Sri Lankan economy:

Driving a brand

The other day I was on the panel for judging the Brand Excellence awards for Sri Lanka Institute of Marketing, and from the presentations that were made by the corporates, a clear fact that emerged was that even with the economic downturn there had been an outstanding business performance.

This very clearly proved to the world that Sri Lanka has once again demonstrated that we are a country that is resilient.

Sri Lanka’s economy has grown at a six percent growth trajectory in the last couple of years and this year too it is sure to cross the 4 percent+ GDP growth mark whilst foreign reserves topping 5.2 billion dollars has lifted the country’s rating by Standard and Poor to a `B+’ sovereign rating that we as Sri Lankans can sure be proud of when global economies continue to crash.

Today Sri Lanka is ranked one of the top 10 growth engines of the world that very few countries can even aspire to become.

I would like to highlight that the Apparel Industry who embarked on internal reforms that has helped the industry to remain competitive. To my mind it’s a case study of the how private sector reforms can be done even though it’s painful. May be the Sri Lankan telecom Industry needs to take a cue and get together and start implementing this as a priority.

Asia needs to be cautious

While Sri Lanka has once again ridden the economic downturn wave quite successfully amidst the global economic crisis, a point that needs to be highlighted is that Asia as a whole is the driving growth of the world and taking the lead role for the world to come out of the economic downturn. India and China is championing this task and I feel unless the stimulus packages are continued in the larger economies, there can be issues that can crop up in Asia in the future.

The reason being fiscal pressures continue to haunt countries like Japan, South Korea and even Singapore and unless debt-to-GDP ratios are managed there can be serious economic issues in the future. Even though Sri Lanka was not directly affected by the global crisis a country which is export dependant must carefully analyze the impact that we can face in the future as the US and Europe is yet grappling to arrest the economic decline and the increasing unemployment level which has to have an impact on consumer demand at some stage towards the apparel industry.

Link to brand building

In a country like Sri Lanka where over eighty percent of the economy is driven by the private sector, we have to ensure that private demand picks up to a level where a policy stimulus are not required. This will enable organizations to invest in brand building and avoid the cycle of re-stocking inventories and pipeline stocks in the retail trade.

But a point to highlight is that Sri Lanka’s corporate sector as mentioned before has demonstrated the resilience not only in driving business growth but also in its investment on brand building. In 2008 advertising spending has increased by 33 percent to 31.9 billion Rupees which is an indication of the vibrancy of the private sector in Sri Lanka.

Even though the Industry P and L is in the red of the telecom industry, this sector has invested almost 5.3 billion Rupees on advertising which is a case study that needs further analysis.

Brand and its promise

I believe that brands are all about choice and how a brand competes in today’s crowded and noisy environment where 32 billion Rupees is being spent is a daunting task. The only way that I can think of for the outstanding business performance on the companies that presented at last week’s Sri Lanka Institute of Marketing awards was that strong brands had `one’ compelling idea that anchored the consumer’s attention and loyalty by filling an unmet or unsatisfied need.

To be continued