva-region estate and factory during their trip, fell in love with that experience and the tea they tasted there, and wanted to order that particular tea spontaneously in the future, e-commerce and customization can enable that.
I remember Mr. Anil Cooke of Asia Siyaka Commodity Brokers telling me a few months ago that there had been frost on the high-grown estates a few days prior to that, and how this event would completely change the flavor profile of the tea made from that day’s picking. Imagine being able to get a customised order of getting that out to discerning consumers who have subscribed online to speciality tea packs. A limited special edition with that unique flavor profile, a collector’s pack of teas made on that frosty day in Talawakelle, at a premium price of US$ 500 for a 500g pack (instead of just US$ 5 for a 1 kilo of bulk tea).
Take a look at an equivalent model for coffee – with so many subscription models for coffee around the world, bringing personalized and curated coffee packs to discerning consumers.
The Roasters Pack in Canada allows you to subscribe from hundreds of coffees, delivered to your doorstep every month. Similarly Craft Coffee promises “fresh-roasted coffee, delivered when you need it” (subscription) and “tailored to your taste” (curation). Another site, MistoBox, promises that, “Your coffee curator reviews your preferences and selects a coffee for you from 300+ coffees” and “Your coffee is fresh-roasted to order by one of our 40+ amazing artisan coffee roasters”. There’s dozens more examples.
Of course, there are a few of these in tea as well, like Bruu Gourmet Tea Club, Teavana, and TeaBox. But I strongly believe that Ceylon Tea can have its own dedicated tea subscription service to take curated teas global, and direct from our estates and factories straight to the consumer – true to the spirit of Ceylon Tea of authenticity and purity.
An important caveat in all this of course is that Sri Lanka would need to rethink the tea auction system, because right now majority of tea that is traded is mandatorily sold via the auction only. Only very small quantities are permitted outside of it (around 10%). Yet, while our tea export that has gone from bulk tea to tea bags and other value added products, Ceylon Tea now needs to leverage much more strongly on the growing e-commerce market, and there are huge opportunities for capturing much more retail value right here in Sri Lanka through this.
For a wonderful website on the ‘History of Ceylon Tea’ recently launched by Dilmah, visit http://www.historyofceylontea.com
For an analysis of recent rends in tea export and drivers and challenges in the year ahead, read this article by my colleague – ‘Brewing Resilience Amidst Challenges’ https://www.chamber.lk/wp-content/uploads/2017/06/TIPS-Vol-21-22-June-2017.pdf