I don’t understand why it is so difficult to get into India. Clearly, the Tata Group thinking is that your papers are in order and there's something wrong with the diplomatic process between the two countries. Is there some problem with the diplomats? I mean - that could be one reason why the papers are not going forward.
It’s nice of the Tatas to try and keep you employed. It goes to prove, once again, the benefits of working with the Tata Group as compared to working with any other group in India. I’m sure, if something like this had happened to someone in UBS, they wouldn’t even bother to hire a lawyer… They’d just get on with their lives.
If they offer you a position like Finance Head in the Taj Samudra, it should be some learning. Who knows what life has in store? Come back to India and open your own hotel - It makes sense with the kind of tariffs in Bangalore..!!
Thursday, May 31, 2007
Wednesday, May 30, 2007
First Signs of Pessimism
“I have a feeling it’s likely to be longer haul. The relatively better exploration would be to try and seek an employment opportunity outside India, which we are also trying.”
– Manoj Chakravarti
– Manoj Chakravarti
Stopping a Galloping Beast
A good economist is a lot like inflation – difficult to keep down. And Harsha de Silva, Lead Economist, LIRNEasia, was as irrepressible as they come when The Sunday Times FT cornered him on the sidelines of a public event for an exclusive chat.
During de Silva’s presentation earlier, he had highlighted a graph indicating a high correlation between inflation and the Central Bank’s (CBSL) net credit to government. That represents extra money that was printed, he explained, which resulted in inflation.
In Zimbabwe, inflation rockets skyward at the incredible rate of 3,700% per annum. “In such an economy, it is more appropriate to measure inflation by the day,” quips de Silva. While Sri Lanka’s inflation – at 16% - seems tame in comparison, it is still the country’s economic enemy number one.
“Prices have been going up because of irresponsible printing of money by the CBSL,” says de Silva. “Since January, they have stopped printing money because they were forced to.” The good news is that if printing money pushes up inflation, stopping will bring it down as fast. That will happen “if Cabraal and crowd walk the talk”, says de Silva.
Explaining that monetary policy has also been tightened, de Silva says, "There are two things CBSL can do to reduce inflation: stop printing money – which they have done – and increase interest rates – which they are now doing.”
The flip side of the coin is that borrowings are becoming more expensive for corporate entities. “Even the prime lending rate is in excess of 20% - and that can be accessed only by AAA-rated companies like Hayleys and John Keells. Small-timers have to pay 30%-plus.” Doing some crystal ball-gazing, de Silva predicts that interest rates will descend only when inflation declines to 10%.
During de Silva’s presentation earlier, he had highlighted a graph indicating a high correlation between inflation and the Central Bank’s (CBSL) net credit to government. That represents extra money that was printed, he explained, which resulted in inflation.
In Zimbabwe, inflation rockets skyward at the incredible rate of 3,700% per annum. “In such an economy, it is more appropriate to measure inflation by the day,” quips de Silva. While Sri Lanka’s inflation – at 16% - seems tame in comparison, it is still the country’s economic enemy number one.
“Prices have been going up because of irresponsible printing of money by the CBSL,” says de Silva. “Since January, they have stopped printing money because they were forced to.” The good news is that if printing money pushes up inflation, stopping will bring it down as fast. That will happen “if Cabraal and crowd walk the talk”, says de Silva.
Explaining that monetary policy has also been tightened, de Silva says, "There are two things CBSL can do to reduce inflation: stop printing money – which they have done – and increase interest rates – which they are now doing.”
The flip side of the coin is that borrowings are becoming more expensive for corporate entities. “Even the prime lending rate is in excess of 20% - and that can be accessed only by AAA-rated companies like Hayleys and John Keells. Small-timers have to pay 30%-plus.” Doing some crystal ball-gazing, de Silva predicts that interest rates will descend only when inflation declines to 10%.
Aid and Economic Sovereignty
The 1990s were marked by a series of crises that posed a challenge to the international financial and monetary system. These crises made it obvious that international capital flows bring concomitant risks, besides the visible benefits.
The relationship between countries and international financial institutions (IFIs) has more substantial effects on the changing nature of state sovereignty in the developing world. This week, ‘Aid and Sovereignty: Role of International Financial Institutions in Developing Countries’ was the subject of a panel discussion at the Bandaranaike Centre for International Studies.
In the context of globalization, Dr M Ganeshamoorthy, Department of Economics, University of Colombo, described economic sovereignty as “the ability of a state to control its own economy in response to its own needs”.
Dr Ganeshamoorthy provided a litmus test of whether a nation is economically sovereign: “It should keep its own currency; it should trade with whomever it chooses to; it should control imports and exports; and it should regulate its currency to protect against speculation, if necessary.” By that framework, he points out, the introduction of the Euro was not compatible with the principle of economic sovereignty. He describes the tendency of World Bank, IMF and WTO to get increasingly and extensively involved in the domestic economic affairs of its members as a kind of ‘neo-colonialism’.
Prof. Nira Wickramasinghe, Department of International Relations, University of Colombo, delivered a message replete with events from history. She questioned the relevance of IFIs and examined the evolution of their roles. Tracing the history of IFIs, she said, “Since the late 1970s, they have provided loans to support economic reforms – currency, exchange and short-term balance of payment.” That role is being challenged, however, with other countries (like China, for Asia) taking on the mantle of lender and developer.
“Aid budgets are being spent on overpriced consultants instead of on real projects,” Prof. Wickramasinghe said. Providing the example of education in Sri Lanka, she contrasted the ‘so much money pumped in’ resulting in ‘declining levels of knowledge of university entrants’. Taking issue, Harsha de Silva, Lead Economist, LIRNEasia, asked, “If 20,000 teachers are absent on a daily basis, is that the World Bank’s fault?”
In his presentation, de Silva said, “We do not have the right to demand aid. If we are asking for aid, reasonable conditions are neither bad nor wrong.” Highlighting the need for proper post-sanction management of aid, he quipped, “Thereafter, whether I buy BMWs and my citizens starve to death is a separate question.”
De Silva pointed out that IMF has clearly indicated that its aid is conditional and is granted “provided that the country is implementing an adequate programme of policy adjustments” (2002).
Turning the mirror inward, de Silva said, “The only available option to protect the sovereignty of our country is for the state to borrow less and let private investments flow in… When foreign direct investment comes, you get advanced technology also,” which is not necessarily the case when you get aid.
The Indians Are Coming!
Prema Cooray, Chairman – Sri Lanka Convention Bureau, describes India as “the obvious place to go to promote tourism”. He will be leading a team to that country to tap the corporate meetings and conferences potential there. Prior to his forthcoming departure, however, he is in a reflective mood, casting his mind back ten years, when - during the late 1990s, “There were three problems - Flights were very few and always full; Indian Airlines had an older fleet and couldn’t increase capacity.
“Secondly, any Indian had to obtain a visa to come to Sri Lanka and it used to take three or four days to get a visa. Today, of course, Sri Lanka is the only country in SAARC where a leisure tourist gets a visa on arrival.
“Third, India’s currency regime was restrictive, not allowing people to take foreign exchange out, even on the current account. We worked on clearing those impediments and we have no problems in those three areas today.”
Besides, travel packages to Sri Lanka were very expensive compared to available options like Singapore, Malaysia Thailand or Mauritius. At that time - in November 2001, Udaya Nanayakkara, the former SLTB President, and Cooray recognised that people had a huge fear of traveling. (This was four months after the LTTE attack on the Katunayake International Airport and two months after 9/11.)
“SriLankan Airlines was approached to make an attractive offer. They asked us to put a package together - and they gave us a thundering ‘Buy One, Get One Free’ offer. You won’t believe what price does to people… 20,000 Indian leisure travelers visited in four months! Since that day, we have not been able to stop the Indians from coming,” says Cooray contentedly.
But Cooray believes that we have not touched even the tip of the iceberg yet and that it makes sense to go to India at this time… Taj has more than 60 to 70 rooms booked on meetings; which itself is a ready-reckoner that the market has potential… We have done our research with our Indian counterparts, with Taj and with the corporate community.
“Secondly, any Indian had to obtain a visa to come to Sri Lanka and it used to take three or four days to get a visa. Today, of course, Sri Lanka is the only country in SAARC where a leisure tourist gets a visa on arrival.
“Third, India’s currency regime was restrictive, not allowing people to take foreign exchange out, even on the current account. We worked on clearing those impediments and we have no problems in those three areas today.”
Besides, travel packages to Sri Lanka were very expensive compared to available options like Singapore, Malaysia Thailand or Mauritius. At that time - in November 2001, Udaya Nanayakkara, the former SLTB President, and Cooray recognised that people had a huge fear of traveling. (This was four months after the LTTE attack on the Katunayake International Airport and two months after 9/11.)
“SriLankan Airlines was approached to make an attractive offer. They asked us to put a package together - and they gave us a thundering ‘Buy One, Get One Free’ offer. You won’t believe what price does to people… 20,000 Indian leisure travelers visited in four months! Since that day, we have not been able to stop the Indians from coming,” says Cooray contentedly.
But Cooray believes that we have not touched even the tip of the iceberg yet and that it makes sense to go to India at this time… Taj has more than 60 to 70 rooms booked on meetings; which itself is a ready-reckoner that the market has potential… We have done our research with our Indian counterparts, with Taj and with the corporate community.
Tourism Feeds A Million
Tourism does not appear in the national accounts because it is a ‘demand-side activity’. Unlike manufacturing and agriculture (both supply-side), demand-side activities are defined in terms of who consumes the product. When any industry sells to a tourist, that is ‘tourism activity’, explains UNWTO Consultant, Stan Fleetwood, in conversation with The Sunday Times FT.
“If you understate it, it’s not recognised,” Fleetwood says, justifying the purpose of Tourism Satellite Account (TSA). TSA addresses the problem by giving tourism statistics the same official recognition as supply-side activities have.
Fleetwood continues: “In Australia, before we got TSA in 2000, the Treasurer didn’t believe the figures that our consultants put together. After TSA, the Minister for Tourism could say, ‘Tourism is 4.5%... bigger than coal exports, bigger than wheat.’ The Treasurer couldn’t argue with that because it was produced by Australian Bureau of Statistics (which comes under the Treasurer)!”
“Visitor arrivals and earnings in foreign currency are only one part of the story”, elaborates Prema Cooray, Chairman of USAID’s Tourism Cluster. In the local context, Cooray says, “There is a huge informal sector in tourism - handicrafts, curios, gems & jewellery, spice gardens, batiks... Suppliers of these items live on tourism. There are 60,000 persons directly employed in the tourism sector.
“But for every direct employee, there are at least three or four indirect employees. If four, that means 300,000 people altogether. Multiply that by a family unit and you will realise that tourism feeds one million people.”
“If you understate it, it’s not recognised,” Fleetwood says, justifying the purpose of Tourism Satellite Account (TSA). TSA addresses the problem by giving tourism statistics the same official recognition as supply-side activities have.
Fleetwood continues: “In Australia, before we got TSA in 2000, the Treasurer didn’t believe the figures that our consultants put together. After TSA, the Minister for Tourism could say, ‘Tourism is 4.5%... bigger than coal exports, bigger than wheat.’ The Treasurer couldn’t argue with that because it was produced by Australian Bureau of Statistics (which comes under the Treasurer)!”
“Visitor arrivals and earnings in foreign currency are only one part of the story”, elaborates Prema Cooray, Chairman of USAID’s Tourism Cluster. In the local context, Cooray says, “There is a huge informal sector in tourism - handicrafts, curios, gems & jewellery, spice gardens, batiks... Suppliers of these items live on tourism. There are 60,000 persons directly employed in the tourism sector.
“But for every direct employee, there are at least three or four indirect employees. If four, that means 300,000 people altogether. Multiply that by a family unit and you will realise that tourism feeds one million people.”
Tourism: Proving a Point
The World Tourism Organisation (UNWTO) conducted a workshop on Tourism Statistics & Tourism Satellite Account (TSA) this week. The participants included eleven foreign delegates from six countries. In his welcome speech at the inaugural ceremony, Renton de Alwis, Chairman, Sri Lanka Tourist Board, emphasized the need to influence governments with facts and figures.
P M Leelaratne, Secretary, Ministry of Tourism, corroborated that viewpoint, saying, “Measurement of earnings is essential for policy makers to decide where we should invest. On what statistics should we base our decisions? Do embarkation cards, for example, capture what we really want to?”
‘Travel and tourism’ is the fastest growing industry, Christine Brew, UNWTO representative, pointed out. “UNWTO forecasts worldwide tourist arrivals at 1.1 billion during 2010.” That represents an annualized increase of 6.9% over the 842 million that was recorded during 2006. Brew spoke of the need for a comprehensive system of tourism statistics and indicated that the Colombo workshop was the second to be held this year.
Stan Fleetwood, a UNWTO Consultant, described tourism as a “fantastic phenomenon”. However, many countries struggle to generate a consistent and reliable database on international and domestic visitors’ consumption. UNWTO has dedicated sustained efforts to designing statistical instruments to help countries do their estimation.
The workshop had two primary objectives:
Improve statistical capacity building for participating countries, and thereby make progress in measurement and analysis of economic impacts of tourism
Initiate tasks recommended by UNWTO for development of a TSA.
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