Thursday, June 14, 2007

Be Lankan, Buy Lankan but don’t Be Stupid

The editorial of last week’s Sunday Times, was probably the worst socio-economic analysis I’ve read in a long time. The editor seems to be highly taken up by a JVP-inspired campaign which encourages Sri Lankans to buy locally manufactured goods over foreign ones via ‘awareness campaigns for students where they will be taught the importance of eating nutritious home-grown food’

Clearly a campaign only a JVPer, or an equally retarded Leftist could have come up with.

First the writer claims that we should learn from India, one of the biggest and fastest-growing economies. I’d agree, only if he didn’t say ‘Gandhian’ self-sufficiency principles and ‘buy Indian’ campaigns that laid the foundations for India’s growth.

Nothing can be further from the ‘truth’.

The roots of economic success in India’s lies not in any ‘Gandhian’ or even Nehruvian principle but rather in the economic reforms in the early 90’s which saw India’s middle class nearly quadruple and 1 percent of its poor cross the poverty line every year, given the speed at which the Indian economy is growing it would soon surpass Japan and become the third-largest economy in the world.

Sri Lanka was luckier than India, and came into it's senses much earlier and opened its economy as far back as the late 70’s which put us on a path towards prosperity. Ever since we have managed to do reasonably well, and even now Sri Lanka is ahead of India in almost all economic and social indicators, quite an achievement for a country which had to endure a chronic civil war throughout the reform period. What SL would have become without this war can only be left up to the imagination.

In any case, core argument of the article and the ‘buy lankan’ campaign seems to be that Sri Lankans tend to think foreign produce is better than local produce as a matter of principle. I don’t think that’s necessarily true.

Let’s take the insurance for example. Sri Lanka does have quite a reasonably open insurance sector, which allows for 100 percent foreign ownership of insurance companies, yet the leading players in the sector are two Sri Lankan companies. It’s similar in banking. The likes of Asian Alliance and HSBC haven’t been able to just swallow the domestic market because Sri Lankans are not infatuated with foreign goods or companies, they, like consumers all over the world like good products at competitive prices.

Some 3 million Sri Lankans use Dialog as their mobile service provider, not because it’s foreign, but because it provides a decent service, best coverage and good packages. If Tigo provided the same, perhaps people would shift there, as some did when Mobitel offered tempting deals.

The best thing Sri Lankan producers can do to make people ‘buy lankan’ is to make good products and sell them well, consumers would follow. Surely if someone can’t sell their produce without invoking the patriotic card, it must be a pretty awful product. Having said that, I’m fine with this so long they restrict their ‘campaign’ to advertising and ‘awareness raising’; but if they seek legal protection from the state, then that's a slippery slope to hell.

After all the basic premise of tariffs and import controls are quite illogical from a consumer’s point of view, the government (and possibly even the ST Editor!) would consider the consumers as completely rational beings so long as they buy local produce, but if they buy foreign goods, then some authority must step into advise them and say :

“Look here son, you have made an unwise choice here, haven’t you been watching JVP Buy Lanka Commercials? Don’t you read the Sunday times? So now that you have made this mistake we are going to help you to make the right decision by increasing tariffs and taxes, because you obviously don’t have the ability to make these kinds of important decisions.”

I’d say that’s rubbish.

The editorial is well intended, but they say even the Nazis meant well, and that the road to hell is paved in good intentions. If anybody really wants to make a strong Sri Lankan industry which produces competitive products which can compete against global companies then the real things to do are not these superficial campaigns, but to bring in real economic reforms which have been stalled for a while. Slash the red-tape, which makes an entrepreneur wait for 50 days to set up a business in Sri Lanka, bring in labor reform, slash taxes, downsize the enormous state-sector and provide for a good business and an investment climate.

When it comes to economics there are no competing ‘ideologies’. That was last century. The reality is based on market-economics and capitalism. The rest is just fantasy.

20 comments:

n said...

That was a pretty piss poor article...also why no mention of targeting the Indian middle class with our quality products and services? That imo would be the real road to prosperity, as you said they'll be the third biggest economy soon...what a market to have on our doorstep!

The problem with this JVP inspired bullshit is its simplistic and will attract attention. Real reform is tough and not nearly so romantic as "Ganna - Ape De" but essential to quality. Funnily enough the two main items that I 'buy Sri Lankan' the GOSL is trying to destroy, Lion beer and Old Reserve...go figure..

Anonymous said...

blogger and commneter are being very selfish here. They oppose to JVP politically, so even their good principles are taken for jokes by you. This is not a jvp program in the first place! Is ariyaseela Wickramanayake JVP? IS DSI jvp?

You are not thinking for the country. You think of only your quality of life. The advantage of this is that country saves money from imports. Its economocally, finacially good. Not only india, but countries like New Zealand, auatralia also do this, they try to promote their own stuff. In any developed country, Chinese cheap goods are critisisded when their own brands are available. That is because its good for the country.

Other side is, it improves the patritism within yourself. Some English speaking mobs might not have any patrissm even though they live in the country. But its important to create that mindset. Mahinda is our president, he is there reprsenting our heritage, our own things, thats why govt supports this. This prgram has advantages both finacially and socailly.

For your reference read following text and also clear your monds by looking at who are invloved. Pls love your country!

''''

A new identification logo for quality Sri Lankan brands and products was launched on Monday (June 11) by the Mawbima Lanka Foundation, a non-profit organisation established to promote indigenous products and brands.

The organisation will issue the "Sooryasingha" logo for the brands and products which their evaluation criteria and will certify them as genuine Sri Lankan products and brands, Mawbima Lanka Chairman Ariyaseela Wickramanayake said.

He said that Sri Lankans prefer to buy local products under a distinct logo. It was required to establish the identity of the local brands because some foreign products have been launched in the local market under local names, which undercuts genuine Sri Lankan products.

Wickramanayake said that the foundation is planning to launch a publicity campaign to promote its logo and Sri Lankan identity amongst the public.

Kulatunga Rajapakse, director of Mawbima Lanka, said that the majority shares of a manufacturer or brand owner must be held by Sri Lankans, if they were to qualify for the logo.

"The Japanese and Germans take pride in patronising their products and even Indians are now proudly displaying the ‘Made in India’ trade mark," Rajapakse said.

He said that with the new logo, Sri Lankans would also get a chance to easily identify good local products and patronise them preferably to foreign brands.

He also pointed out the importance of establishing the Sri Lankan identity for local produces, including gems and cinnamon.

Multi Chem Group chairman Dr Samantha Kumarasinghe said that the Sooryasingha logo was selected after the success of a similar campaign in Australia under the Kangaroo logo to promote local brands.

He said that when the USA was in economic recession in the early 80s, ‘Promote American products’ was one of the strategies adopted by the Reagan administration to re-establish the economy.


'''

Now, u would see that other countries also did/do this. Be postive. Dont be narrow minded. Love your country by heart! Dont think only of your wellbeing..

N said...

anon...don't be presumptuous...the fact is real reform that allows entrepreneurs to exercise their skills and minds without the redtape will lead to more innovation and more quality Sri Lankan goods and services that can be exported. When I have a choice over a foreign and SL brand and they are of equal quality I buy the Sri Lankan one. At the end of the day no matter patriotic I am I refuse to waste my money on non-quality products. Hence the gravitationn towards Reserve and Lion Lager...so much better than Absolut or Heineken.

Also you might want to take your tongue out of Rajapakse's arse...its funny how all these so called patriotic Sri Lankan politicians are the ones bleeding the country dry...so much for loving the country.

Again giving people the chance to contribute and take advantage of the global marketplace (esp. the Indian one) is a sure fire way of bringing those at the bottom of the pyramid up to more prosperous levels. Unfortunately purely cosmetic measures without any solid foundations will not achieve this. A logo is fine but the infrastructure is more important.

P.S. Another Rajapakse? Any relation to Mahinda?

ddm said...

anon says "The advantage of this is that country saves money from imports." - this is flawed economics typical of protectionist attitudes, and sadly a very common misperception. People tend to think that imports are bad and exports are good, this is nonsense.

If you have an import, we'll call it x which costs Rs. 20 to buy, and it's locally produced substitute, Y costs Rs. 30 to produce. Now in order to buy the import you use up Rs. 20 worth of the country's resources. To produce Y you use up Rs. 30 worth of the country's resources. So does importing save the country money? no. Whether it's an import or a locally produced product, the cost to the country is reflected by the resources required to procure the product.

The usual argument that follows from this is "but if we buy local at least we give our ppl jobs and keep money in the country" - again, flawed economics. So our local substitute Y is clearly cost ineffective, in an open market it will not make profits and will go out of production, reflecting the fact that the country is inefficient in producing this good. Producers in the country will then shift to a product in which it is more efficient at producing. When it is more efficient, it can produce more output with the same number of input resources, and thereby increase the returns for the producer, and the country gets more money (whatever that means).

The problem in this simplified argument is the movement of resources from the production of inefficient products to efficient products. Due to rigidities in Sri Lankan factor markets this is very slow, and therefore unemployment can be persistent. What we need to look at is improving fluidity of factor markets (specially labour markets), improving access to information and most importantly improving the ability of workers to adapt to different jobs - EDUCATION.

sorry for the essay :(

Anonymous said...

"Producers in the country will then shift to a product in which it is more efficient at producing."

If SL people dont buy any Sri Lankan good because its not promoted, then the above situation will happen to each product. If we are to have atleast few cost effective products, people should buy them in the fist place. so, buying has to be promoted. If not what happens is , the above syndrom will occure for every product ultimately making a situation where we wont have any product made here, and everything imported. This has already happened to a great extent, and thats because of false interpretations of macro economics like the above of DDM.

That argument is true ina competitive environment where you have a good mix of local products with high demand. If not, the logic deosnt work.

So the important this is to create that demand for some local products. and thats the baseline of this prgram.

Are we arguing here that people who are behind this prject like Ariyaseela, DSI, Maliban, Commercial boards etc. are dumb about macro economics?

This is a start. If we create some demands for some products, then we will have some profitable SL products. From there on in, the above theory could be applied.

UNP lead govts gave false reasons and misinterpreted macro economics and we are enjoying results of those today. No products, no exports except tea. So, maney doesnt come in, money goes out. The above great theory doesnt work as we sont have any profitable product (I mean a reasonable number of products)

Open economy and global villae is a big caorrot. Even US doesnt follow this to the extent that UNP advocated. They try to make as much as possible within their country. Australia does the same. Open economy is good as long as you have a strong lcal economy, so we need to build that. If not, we become beggers.

Pls support this program......

ddm said...

Do major retailers in the US and EU buy products from MAS, Brandix and so on bc the GoSL promoted them? Do ppl use HNB, Commercial Bank bc GoSL promoted them? No, it's because the products are good. You are insulting sri lankan entrepreneurs by suggesting that they can not make good products without being held by the hand and promoted. If you're championing the values of advertising, that's a different matter, it's the firm's choice. And that is exactly what guys like DSI and the others are doing. I'm sure they have a fine understanding of macroeconomics, but what they're doing has nothing to do with macroeconomics. It's a form of advertising in their own interest, not out of some love for the country. And if that can help them sell more stuff, kudos to them.

Your fear of all products being imported and nothing being produced in unfounded. In trade one country will always, always have a comparative advantage in the production of a good. I'm not going to clog up this blog with an explanation of comparative advantage, but do look it up.

Deane AKA ~CC~ said...

Thank you all for comments.

Anon 1 :

I do in fact oppose politically, i see few good attributes they have. they seem to reasonably honest thus far and have the good mass mobilization skills. they have also been surprisingly successful in the marxist inspired nationalist propaganda of which you are a victim of.

As for any good principles in them, i see none. you mention the criticism of the west of cheap chinese goods. Every country has its protectionists, and they deny their people a chance to consume make their own choices of what's best for them.

the situation is of course much better in those countries. Japanese automobiles are much cheaper in the States than in Sri Lanka. someone posted a comparison of prices in US consumer goods and SL consumer goofs. i suggest you look at the comparison.

Mahinda has so far shown only incompetence i refuse to believe that being representative of 'our heritage'.

Thanks DDM and N I think they have addressed the flawed economics you raise.

Annon 2:

Your citation of DSI,Maliban is precisely why i'm saying that Sri lankans don’t just go off and buy foreign produce. If it’s good enough they will buy local, so long as their needs our met.

Economic activity is based on consumption, not patriotism. it doesnt make sense to impose tariffs and make goods more expensive for consumers and expect them to happily consume either inferior or expensive products while singing 'Sri Lanka mathaa' is silly.

advantages of trade liberalization makes sense unilaterally even if other countries do not open up, you cite Australia and the US, but i'd like you to point towards Hong Kong and Singapore, which unilaterally opened up its markets without building the so called strong local economy.

today these countries have more economic freedom than Australia or US and per capita Income levels surpassing even their former colonial masters.

Every country has had to give up their traditional industries, Britain have by now lost ALL of its car manufacturers to foreigner owners. Levis closed up all of its factories in the United States and moved them into places where they can produce cheaper. at the end of the day both british and american consumers benefit via better and cheaper goods.

Britain which kick started the industrial revolution now almost entirely depend on the service sector, HSBC, BBC, and David Beckham have replaced Rolls Royce which and the likes is now no more 'british-owned'.

Yet overall the brits do better than they ever did. i could rant on, but time is of the essence, and I’ve wasted too much already.

As i said in the post i don’t mind the 'program', so long as it remains an advertising campaign. if they seek legal protection from government.. then that’s a different story.

Dayaratne said...

You think dialog and other foreign companies care for Sri Lanka? please dont be so naive.

drac said...

actually, BMW sales are huge inside Germany - perhaps more so than other countries with comparable disposable wealth. (source).
This is anecdotally attributable to the ideal that the Bayerische Motor Werk products are (still) a product of Bayern and thus worthy of German support. Especially in the south.

So there is a place for patriotism in buying your own country's brands, but everyone who seems to promote this view (including the anonymous commentor[s]) favours doing so by restricting the choice of the consumer.

Why is it so difficult to open up the market and allow the state to provide subsidies for local industries to compete, if required? As ddm notes, it's insulting to have an expectation that Sri Lankan entrepreneurs and companies can't compete in a global market. It's too easy to restrict imports and create an artificial monopoly. Haven't we been there already in the early 70s?

And sorry. I refuse to get screwed over repeatedly by any company or product; be it Sri Lankan or foreign. Our flagship airline is a prime example of a service that I will never use with my own money for that very reason.

themissingsandwitch said...

Here!Here! And three cheers to your post. I think many advertising agencies in the country can learn from it too! The industry seems too busy shoving the Sri Lankaness of their porducts vs. the quality of it. The LAUGFS campaign does nothing for the brand, because LAUGFS is piss poor as a brand to begin with. Lanka Bell had something going when they talked about affordability but now they're hung up on SRI LANKA BELL - which means jack shit when all people want is a good deal.

Deane AKA ~CC~ said...

N yes, Lion is a good example.. i suppose its consistent with the 'swadeshi' idelogy.. drinking is obviously a western concept..

Drac, i somewhat agree.. but subsidies are a Pandora's box i'd rather not want them to open..

And mr Dayaratne,

its somewhat tiring to answer all these, but since this can be fun..
Dialog's parent company (MT) come here to make money, not for charity. if SL has a competitive market which it does in Telecoms then they can only make that money by improving quality, bringin in new Tech, upgrading their skills, and the skills of their employees. All these are beneficial to the country.

In fact Dialog is Sri Lanka's top most investor bringing in its investment even to develop infrastructure, it does all this out of self-interest. But in the end everyone benefits.. good scene isnt it?

Anonymous said...

The Government will shortly launch a Ganna Ape De (Buy Sri Lankan goods) campaign to popularise local products.

The programme is being implemented by the Mawbima Lanka Foundation (MLF) in collaboration with the Ministry of Industrial Development and the Strategic Enterprise Management Agency (SEMA).

This will be launched in line with the Mahinda Chintanaya.

The project will encourage and propagate ’Patriotic Marketing’, a market concept which has been highly successful in Japan and other countries adopting a free market policy.

In ’Patriotic Marketing’ the consumer takes many factors into consideration, and after a psychological battle, finally decides to buy the indigenous product or service, based on a sense of sheer patriotism or ’Ownsomeness’ (Apey kama).

This process will lead to enhanced production and the development of our own indigenous industries which will in turn generate more employment opportunities locally.

With a ’Demand side approach’ and the dream of a marketplace where consumers typically seek out and use Sri Lankan products and services, Mawbima Lanka will award selected brands the right to use the Ganna Ape De logo, in recognition of that brand being truly Sri Lankan.

Local business organisations may obtain the logo on application to the MLF, who will assess their products and services to ensure and ascertain whether they meet the MLF required standards and criteria. On meeting such specifications, those brands could join the ranks of truly Sri Lankan products and services recognised islandwide.

The MLF’s long-term objective is to enhance the demand and the consumption of locally produced goods and services. To achieve this end, an intensive and large-scale advertising campaign will be launched countrywide, to create awareness of the Ganna Ape De logo.

The campaign will also be used to encourage and promote the local entrepreneurs to acquire the logo for their own brands. Those brands which have duly obtained the logo, could print the Ganna Ape De logo on their products and their business communications.


]]]]

If someone knows the link to this new website, pls publish here,,,cant find it,...

N said...

drac really u don't like Sri Lankan Airways? It's one of my favourite airways along with Virgin Atlantic..all the others from British to United are horrendous...may have something to do with the SL uniform and my fetish for brown girls:)

Anonymous said...

Cant understand comment abt SriLankan air lines by drac. See this one,,hot off the press..


http://www.etravelblackboard.com/index.asp?id=65751&nav=51


And also dont forget that we have another our own airline...


Mihin Lanka targets South Indian cities


Dubai: A new Sri Lankan airline said it would offer the cheapest fares from Dubai to South Indian cities, if it wins Indian approval this summer.

Mihin Lanka, which owns just two aircraft, an Airbus A320 and A321, began daily flights to Dubai in April from the Sri Lankan capital of Colombo.

The budget carrier, which distinguishes itself from other no-frills airlines by offering an in-flight meal, said it is awaiting approval from the Indian government to fly to two cities in Tiruvanandapuram and Trichi.

Once approved, Mihin will fly from Dubai to Kerala via Colombo, which could provide a boon for the hundreds of thousands of Keralites working in the UAE.

"Once we start, we'll have to provide cheaper fare than the other airlines which provide direct service, such as Air India Express," said a spokesperson in Dubai.


Male route

Mihin is owned by the Sri Lankan government, and competes with Sri Lankan Airlines, which is also government owned with a minority stake held by Emirates airline. Next week, Mihin will add its second route, from Colombo to Male, in the Maldives.

The spokesperson said Mihin has seen healthy growth in its Dubai route, after its first flight carried 25 passengers in May.

Its latest flight carried 141 passengers, a 90 per cent seat load factor.

drac said...

Sri Lankan overbooks like crazy.

I've actually had to elbow my way forward to a rep and tell him not to bump me off once. I wasn't being nasty either, I said I hadn't been home for an year and I wasn't looking forward to spending the night in Frankfurt Am Main. I got unbelievable attitude from the guy.

If it only happened once? well, not great but shit happens. Twice? Umm. No.

Hey, maybe they're great now. I'm just not going to fly them again with my own money without a darn good reason :)

Aravinda said...

Why the Ganna Ape De is a good campaign:

http://tinyurl.com/1qe

It should have been brought in earlier.

Deane AKA ~CC~ said...

Hm i've found the SriLankan Service to be 'OK', without being too great.

They get usually late though (UL), and quite recently a friend of mine was waiting for the flight to start boarding when they announced :

"There will be a slight delay as The crewe haven't turned up."

Only in Sri Lanka.

--

themissingsandwitch - thanks :).. and Aravinda, machang, what's this TinyURL gig u have hooked up with?

Tania J. said...

Mahinda knows how to win elections, but we all know he has no vision for the country. Ranil is a much better choice. Hope Ranil is voted into power soon

[Ping Back] said...

[..]I just commented on a blog where some chap (not the author) was arguing that reducing imports saves money for the country. The scary thing [..]

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