Into the Valley of Death

DECEMBER 2020

STARTUPS: P.18 INTO THE WHY SRI LANKA VALLEY OF CANNOT BE A DEATH SINGAPORE: A CHIEF FESTUS P.38 BUDGET

REIMAGINING THE NEW NORMAL: HOW BUSINESS CAN COME OUT OF THIS CRISIS

CONTENTS

DECEMBER 2020 P.26 Listed company earnings tumble 60% in Covid-hit June quarter It was an unsurprising yet highly anticipated quarter! However, companies like Expolanka, a few export companies, and conglomerates like Hayleys P.18 and Hemas impressed Why Sri Lanka cannot be a Singapore: a Chief Festus budget Competition is the key to efficiency, not protection

P.30 Covid-19: Ceylon Tea’s wake up call The tea industry is yet to come to terms with sustainability over the long term

P.32 Vacancy: Chief Covid-19 Officer Every organization may not need a Chief P.108 P.120 COVID-19 Officer. But there is little doubt Dutch Treat? Disaster capitalism every company has to in the moral maze re-strategize its business No one knew the arts of canal building, to account for COVID'S dykes, drainage and land reclamation And do we really need psychopaths in limitations like the Dutch charge?

CONTENTS

DECEMBER 2020

P.38 P.42 P.50 Tech Startups: Reimagining the new The future of technology into the valley of death normal: how business can and digital payments Most tech startups don’t survive the come out of this crisis LankaClear is leading the valley of death. To sustain the ones that For Ganaka Herath, Managing Partner at transformation with innovative do survive, the investment landscape McKinsey Sri Lanka, resetting strategy methods for digital transactions. needs fixing, according to a pioneer may not be ideal way out of this Covid-19 economic crisis for most companies

P.54 Port City: Sri Lanka’s Game Changer The CHEC Port City Colombo and Proposed Special Economic Zone is just the reset and reimagining the country needs right now

P.60 Staying relevant in today’s data-driven world: Build customer- centricity and hyper- personalisation Data has gone from scarce to superabundant. That brings new benefits for companies ready to adapt and headaches for ones that aren’t. P.70 P.66 JLL’s Outlook for First Capital Colombo’s Holdings: thriving Property Market in a crisis The residential market The investment institution laid the is recovering fast due to foundations for a resilient business low interest rates, while years before COVID-19, and now its the market for office and reaping the rewards, and confident retail spaces is seeing a about a 2021 economic recovery gradual recovery

CONTENTS

DECEMBER 2020 THE P.76 GREAT Sunshine Holdings’ pursuit of stability and growth RESET: Stories from Echelon Studios P.80 Pan Asia Bank: a legacy built on innovation

P.82 Coca-Cola is making sustainability a priority

P.86 Sarvodaya Development Finance: rural-led economic growth

P.90 Wimaladharma and Sons: building a timeless legacy

P.94 How Nations Trust Bank re-adjusted its strategy before the pandemic hit P.106 P.96 How one legacy Allianz Insurance: property developer gearing for growth is intent on rising above any challenge

P.98 P.104 P.102 ACCA: Opening A DoubleTree by Hilton Weerawila How to build a World of Opportunities Rajawarna Resort: An unshakable global startup belief in tourism’s potential

Editor’s Desk

Entrepreneurial ecosystems

The pandemic has set into a spin Sri Lanka’s ramshackle tech startup ecosystem. The damage here can be far-reaching as most startups, scrambling to build prototypes with a limited amount of money borrowed from family and friends or some angel funding, will run out of capital and also enthusiasm for building a business. That’s the pandemic’s tragic outcome, its ability to sap the energy out of the best and brightest. However, to focus on startups as the lynchpin of an entrepreneurial ecosystem is a misplaced Innovation ecosystems, obsession. Innovation ecosystems have emerged unlike entrepreneurial in countries with big groups of medium to large ecosystems, require large companies co-financing innovation. and small companies Venture capital’s role in furthering an innovation ecosystem can also be overrated. to be co-financing Venture capital funds are not providing the kind innovation alongside the of patient long-term finance needed for radical public sector innovations. They are far too shortsighted for that, given that their profitable “exit” - through a sale to a bigger company or an IPO in, at most, five years - is inconsistent with the long time needed for innovation. The most patient long term capital globally has come from governments. Currently, a leader in this is China, with its last 5-year plan committing $1.7 trillion to several sectors like IT and environmentally friendly technology where it wishes to establish leadership. Innovation ecosystems, unlike entrepreneurial ecosystems, require large and small companies to be co-financing innovation alongside the public sector. With its strained public finances, Sri Lanka’s options are limited. But it’s government budget for 2021 has promised public-sector involvement in the innovation ecosystem. If achieved, it could be the missing catalyst.

SHAMINDRA KULAMANNAGE, EDITOR-IN-CHIEF

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THE PRICE SIGNAL | BELLWETHER

THE PRICE SIGNAL WHY SRI LANKA CANNOT BE A SINGAPORE: A CHIEF FESTUS BUDGET Competition is the key to efficiency, not protection

BY BELLWETHER

Sri Lanka aspired to be a Singapore after liberalizing trade and ending a closed economy of the 1970s, but it all failed as the currency collapsed, triggering unrest and strikes while smouldering nationalism ratcheted up into a civil war and later, trade controls came back. All economic activity was tied up in draconian import and exchange controls while the central bank bought Treasury bills to finance the deficit. The 2021 budget has taken the country back to the 1970s era with all efforts to 'save foreign exchange' amid the worst money printing in its history, and looming sovereign default with the credit rating at 'CCC' which is barely above default. Sri Lanka is effectively locked out of bond markets. Most Latin American countries with bad central banks, that engaged in import substitution to save foreign exchange and boost domestic industry, also ended up in sovereign default. The greed to make easy profits through the exploitation of the common people through high tariffs and import substitution, flowers under soft-pegged central banks which create forex shortages. There is also a profound lack of understanding that trade and current deficits are created mainly by deficit spending with foreign borrowings, with private individuals being net : SAHELI KARUNARATNE savers who buy Treasury bills. For this, not only politicians should be blamed but also Mercantilists who are labelled economists in this country who have doctorates from for-

eign universities. ILLUSTRATIONS BY

18 ECHELON.LK DECEMBER 2020 THE PRICE SIGNAL | BELLWETHER

DECEMBER 2020 ECHELON.LK 19 THE PRICE SIGNAL | BELLWETHER

as licenses and selling overpriced grain to chicken farmers and feed mill- ers. Shoes of school children continue to be taxed heavily to give profits. Owners of Sri Lanka's 'infant industries' have sent two generations of their own children to study at foreign universities while children of poor families are struggling to buy food. This is in sharp contrast to Singapore which created free trade in a single day in 1967, or Vietnam which had no private enterprises to oppose free trade when the Communist Party decided that self-sufficiency had failed.

CHIEF FESTUS Singapore’s Prime Minister Lee Kwan Yew once recalled having met the then Finance Minister of Nigeria, Chief Festus Okotie-Eboh in 1966 at a Commonwealth meeting in Lagos. "I will never forget Chief Festus," Prime Minister Lee Kwan Yew said at a meeting of African Leaders in Lagos in 1993. “We had sat opposite each other at a formal dinner at the hotel where we were all staying and where the conference was held. He said that he wanted to leave politics soon to devote more time to his business - that IMPORT SUBSTITUTION GREED of a shoe factory. He also said that he had increased taxes to protect the The current administration came to power crit- viability of the shoe factory.” icizing a free trade deal with Singapore driven "Two days later, whilst I was in Accra a coup took place in Lagos. The Nigerian Prime Minister Abubakar Tafawas Balewa was killed, along with by rent-seekingI protectionist lobbies and some the Finance Minister, Chief Festus Okotie-Eboh." 'professional' associations. Chief Festus was a former accountant of Bata in Nigeria who had set up "..[F]ree trade agreements should be drafted his own shoe factory later. with strategies to bridge the trade gap by limiting In Sri Lanka's Chief Festuses are now dictating policy. imports through the production of goods that A shoe is to be taxed at 1,000 rupees a unit. There are Chief Festus's not can be manufactured within the country, facil- only in shoes but in most inefficient industries which are export un-com- itating industrial development," Prime Minister petitive. and Finance Minister Mahinda Rajapaksa said. A number of building material producers in steel, tiles, and aluminium "Therefore, I propose to formulate a balanced are exploiting the people with overpriced goods and making the country uncompetitive in exports and tourism as well, and putting houses out of trade policy yielding long-term returns so as to reach of married couples and making them take bigger loans than needed. increase the export earnings of our industrial Meanwhile, in a bizarre policy twist, tax-free inputs are allowed for products and to save foreign exchange through mega property developers involved in luxury apartments. After pushing import substitutions." The line was running all up housing costs, 7 percent interest rates loans are also mandated in a along the budget for 2020. price control on banks. The bigger problem is while the ordinary people "Since the foreign exchange spent on the impor- are paying high prices under cover of the tax, the money is not going to the tation of fuel for power generation is saved through government budget but to the pockets of the Chief Festuses. the development of renewable energy, it will be The import substitution Chiefs are not actually producing anything but are going through the motions of production and are collecting and one of the main import substitution industries," pocketing the taxes, in a tax-arbitraging action. it said. The easiest path to easy money is to produce ROBBED FREEDOMS basic goods; food, clothing and shelter which peo- Sri Lankans got economic freedom after the British East India Company ple cannot do without and sell them at exorbitant monopoly and trade protection was dismantled by the colonial civil ser- prices under the cover of protective tariffs. The vice officers. policy would be "limit importation of agricultural After self-determination in 1948, Sri Lanka's Chief Festuses and state commodities except for the items that cannot be enterprises gradually robbed freedoms, justifying protection to save foreign produced domestically (negative List). exchange, where shortages started to come after 1951. It was not just Chief Festuses giving campaign contributions to politicians that drove import Maize is another racket where billions are substitution, though this seems to have become the driving force of the made, restricting imports through taxes as well phenomenon later.

20 ECHELON.LK DECEMBER 2020 " THE PRICE SIGNAL | BELLWETHER

The ideological support for exploitation of helpless poor by import substitution was given by the likes of Raul Prebisch, the architect of the Argentina Central Bank who promoted state-led "Singapore rejected con- industrialization to catch up with the West. ventional wisdom when In many Latin American countries with bad central banks inspired by Prebisch and fellow trav- it did not accord with eller Robert Triffin at the Federal Reserve, import substitution naturally followed as money printing rational analysis and its created forex shortages. Foreign exchange shortages occurred regularly own experience," in Sri Lanka also after a Latin America style central bank was set up in 1951 by Fed money doctor John Prime Minister Lee said. Exter. Instead of fixing the central bank which is the source of the trouble, people were being told that they must pay higher prices and forego foreign goods and allow their pockets to be picked by 'domestic' industries which could not compete elsewhere.

DEPENDENCY THEORY - STRUCTURALISM But the philosophy that was articulated by the likes of Prebisch was much broader. The Prebisch-Singer hypothesis, for example, claimed that the primary commodity exporting may have have been easy to push to anyone who had an inferiority countries were at a disadvantage (before WWII complex and were prepared to believe that so-called 'white' people during the great depression, commodity prices col- were capable of doing something they themselves could not do. lapsed as credit collapsed in the US) and they were Singapore rejected these ideas outright. dependent (dependencia) on industrial countries. "Singapore rejected conventional wisdom when it did not accord Proponents came up with the theory that there with rational analysis and its own experience," Prime Minister Lee said. was a centre and a periphery. In actual fact, indus- "For example, in the 60s and 70s, it was politically correct to be trial firms collapsed in the US also, creating mass anti-American and anti-MNC. The theology expounded by Latin unemployment, while farms were foreclosed. Americans like Raul Prebisch was that MNC would reduce them to In Latin America, multinational companies “dependancia”. We did not accept this. (MNC) were demonized particularly due to the "Instead we assiduously courted MNCs. They had the technology, actions of firms like the Boston Fruit Company. As know-how, techniques, expertise and the markets. We decided it was currencies collapsed and cost-of-living was driven a fast way of learning on the job working for them and with them. by the central banks, socialists came to power. Indeed they have been a powerful factor in Singapore’s growth." Anti-Americanism flourished. Later the backlash against neo-liberalism also came from countries SUBJUGATED BY SELF-DETERMINATION like Chile where market reforms were constantly Monetary instability and economic nationalism were not the only undermined by depreciating currencies. Santiago cancers unleashed on the people by the new rulers who got control academics were a fanclub of Prebisch. of the state machinery from former Colonial rulers. The roots of most The International Monetary Fund (originally a of Sri Lanka's problems are also not new. New Dealer agency) invited the backlash by not Outright ethno religious fascism, rarely if ever found under ancient fixing the central banks and supporting currency kings, spread like cancer after self-determination, though it was fes- depreciation on ideas such as 'overvalued' cur- tering earlier. Linguistic nationalism came in 1956 with the Sinhala rencies. Every fiscal reform failed at the hands of only Act, through a law-making parliament created by the British. depreciating currencies. Sri Lanka's last King was Kannasamy Nayak (Sri Wickrema The so-called 'overvaluation' never went away in Rajasinghe) descending from the many wives of former kings imported these countries, despite ever present depreciation. from South India who nationalists would call a ‘Tamil’ or a Dravidian Ideas like dependencia or the 'Global South' (South Indian).

DECEMBER 2020 ECHELON.LK 21 THE PRICE SIGNAL | BELLWETHER"

Turkey itself (Armenians) after the break up of the Ottoman Empire as well as Africa and Asia where mainly European powers ruled "Fortunately for in the 20th century. This is what Prime Minister Lee told Singapore, we were African leaders, where there were many tribes. the exception in "The Singapore solution to the problems arising from its young nationhood has been a world of infant a policy of deliberate gradualism in all issues industry protection. which involve race, language, culture and religion," PM Lee explained. Multinational companies "We are 76 per cent Chinese, but of different clans speaking different dialects invested in Singapore from different parts of China. We are 15 per cent Malay-Muslims from different parts of because we practised a Malaysia and Indonesia. We are seven percent Indians from different parts of India. free and open economy The rest came from Europe and other parts of Asia. We need a common language. We without exchange solved this by making everybody learn not one but two languages, English and the controls or protected mother tongue. industries." "English is not any group’s mother tongue, so no advantage is gained or lost by any one group. "We have neither forced nor pressure-cooked a national identity. We have refrained from suppressing ethnic culture, languages, religions or sense of identity." In Sri Lanka, religious nationalism also took wing along with linguistic nationalism, with religious leaders adding fuel to witch's brew of ethno religious fascism. Minorities cannot solve the problem of nationalism. Only the majority can. It was the 'Chinese' majority who solved the problem in Singapore. Slavery was not abolished by NATIONALISM the slaves, but by the mainly white liberals. Donald Trump was defeated mainly by Like French was widely used in Royal Courts around Europe where inter-mar- white male voters switching under the lead- riage is the rule (The 'British' monarchs are 'German') Tamil was spoken ership of a white man, while the share of in the Royal Court. blacks and Latinos voting went up according Kings had no problem with commoners having different languages or to exit polls in the US. races - in fact, successful emperors rule over vast regions with people of many religions and races, knighting even the most successful commoners among and taking them under their wing. REGIME UNCERTAINTY But in a democracy (read popular vote) appealing to the majority and Regime uncertainty also came pretty fast as discriminating against the minority was the easiest path to power. This was the new rulers expropriated both foreigners a problem of many new countries given self-determination by Imperial and local businesses. British owned planta- powers. Without the vote, it had not been too much of a problem when tions were expropriated both in Sri Lanka and Empires broke up in earlier ages. It became a visible problem from the Zimbabwe, where the central bank ended break-up of the Austro-Hungarian Empire in Europe in the 19th century, up in hyperinflation. Singapore did the opposite.

22 ECHELON.LK DECEMBER 2020 THE PRICE SIGNAL | BELLWETHER

"Singapore consciously set out to maintain continuity with past policies. We accept our colonial heritage," PM Lee said. "Continuity with the past helps the evolution into new growth sectors. This is one of our secrets to growth. We encouraged all British, European, American, Japanese and Asian businesses to stay and expand their investments. We encouraged our own businessmen to enter trade and manufacturing and services not by displacing these foreign enterprises but by working as their suppliers or competitors." Sri Lanka expropriated bus companies, the Bank of Ceylon and land along with oil companies. In 2011 more firms were expropriated.

LATIN AMERICAN STRUCTURALISM Singapore did not always have free trade, though it always had monetary stability (except during Japanese occupation in WWII with Banana Money) due to having a currency board. When Singapore was part of the Malayan Federation and a so-called 'common market', import substitution was attempted based on the Prebisch style theory. Prebisch's Latin American structuralism had infected Malaysia as well. Prebisch became influential because he became director of the Economic Commission for Latin America and later the United Nations Conference of Trade and Development, which did enormous damage to newly independent countries, grow. As Singapore's domestic market was minuscule, we sought a common impoverished them and kept them in the market with Malaysia through a political merger. On gaining independence so-called third world. on 9 August 1965, we had to learn very quickly to face frontally the head- "Like the other developing countries winds of global competition. in the 1960s, Singapore tried to kick- "Fortunately for Singapore, we were the exception in a world of infant start industrialization through a policy industry protection. Multinational companies invested in Singapore because of import substitution, advocated reli- we practised a free and open economy without exchange controls or pro- giously by academic UN Economists," tected industries." recalled top civil servant Ngiam Tong Dow in 'A Mandarin and the makings of LIBERTY AT MIDNIGHT public policy'. The Malaysia-Singapore separation took place on 9 August 1965. "Import tariffs were imposed on a "Mr. I F Tang (a colleague of Albert Winsemius, a Dutch economist who full range of consumer products to give advised Singapore) played a great role in our economic development," recalled fledgeling domestic industries time to Ngiam. "Before that, we were perusing import substitution. The Malaysian

DECEMBER 2020 ECHELON.LK 23 THE PRICE SIGNAL | BELLWETHER "

common market was the order of the day. "But the moment we left Malaysia, there was no more Common Market. There was no more domestic market. So I F Tang gold Dr Goh (Keng Swee), "Ok from now on we must be export oriented. Sri Lanka also had "And in one stroke we removed all duties and tariffs.” a currency board In Sri Lanka, Mercantilists always claim that tariff removal must be gradual. when Malaysian firms It is not so. In 1978, tariffs were removed. raised capital in our By 1994 when A S Jayewardene took over as Treasury Secretary a large portion of stock market before government revenue still came from import duties. self-determination. "I felt sorry for the Small and Medium sized Enterprises because they believed But in 1951 a Latin- in us," Ngiam said. "We sold them the idea of Malaysia, America style no- the Malaysian Common Market. And then we put duties to protect the Common holds-barred central market, so they built factories and started bank was set up their business. So when we left Malaysia they were left holding the can. And then with an unrestrained we invited the MNCs in. So sometimes it is difficult. We have to adjust. constitution. "But now I am glad to see that SMEs have become independent. They are the ones who are producing components, the contract manufacturers. I would say the EDB (Economic Development Board) had a role in this because in the EDB we set up training centres." However, if the domestic market pre-dated Latin American import substitution. It was started in the US by Alexander is insulated, no firm will become cost Hamilton and was made popular in Europe by Friedrich List, a German historical competitive to produce components for economist, which is a type of Mercantilism. exporters. "Fortunately for Singapore, we were the exception in a world of infant industry Ngiam recalls how he called Colgate protection,” Ngiam said. which had a plant in Singapore to ask “Multinational companies invested in Singapore because we practised a free why they did not drop the price after and open economy without exchange controls or protected industries." the taxes were taken off to be told that the price was set at what the market FOUNDATION OF MONETARY STABILITY could take. Singapore did not have exchange controls because it refused to build a soft-pegged "So they never dropped the price," central bank, which was a mistake of many newly independent nations. he said. "So having domestic industries As a result, underpinning the policy framework was monetary stability. Without does not mean that prices will drop at monetary stability, people will take to the streets as the cost of living goes up and the marketplace. Only competition does the government will get kicked out even if it practices sound policies. Corruption that. So later on you had other brands rises as real wages fall, especially in the public sector. Permits, controls, price of toothpaste coming in. Only then did controls and smuggling degenerates the entire society. the prices drop. So I think competition is Singapore’s economic framework was backed by monetary stability through the key to efficiency, not protection. And a currency board, which was a legacy of the British. The British honoured all the if we remove the protection it doesn't pre-war money after the end of Japanese occupation. Singapore’s first Finance mean the manufacturers will drop their Minister, a classical economist who had studied at the London School of Economics, prices. No, only competition does that." kept it intact. Infant industry was a concept that "That was to Dr Goh's great credit," Ngiam recalled. "He believed in the Currency

24 ECHELON.LK DECEMBER 2020 THE PRICE SIGNAL | BELLWETHER

Chart 1 bank was set up in 1935. Mexico What a central bank did was once an Imperial power that GDP per capita in the United States and Argentina owned parts of what is now (1875-2018) the US but its soft-peg reduced Source: Madison project database the country to a basket case. Even now, most of the immi- 60'000 grants into the US come from USA GDP per Capita $55,650 Latin American countries with Argentina GDP per Capita Prebisch-Triffin central banks. 50'000 Sri Lanka's central bank went to extremes under the Sirisena- Wickremesinghe administration, 40'000 creating two currency crises 1035: Formation of the and imposing deposit rate con- Central Bank of Argentina trols, breaking all restraints. It 30'000 is hitting new lows in 2020. Its Treasury bill holdings are over half a trillion rupees. "Our economy was and is 20'000 both small and open. Financing budget deficits through Central Bank credit creation appeared to 10'000 $18,255 us as an invitation to disaster," Goh said at the 30th anniversary of the Monetary Authority of 0 Singapore. "There was no effec-

GDP Per Capita (measured in constant 2011 USD)* 2011 in constant (measured Capita GDP Per 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015 tive way of exchange control in an open trading economy like ours to deal with the inevitable balance of payments troubles." In Sri Lanka, balance of payments troubles are blamed not on state failure but on imports Board system. I would say there were two very successful policies in Singapore, which we and the people, who - wonder claim to be our very own. First, the Central Provident Fund. Second, the Currency Board. Both of wonders - happen to be net were actually British colonial policies, which worked so well that we retained them even when savers in the banking system and we were on our own. also buy Treasury bills to finance "And with a Currency Board, before you can issue a dollar, you must have so many pounds the government - unless their banked with them as a reserve. Every (Singapore) dollar is fully backed by reserves. The system bids are rejected and money is maintains its own stability. It is a beautiful system. It can never lead to currency depreciation. printed for the holy grail of tar- "The currency board is a very clever idea. Very clever. So even after Brits left, Dr Goh did not geting the yield curve. It is all change the Currency Board. So that is why our currency is still fully backed. happening now, again. But this "The Finance Minister will never be able to issue currency unless he has reserves to back time it is more dangerous. Sri the currency. Singapore can ever print money. So we will never have runaway inflation. What Lanka got away in the 1980s with the British imposed on us turned out to be a great virtue." massive money printing because Goh later modified the currency board to be able to appreciate the currency, but with a there was no commercial debt floating policy rate as in a Currency Board and it is the only such system in the World. The and trade was relatively free. Singapore dollar is now about 1.2 to the US dollar from the original 3.0 to the dollar. But Sri Lanka now has a credit rating of CCC. Almost all LOOMING THREAT Prebisch-Triffin central banks in Latin America that tried import Sri Lanka also had a currency board when Malaysian firms raised capital in our stock market substitution ended up with before self-determination. But in 1951 a Latin-America style no-holds-barred central bank sovereign default or complete was set up with an unrestrained constitution. The anything-goes Monetary Law allowed the meltdowns. central bank to do anything. But it is never too late to learn Argentina’s per capita GDP was almost the same as the US before the soft-pegged central a lesson, even now.

DECEMBER 2020 ECHELON.LK 25 LISTED COMPANY EARNINGS TUMBLE 60% IN COVID-HIT JUNE QUARTER It was an unsurprising yet highly anticipated quarter! However, companies like Expolanka, a few export companies, and conglomerates like Hayleys and Hemas impressed BY DEVAN DANIEL : SAHELI KARUNARATNE ILLUSTRATIONS BY

26 ECHELON.LK DECEMBER 2020 NEXT

EQUITIES

A CLOSER LOOK AT JUNE 2020 The June 2020 quarter was perhaps the most anticipated. Market analysts were keen to know how listed companies performed in the June 2020 quarter and try to understand the full impact of the lockdown on the economy through the eyes of listed companies. According to First Capital Research, combined earnings of listed companies fell 58% from a year ago to Rs18 billion in the June 2020 quarter (down from Rs42 billion in June 2019). First the bad news, and there is no surprise here, mostly. Tourism-related companies reported a combined loss of Rs8 billion in the quarter, ombined earnings of listed doubling losses from a year ago. Every companies have been declining one of the nearly 40 companies reported each quarter for a couple of years losses. The sector was hit hard by the 2019 heading into 2020. However, since Easter bombings, but COVID-19 is beating falling 32% in the Dec 2018 quarter, it senseless. combined earnings decline had The country's two largest hotel chain bottom-out, recovering to a mere operators, with properties in the Maldives C5% fall in the Dec 2019 quarter. Back then, many too, John Keells Hotels and Aitken Spence analysts predicted 2020 to be equity's comeback year! Hotels both saw losses quadrupled to Rs1.7 The All Share index of the Colombo Stock Exchange billion each. ended 2019 with a 1.27% gain, after declining 18% over Retail reported Rs410 million in the previous four years! combined losses, a slight improvement COVID-19 was emerging as a global threat, but it from a loss of Rs629 million with Odel Plc was still not Sri Lanka's problem. The pandemic did reporting to Rs676 million loss, tripling make it ashore, and the impact on listed companies from a loss of Rs210 million a year ago. have been devastating. The All Share index fell 16% Singer Sri Lanka did exceptionally well during the first six months of 2020. reporting a profit of Rs370 million in the In the March 2020 quarter, combined earnings fell quarter, ballooning over 1,200% from Rs27 52% from a year earlier. In the next quarter, June 2020, million a year earlier. John Keells Plc which it tumbled a further 60%! controls several consumer food brands, Since June 2018, listed company earnings have supermarket chain SuperK, logistics, fallen 205% over eight quarters. COVID was responsible property, plantations and an insurance for half this decline with combined profits falling 110% firm, reported a profit of Rs59 million in in the two quarters to June 2020 (please see Figure 1). the quarter, up 300% from a year ago. This data backs up what economists have been Supermarket chain Cargills Ceylon profits saying: Sri Lanka's economic problems only got worse fell 70% to Rs210 million due to lower with COVID; it's not like the pandemic started this! We consumer footfall due to the lockdown. will now have to wait for the September 2020 earnings Capital goods sector losses deepened data to see how the post-lockdown recovery went if fivefold to Rs5 billion. First Capital has there was indeed a recovery. The All Share index did included diversified holding companies recover losses in the September 2020 quarter, gaining such as John Keells Holdings, Aitken 14% since June. Will the underlying earnings stack Spence and Softlogic Holdings into this up? Time will tell. category.

DECEMBER 2020 ECHELON.LK 27 JKH reported Rs1.7 billion loss Figure 1: Lost recovery compared to a profit of Rs1 billion a Combined earnings growth of listed companies. The decline seemed to have year ago, mainly due to the closure of bottomed out in 2018, but then came COVID its hotels to the pandemic. Softlogic Holdings, with interests Sep-18 Dec-18 Mar-18 Jun-18 Sep-18 Dec-18 Mar-18 Jun-18 in retail, telecommunications, 0% financial services, and leisure, saw its losses slide down to Rs2.5 billion, -10% -4.7% compared to a Rs753 million loss a -10.4% -9.6% year earlier. -20% -15.6% However, there were a few bright -22.6% stars: Hemas Holdings reported a -30% profit of Rs270 million, compared to a -31.8% -40% loss of Rs430 million a year ago while Vallibel One saw earnings grow 50% -50% to Rs860 million. -51.9% Consumer durables and apparels -60% reported a Rs260 million loss, -58.0% compared to a Rs343 million profit -70% a year earlier. Dankotuwa Porcelain made a R170 million loss, and Ambean (Source: First Capital Research) Holdings reported a Rs132 million loss. Losses of energy companies doubled to Rs980 million from Rs510 million a year ago. Lanka IOC losses grew over 200% from a year earlier to Rs795 million while Laugfs Gas cut back losses by 32% to Rs180 million. to Rs7 billion. Ceylon Tobacco saw profits dip 34% to Rs3 billion while Distilleries' What's perhaps surprising is earnings fell 40% to Rs980 million. that healthcare lost Rs850 million, Ceylon Grain Elevators profits fell 67% to Rs62 million while Nestle Lanka's compared to a combined profit of earnings declined 37% to Rs370 million. Watawala Plantations earnings grew Rs200 million a year ago, mostly 60% to Rs400 million. because people were afraid to go to According to First Capital Research data, the property sector earnings plunged hospitals fearing they would catch 84% to Rs560 million. Earnings at Overseas Realty fell 75% to Rs230 million and the virus! while East-West Property Plc profits fell 95% to Rs136 million, down from Rs2.6 All listed Hospitals reported billion a year ago. losses from Asiri Hospitals's Rs390 Non-bank finance companies saw combined earnings grow 55% to Rs17 billion. million to Nawaloka's Rs270 million. However, this was due to LOLC reporting profit of Rs14 billion, up 130%. The profit Little known Muller and Phipps included a one-off capital gain from the sale of a subsidiary. Excluding LOLC, sector Plc, an importer and distributor profits fell 97%, First Capital Research points out. Central Finance saw profits of pharmaceuticals, reported an decline 80% to Rs67 million and LOLC Finance earnings fell 91% to Rs70 million Rs8 million profit compared to an on rising bad loan provisioning and falling net interest incomes. Rs23 million loss the previous year. Investment houses had better luck. First Capital Holdings reported a profit E-channelling was the only other growth of 151% to Rs1.4 billion, and Ceylon Guardian Investment Trust saw earnings profit maker, with Rs3 million, but grow 400% to Rs900 million. this was 35% lower from June 2019. Combined earnings of listed insurance companies grew 13% to Rs3.2 billion Several sectors remained with Ceylinco Insurance reporting a profit of Rs1.9 billion, up 5% from a year ago. profitable, although margins had People's Insurance made a profit of Rs500 million, up 150% from a year earlier eroded. Food and plantation company while Softlogic Insurance reported a profit of Rs53 million, down 88%. earnings fell 70% from a year earlier Banks had an indifferent quarter with profits growing 3% to Rs11.5 billion.

28 ECHELON.LK DECEMBER 2020 NEXT

EQUITIES

Figure 2: Listed Banks Large banks didn't impress, but several mid to small-sized ones did

Tightening interest margins, pressure Amana Bank on loan quality and credit moratoriums Rs Mn stressed the country’s banks (please see 41 75% Figure 2) Commercial Bank Commercial Bank profits increased 5% to Rs3.6 billion, and Hatton Nation Bank's earnings fell 30% to Rs2.1 billion. Rs 3.6Bn 5% Sampath Bank reported a profit of Rs1.3 billion, a 36% decline. DFCC Bank saw DFCC Bank profits surge 183% to Rs770 million while Sanasa Development Bank more than Rs 767Mn 183% doubled its profits to Rs275 million. Despite the challenging period, some HDFC Bank companies reported stellar results for the COVID-impacted quarter. Rs 145Mn 46% Expolanka is a standout company. Its profits exploded by over 1,000% HDB from Rs150 million a year ago to Rs1.7 billion in the June 2020 quarter. "Its Rs 2.1Bn 29% freight forwarding business thrived with logistics solutions for personal NDB Bank protective equipment amidst the COVID- 19 pandemic," First Capital said. Rs 1.1Bn 43% Listed companies in manufacturing and materials saw combined profits PROFIT Nations Trust GROWTH increase 60% from a year ago to Rs2.9 billion. Surgical gloves maker Dipped Rs Mn Products reported a five-fold increase in 739 24% earnings to Rs610 million while activated Pan Asia carbon manufacturer Haycarb profits increased by 150% to Rs690 million. Tokyo Rs Mn Cement reported a 26% earnings growth to 490 2% Rs690 million after construction activity Sampath Bank picked up post-lockdown. The company also benefited from higher import tariffs Rs Bn slapped on competitor brands. 1.3 36% Construction firm Access Engineering's Sanasa profits fell 74% to Rs76 million. Development Bank A RECOVERY IN SHAMBLES? Rs Mn Market analysts expect companies to 275 166% report better earnings results in the Seylan Bank September 2020 quarter. Equity investors seem to share that sentiment with the All- Rs Mn Share index gaining around 14% from July 670 1% to end September. However, that recovery Union Bank is unlikely to be sustained with a second COVID wave hitting the island. Which Rs 150Mn 27% means the next quarter to watch will be December 2020. (Source: First Capital Research)

DECEMBER 2020 ECHELON.LK 29 COVID-19: CEYLON TEA’S WAKE UP CALL The tea industry is yet to come to terms with sustainability over the long term

ea accounts for 12% of Sri Lanka’s total export earnings, but the sector continues to grapple with concerns over its long- term sustainability. The TCOVID-19 pandemic has only exacerbated the problems the industry is facing. “By the time COVID-19 hit, Sri Lanka’s tea production and export earnings had already been on a declining trend over the past few years. Adverse weather conditions and long-term structural issues such as labour shortages and lack of technological application have affected production levels over time,” says Nimesha Dissanayaka of the Institute of Policy Studies, a think tank, in a blog titled COVID-19: a wake-up call for Sri Lanka’s tea industry. Sri Lanka’s export earnings fell 15% from a year ago to $830 million in October 2020 because the global pandemic severely impacted the country’s major markets in Europe and North America. “It is concern- ing to see a sharp reduction in exports in October due to the C19 eruption in Sri Lanka which has had a direct impact on our manufacturing and export facilities,”

30 ECHELON.LK DECEMBER 2020 NEXT

TEA

over the past few years. “While this is due to extreme weather conditions Falling Volumes and low fertiliser applications, restrictions on labour movements and trans- Production volumes have been sliding long before the global pandemic port of intermediate inputs due to COVID also contributed to this decline,” Dissanayaka suggests. TEA Shrinking global trade from the pandemic and falling oil prices have impacted shipping volumes. “Highly plugged into international trade via Mn Kg. global logistics systems, Sri Lanka also encountered delays in shipments 2019 and clearance processes in ports". 2020 32 However, Ceylon Tea benefitted from sharper drops in volumes in compet- 28 itor countries, enabling Sri Lanka to attract premium prices. A depreciating 24 currency helped the tea exports sector too. But Dissanayaka warns that these 20 are short-term benefits and will “dissipate as Sri Lanka’s key competitors 16 return to normal levels of production”. 12 J F M A M J Jy A S O N D From the demand side, international price fluctuations, changes in purchasing power, and consumer preferences could impact Ceylon Tea going forward. Month “Although Sri Lanka has not yet experienced import restrictions by any Source: Central Bank of Sri Lanka of its tea buyers in the world including most hit countries by the COVID-19, importing volumes of major buyers have shown decreases,” Dissanayaka points out. Export Development Board Chairman Ceylon Tea volumes to Iraq have already fallen by 18% in the first quarter Prabhash Subasinghe had said. and is down sharply in Russia, Syria, and Turkey too. However, by September Tea export volumes fell a marginal 2020, the situation changed, and major buyers such as Turkey, Iran and 1.4% from a year earlier to $112 million in Russia are showing slight growth in their tea imports. But this now seems October. However, tea exports fell nearly like a brief reprieve! 10% in the Jan-Oct period to $1.1 billion. According to EconomyNext.com, Echelon's sister news portal, Sri Lanka The first global wave of the pandemic tea prices has eased after a dip in the moment of Russian winter buying exposed the tea industry’s vulnerabilities. which helped buoy prices in the early weeks of November 2020. There was The ongoing second COVID-19 wave can a marginal price escalation because the Russian winter buying was active in have far-reaching negative consequences the last few weeks. However, buying will come to a halt towards the second than previously anticipated. half of November. The tea supply chain comprises pro- Dissanayaka draws attention to a fundamental problem, one that goes ducers, processors, distributors, import- beyond the COVID-19 pandemic: Sri Lanka’s tea trade is in a disadvantageous ers, domestic and global logistics net- position since its exports are primarily in the black tea segment, which is works, and traders who cater to both likely to see a further drop. “Shifts in consumer preference towards high-value the local and international markets. “Any products that have ‘health benefits’ – healthier green, functional, and herbal disruptions to any of these elements tea blends – are likely to take place post-COVID-19,” she warns. will likely affect the tea industry either There have been several initiatives that boost tea production during the through shocks on the supply side, trade pandemic from allowing labourers to work in the field during the lockdown flow, the demand side, or a combination and conducting tea auctions online. “However, the present situation of the tea of all these,” Dissanayaka says. industry demands that Sri Lanka reassesses its sectoral policies to increase Labour-intensive agriculture is prone the sector’s long-term resilience”. to higher risks from the pandemic, accord- “COVID-19 is a wake-up call and an opportunity for all stakeholders to ing to the global Food and Agriculture collectively drive growth in the tea industry,” Dissanayaka suggests. “Value Organisation (FAO). Sri Lanka’s output addition including moving towards herbal and health-based products needs of tea has been declining even before the to be a priority. This will require a comprehensive reassessment of the long- pandemic due to adverse weather condi- term prospects for Sri Lanka’s tea industry. tions and inadequate labour productivity. “Introducing modern production technologies, enhancing technical skills, Tea production in Sri Lanka declined and fostering innovation, together with improvements in warehousing and significantly in the first and second quar- packaging facilities and quality assurance throughout the value chain are ters of 2020 compared to the same quarter critical areas to be addressed,” Dissanayaka argues.

DECEMBER 2020 ECHELON.LK 31 VACANCY: CHIEF COVID-19 OFFICER Every organization may not need a Chief COVID-19 Officer. But there is little doubt every company has to re-strategize its business to account for COVID'S limitations

BY CHANUKA WATTEGAMA : SAHELI KARUNARATNE ILLUSTRATIONS BY

32 ECHELON.LK DECEMBER 2020 NEW ROLE

his article will read more 1. She/He should be able to navigate the socio economic impacts in like a job profile for a hith- the external business environment the next 12 months. erto unknown position. At international level, the Intelligence Unit of ‘The Economist’ is not too We are familiar with a optimistic about 2020. It anticipates a recovery in 2021 onwards, but T gamut of C-suite positions. these forecasts were done in June 2020, when the economic outlook Chief Executives, CTOs, wasn’t as bleak as it now is. The recovery may not be as “v-shaped” as COOs and CFOs. But not CCOs - Chief COV- expected. ID-19 Officers. The world is in need of a -bat We can’t expect miracles. Still no business can sail in the dark. Busi- talion of them. It could be an organization, ness plans for 2021 will java to account for greater than normal volatility. private or public, for profit or non-profit, For some businesses the path is clear. Nobody would start a travel agen- large or small. It does not matter, the type of cy or maybe even a hotel aimed at foreign travelers. There will be a surge the firm. The same way some organizations for medical care. Demand for food will remain the same. have appointed CGOs or Chief Gender Of- However, it's now more difficult for most businesses to forecast. Will ficers, many will need CCOs to hold respon- the demand for financial or education services increase or decline? If sibility for specific challenges. In fact these they fall, then by what extent? How can the marketing and production positions should have been filled by June plans be redrawn? These are difficult decisions. A CCO should be in a 2020. Better late than never, I guess. position to provide realistic and useful input to the decision making pro- Why CCOs? Do we anticipate the pan- cess. demic will be a long term challenge? How long do we have to live with COVID-19? Six 2. She/He should be able to manage costs in a turbulent environment months? One year? Two or three years? Cost control. With opportunities for expansion limited, the survivors The answer, at the point of writing, is that will be decided by how effectively one controls costs. In 2020 most or- nobody is entirely sure. It depends on thou- ganizations reduced costs but they were also accepting of losses, but sands of things about most of which we have shareholders won’t indulge companies more losses in 2021. absolutely no clue. Almost nobody alive to- A Gartner survey, based on the responses by CFOs of key interna- day had seen a pandemic come and go. We tional firms has found organizations either used or plan to use multiple can only make reasonable assumptions. ways of cost reductions in the first few months of 2021. The COVID-19 pandemic commenced in early 2020 and has seen several waves in most countries. Even if several viable vac- Chart 1 cines were available soon, it will still be too optimistic to expect a hard stop to the virus’ Bleak 2020 spread in the next twelve months. Forecast annual growth 2019-24, % The limited data from previous pandemics don’t offer any reason to assume otherwise. The Spanish flu, also known as the 1918 6% flu pandemic infected 500 million people – 4% about a third of the world's population at the time – in four successive waves. The death 2% toll is estimated to have been somewhere 2022 2023 2024 0% between 17 million and 50 million, making it one of the deadliest pandemics in human -2% 2019 2020 2021 2022 2023 2024 history. It lasted 26 months - from February -4% World 1918 to April 1920. Europe -6% One year for a business is a long time. Asia and Australasia Even a successful business can collapse due -8% Latin America to the economic impact of the pandemic. So Middle East & Africa let's assume we recruit a CCO. What would -10% Source: Economist Intelligence Unit be the job requirements?

DECEMBER 2020 ECHELON.LK 33 NEW ROLE

3. She/He should be an excellent manager of human resources Chart3 As we have already seen in 2020, managing HR will be one of the biggest Not so straightforward challenges during this pandemic. It’s more than a question of managing numbers. The circumstances might call for work from home (WFH) Organisations’ biggest challenges to solutions. WFH comes with its challenges. First, it's not possible to do all WFH work from home. Manufacturing and some services jobs like healthcare and retail can’t be done from home. WFH comes with its own challenges like staff with low tech literacy to issues in monitoring and productivity. Techrepublic identified some of the biggest tech challenges of WFH.

4. She/He should have a flair for tech and how to leverage it This flows from above. Use of remote tech tools is the only possible way to address some of the challenges of WFH. Whether we are ready to accept it or not, remote working makes employees, er...remote. Except for tech teams, who are familiar working remotely (and whose output is largely individual against collective), distance makes the rest lose their Source: Techrepublic touch with work. Tools can improve engagement and maintain productivity. Tools could include a cloud based ERP system, project management Training employees how to most Securely 55.4% and continue current responsibilities/roles systems or even a Learning Management System (for an education es- tablishments). Setting up work or personal devices 53.5% with new software to continue current responsibilities/roles 5. She/He should be darn innovative. No kidding. This brings us to the most important part. Where the pandemic is an Shifting to a new, remote model of 51% communication and/or collaboration unprecedented challenge, perhaps the only way to beat it is to use un- amongst employees

Serving employee needs through limited 47.5% IT resources Chart 2 Finding the right cybersecurity tools to Tightening 45.5% support employees at home Cost reduction approaches organizations have undertaken or plan to 36.6% Ensuring work/life balance

Stop Retirement 5% Contributions 14% Already done precedented means. Need, they say, is the mother of all innovations. COVID-19 may Planned for near future 11% spark a spring of resourcefulness and inno- Reduce Workforce 25% vation. New product lines and new business 8% models. Some are already there. Salary cuts 27% “It is not the strongest of the species that 14% survives, nor the most intelligent that sur- Temporary Lay offs 34% vives. It is the one that is most adaptable to 32% change.” Charles Darwin wasn’t describing a Delay Hiring 57% pandemic, but his quote typifies the situation. 2021 will might see a high mortality rate 58% Freeze Hiring 65% among businesses. Those who survive, let alone grow, will be the ones most adapt to 0% 10% 20% 30% 40% 50% 60% the pandemics turbulence. The role of Chief Source: Gartner COVID-19 Officer is to make that happen.

34 ECHELON.LK DECEMBER 2020

WHAT COMES NEXT?

The pandemic has brought both chaos, and also a new normal with exciting emerging opportunities : RICKY DE SILVA ILLUSTRATIONS BY : RICKY The Covid-19 pandemic has shaken the global econ- First, businesses need to take stock and think about omy and challenging economic and business mod- survival while ensuring the wellbeing of their work- els everywhere. But it is also providing businesses, ers, customers and suppliers are not at risk. Next and countries, a unique opportunity to think about comes streamlining operations for optimal efficiency. the kind of future they want. The big question is: Businesses then need to allocate capital away from how do you reset strategy, and is that enough? unyielding ventures into growth areas post-Covid-19 Fundamentally, businesses and economies need to before anyone maximise gains. Only then comes a emerge stronger than before, and as the following strategy reset. Echelon discusses why this is so and pages discuss, resetting strategy may not be the ideal the emerging opportunities for businesses to build first step for recovery. tomorrow’s economy. STARTUPS TECH STARTUPS: INTO THE VALLEY OF DEATH

Most tech startups don’t survive the valley of death. To sustain the ones that do survive, the investment landscape needs fixing, according to a pioneer

The fascination with tech startups stems software that were not such strong incentives just a decade ago, the from the perception that somehow Sri Lanka Coronavirus pandemic has decimated tech startups in Sri Lanka. is missing the kind of entrepreneurship that Hard numbers on the pandemic’s impact on tech startups are dif- fuels innovation in places such as Bangalore, ficult to come by, but experts estimate at least half the startups may Telaviv or Silicon Valley. have run out of money during the lockdown and in the months since. In its 2021 budget, the government allo- ICTA had estimated Sri Lanka had around 400 tech startups. If indeed cated Rs10 billion to establish five technology the pandemic has run half of these out of businesses, the impact would parks in the districts of Galle, Kurunegala, have set back the tech ecosystem by several years. Anuradhapura, Kandy and Batticaloa where Prajeeth Balasubramaniam is an investor in tech businesses, both startups will have access to fully-fledged infra- early-stage ones with only a prototype to show, and businesses with structure. In addition, funds were allocated for revenue and a clearer path to profitability. the Information Communications Technology Balasubramaniam, who had returned from overseas to take over the Agency (ICTA) for expanding the fibre optic family business in 2002, received odd looks and rejection when at that reach, and for low-interest loans to entre- time he asked startups if they ‘wanted some money?’ The big break came preneurs, all directly or indirectly expected after Balasubramaniam in 2010, co-founded Blue Ocean Ventures (BOV) to improve the environment for Sri Lankan partnering Rajan Anandan, then Google India’s Managing Director and tech startups. part of the Indian Angel Network. A couple of technology trends are helping Balasubramaniam and Anandan’s Blue Ocean Ventures and other part- fuel fast-growing tech startups that small and ners’ business plan competition, Venture Engine in 2012, was a success medium-sized businesses, in general, cannot not just for the firms that got over Rs100 million in angel funding, but match. The first is cloud computing which also due to the electrifying effect the competition had on the start-up allows businesses to lease computing power scene here. Venture Engine has since been an annual event. as and when they need it rather than having Tech startups until then found it challenging to access the scattered to buy expensive equipment. The second is part-time investors. And when they did, startups lacked the charm to open-source software freely available and get investors to open their wallets. Besides investing, Balasubramaniam used widely not just by startups but also by and other angels coached startups and often assisted by connecting large software companies. them to related opportunities. In spite of taxpayer-funded largesse and “We introduced the angel investing idea eight years ago to fund advantages of the cloud and open-source startups”, Balasubramaniam points out. “But it took eight years to set

38 ECHELON.LK DECEMBER 2020 THE GREAT RESET TECH STARTUPS: INTO THE VALLEY OF DEATH

Prajeeth Balasubramaniam eyes the startups making it through the valley of death. After the pandemic, fewer than usual will cross the threshold and that could be a long setback for the ecosystem

DECEMBER 2020 ECHELON.LK 39 "

STARTUPS

up the country’s first angel fund,” he says referring to the Rs100 million fund established in 2020, weeks before the lockdowns to slow the spread of the Coronavirus pandemic commenced. The fund is spearheaded by an outfit The equity gap exists called the Lanka Angel Network, where Balasubramaniam sits on the board, and because the two equity its Rs100 million in funding was raised in equal portion from 100 individuals sources – an entrepreneur’s for investment into early-stage startups. network and the capital Due to the pandemic’s disruption, no investments have been made so far. “I market - don’t overlap. can understand why it has taken us eight years whereas India also started at the same time. Singapore started way after us. They have enough angel funds.” struggle to finance ventures beyond their savings, or what friends and Young start-ups, which aren’t large family can afford to pocket out. There is a limit to these sources and the enough for venture capital financing, gulf between these and the capital market – the other proven funding now have the option of angel investors source for businesses - is the equity gap. who besides investing small amounts of Investors call this period the valley of death. It's when a startup is equity are willing to roll up their sleeves developing a product or a service and does not have any revenue or gener- to advise and lend a hand to entrepre- ates very little of it. Unless a startup ecosystem is able to fund companies neurs. The analogy of Angels applied to though this cash burning and loss-making period, none will emerge from investors in high-risk projects comes the valley of death into the welcoming arms of venture capital funds who from Broadway where wealthy people may fund them from there. – who see themselves as patrons of the “It's called the valley of death because only one out of 10 startups arts – bankroll risky theatre produc- escape. That's the global norm. For a startup to escape Death Valley and tions. These usually elderly Broadway go on to create value, you need funding for the different stages of a busi- angels didn’t always get their money ness's life cycle,” Balasubramaniam adds. back but occasionally struck gold with The equity gap exists because the two equity sources – an entrepre- some bright producer who made it big. neur’s network and the capital market - don’t overlap. However, since Startups come in various forms. A few businesses have grown big enough or choose to list here, and as the new hair-salon or a mom and pop res- venture capital industry is small, firms here usually operate in a perpetual taurant too are startups. But LAN inves- state of undercapitalization. tors and Balasubramaniam’s Blue Ocean Getting this right is fundamental, Balasubramaniam argues. “Basically, Ventures seek high growth companies it's about growing the entrepreneurship and innovation landscape. Look with the potential to generate high rates at some of the most innovative countries out there. Their economies thrive of investment returns in a few years, and because of disruptive startups.” where an exit route is clear. To achieve such high growth rates, a company will VENTURE CAPITAL usually have to deploy technology to In more sophisticated markets venture capital and private equity help solve a problem. bridge this gap. Here the equity gap is so wide that entrepreneurs have to The failure rate in early-stage start- depend on retained profits and bank borrowing for growth. But startups ups is high. Few survive because entre- are rarely profitable and banks aren’t comfortable lending to unproven preneurial zeal wanes against the tre- ventures with weak cash flow and no assets to pledge as collateral. mendous odds of breaking into a market Undercapitalized companies have been a feature of the Lankan econ- with an unavoidable lack of knowledge omy, as is the case in many poor countries. The result of the low level while trying to implement an unproven of economic sophistication is that attracting overseas investments is business plan. Secondly, entrepreneurs challenging, making capital both expensive and scarce.

40 ECHELON.LK DECEMBER 2020 THE GREAT RESET

So when a business does find traction here but runs out of precious ognise Limited Liability Partnerships owner financing and any angel funding, it usually settles in for a long (LLPs) that would make it attractive for hard slog to dethrone market dominants, because anaemic cash flows investors to register and manage funds won’t allow growth at optimum levels. At least that’s how things have from Sri Lanka. As Sri Lankan law does worked for most start-ups of the past. not recognise LLPs, all VC and private Balasubramaniam’s Blue Ocean Ventures has invested $5.5 million equity funds are registered overseas. The in nine companies. In early 2020 before the Coronavirus pandemic hit, exception is the BOV Capital Managed it exited nCinga which was sold to regional e-commerce heavyweight Digital Innovation Fund which is man- Zilingo at a valuation of $15.5 million. Balasubramaniam says that deal aged by a Sri Lanka incorporated private returned 25% of the capital of the fund’s investors, about $1.37 million. limited liability company. Three of the nine businesses have closed or are inoperative, and haven’t Both the BOV fund and the innova- returned any money. Of the other five companies, Balasubramaniam says tion fund had invested in nCigna, which “two might just give capital back and three might give us some returns.” they exited in early 2020. In an LLP struc- BOV Capital also manages the $6 million Digital Innovation Fund where ture, like the one the BOV fund is set Dialog, Balasubramaniam and other BOV partners have also invested. up in Singapore, taxes are paid on the These two funds are among the few options that companies with proven net gain. Whereas with the Sri Lankan business models can tap. Besides these, a couple of private equity funds Digital Innovation Fund the gain was which fund more mature businesses compared to venture capital, make taxed at three levels; in the hands of up the entirety of the ecosystem. the company as withholding tax, in the Balasubramaniam has been championing the cause of building a hands of the fund, and then when its startup nurturing ecosystem but has mixed feelings about the lack of distributed, taxed again in the hands of achievement so far. First, Sri Lanka keeps messing things up, he points the investors of the fund. out. “Every year some kind of issue happens that affects businesses. I “If an LLC structure is available then mean, there were two prime ministers at the same time, then bombs, it takes into account my net gain or my then elections, and now covid,” he says without betraying any sense of net loss and then allows me to pay tax frustration. net of what has already been paid. So I He is elated about the promised spending by the 2021 budget on nur- have a $10 million gain on a $20 million turing the startup ecosystem, where he has been advising on policy for exit, I will pay tax on the $10 million and several years. “But, here is the thing. I think there's still a lack of under- it will take into account the tax already standing of why this ecosystem is not accelerating as fast as it should.” paid too.” An innovation ecosystem requires large and small investors co-financing Undercapitalized companies at various stages of development. Venture capitalists and private companies have been equity are crucial components of this, but so too are large companies which a feature of the Lankan nurture innovation and the public sec- economy, as is the case in tor which can fund research. The latter have more patient capital and are not many poor countries. too focused on a profitable exit usually through a sale to a bigger company or an IPO within five years of investment. LLP STRUCTURE While the outlook for startups mak- BOV Capital is mulling the creation of a new venture capital fund but ing it out of the valley of death is miser- may base it out of Singapore and have a regal focus than have its legal ably low due to Covid, the ecosystem’s structure in Sri Lanka and invest here exclusively. long term problems like its tax structures In Sri Lanka, venture capital funds between Rs50 to Rs200 million and the availability of long term capital per investment and private equity investments are usually at least Rs300 from companies that have already made million and can go up to Rs1 billion per investment. Both venture capital it and the public sector too need to align firms and private equity have been requesting the government to rec- for a vibrant sector.

DECEMBER 2020 ECHELON.LK 41 STRATEGY

REIMAGINING THE NEW NORMAL: HOW BUSINESS CAN COME OUT OF THIS CRISIS For Ganaka Herath, Managing Partner at McKinsey Sri Lanka, resetting strategy may not be the ideal way out of this Covid-19 economic crisis for most companies

BY DEVAN DANIEL

Founded in 1926, US-based McKinsey & Company is a global management firm with 130 offices across 67 countries. The firm specialises in advising some of the largest international companies across every sector and industry on several functional areas including strategy, operations, and finance. Over the last decade, the firm has built capabilities around advanced analytics, digital and design. "The firm does much more today than focusing on strategy. We do that work as well, but more often now, we partner with companies to transform their organizations and build enduring capabilities," said Ganaka Herath, Managing Partner at McKinsey's Sri Lanka office. He is currently responsible for one of the largest advanced analytics transformations in Asia. In another instance, the firm has been engaged by a large Sri Lankan manufacturer to triple its performance. "We help companies transform. We do not merely advise companies but actively partner with them through to implementation" he said. With a wealth of expertise and deep industry knowledge, McKinsey is well-positioned to help businesses through the unfolding Covid-19 pandemic.

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Ganaka Herath, Managing Partner at McKinsey's Sri Lanka office STRATEGY

customers. The next step is to streamline operations for better efficiency and dynamically allocate capital. Companies need to quickly divest from unyielding businesses so they can ride out the crisis with enough cash and invest in areas that will generate returns just when the recovery starts and before anyone realises there is an opportunity. The next stage is about strategy and resetting for the future. I believe there is an opportunity for all companies everywhere now, because of Covid, to start taking stock of themselves at a fundamental level.

In your view, what does it mean to reset, or A strategy reset applies re-strategise? to any business, but the A strategy reset applies to any business, but the question is whether it is the right thing to do. Most people question is whether it is the believe the performance of a company depends on having right thing to do. Most people a strategy, but this is not true. Three factors drive performance: trend, endowment, and moves. If you are in the believe the performance tourism industry right now, a strategy reset is unlikely to yield of a company depends on much benefit because the industry is caught up in a negative trend due to the Covid-19 travel restrictions. Alternatively, having a strategy, but this you could reorient your strategy to containing costs and is not true. Three factors generating cash flow to keep the business afloat. What we mean by endowment is where a company may have enough drive performance: trend, capital, tech expertise or a fantastic asset such as Google and endowment, and moves. Facebook, for instance, that drive growth. The third aspect are the moves companies make that can drive performance by faster and more radical capital reallocation, acquiring another business, or divesting from businesses that are not generating value. In the context of surviving this pandemic-related economic crisis, businesses first need to be operationally sound before Everyone is concerned about get- thinking of resetting their strategy. You need to evaluate ting through this economic crisis. your business and streamline it to be operationally efficient. How should businesses approach At the same time, you need to take care of your employees, this? customers, suppliers, and investors. Next, a business must Businesses need to come out stronger than they start thinking hard about its revenue profile and how to went into this crisis. While everyone's fortunes ensure a sustainable cash flow if the crisis deepens, and also are linked with those of the overall economy, how to engineer a fast recovery because this pandemic is we do see several companies and industries not going to last forever. break away from the economy, and this is now What is the best way to capture that revenue? Do you termed a “K-shaped Recovery”. Amazon, Disney, have to enter a new space? Is technology working for you? and Netflix are examples of this as they are Do you build new capabilities and acquire talent? A business radically outperforming the market despite needs to ask all these questions and more to figure out how the effects of the global pandemic. to expand its revenue sources in a post-Covid environment Then you have the industries going in the because that will ultimately define success. opposite direction such as tourism, airlines, and financial services. Businesses impacted by the Do you think businesses here understand their Covid-19 economic slump need to first ensure revenue profiles well? its survival and take care of its employees and I believe it is hard for most businesses to truly

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understand how revenue profiles are about to digital will happen, and companies would not want to be change. And in Sri Lanka, I think the challenge caught off guard and overtaken by its competitors. is unique where some of our clients tell us that online sales surged during the lockdown and What are those trends that will shape the future then dropped back to pre-lockdown levels again. of this country? This is different to the experience of most other We will see a fundamental change in how consumers countries. Digital commerce increased from 2% behave. The Covid-19 lockdown forced many people who of total retail to 10% in China during the pan- never used digital channels before to use them. What this demic, before dropping back down to around does is more people becoming aware of the possibilities. 6%. Sri Lankan businesses assume that retail Soon they will expect their banks to offer the same seamless will go back to where it was before Covid-19 experience and service that, for example, Amazon offers. with in-store footfalls recovering and that online Eventually, people will begin to demand efficiency, safety, sales will not be a significantly higher portion and speed, and they will not only want more digital offerings, of revenue – this could be a mistake. but the user experience has to be great too! The shift will be a huge one, and companies need to move quickly to avoid the risk of being irrelevant. We will see a period of low demand until the Covid- impacted economy starts to recover. People are going to be more concerned about saving, and businesses need to deal with that. Sri Lanka will eventually follow the trend seen elsewhere and move towards digitalisation and data analytics because Sri Lanka will eventually businesses will want to keep pace with shifting consumer expectations. For instance, companies will use data in differ- follow the trend seen ent ways to understand customers better. Elsewhere in the elsewhere and move world, companies use data to understand their customers and to target them with tailored goods and services to meet their towards digitalisation needs and wants. Sri Lanka has a long way to go down the and data analytics digitalisation road, but the shift will be sudden, companies because businesses must start thinking about how best to leverage data today. will want to keep pace How should companies be investing in technol- with shifting consumer ogy and innovation? No one disputes the importance of digital but invest- expectations ing in technology is easier said than done. A company should consider three questions before considering an investment. The first question businesses should consider is: What is digitization intended to achieve? What is the customer problem that you are going to solve with this investment in digital? It is critical to know why because far too many companies invest in technology without carefully considering the end-re- Online sales are depressed because, today, most sult. Our research shows that 55% of digital investments sites and platforms do not provide an outstand- get stuck at the pilot stage, and 75% of all large-scale digital ing user experience, so there is an opportunity transformations at firms have failed. The second question here to retain and grow an online customer is about value. You need to know why you are investing in base. Companies like Daraz, Pickme and Uber digital technology, know who your customer is and what are a few examples of how successfully this value you hope to deliver to your customer and business. can be done. As other businesses improve user The third question a business needs to ask is around deliv- experiences on their platforms, more people will ery; how am I going to deliver this technology investment? use them. Before long, the anticipated shift to For instance, many companies invest heavily in technology

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it will have a voluminous collection of data which can add Our research shows meaningful value to consumers, customers, employees, and other stakeholders if analysed in a meaningful way, and this that 55% of digital is especially important. investments get Covid-19 has hit tourism the hardest. What should stuck at the pilot hotels and travel companies in this sector be stage, and 75% of all doing right now? The crisis is severe, but it is time-bound. It is hard to see large-scale digital when tourism will see a complete recovery, and it all depends transformations at on how fast we deploy the vaccines for Covid-19 and how much behaviours will have changed with regards to travel. firms have failed At McKinsey, we are engaging companies and working with them to plan for a revival in tourism which will surely come. At this stage, these companies must have a people-oriented strategy because they should not lose their best people. It would be tempting to lay off employees at this moment, but when the recovery comes, you will need your best people to help you bounce back. Cost-cutting is needed, but it must be done correctly to avoid cutting too deeply, beyond fat into muscle, hampering a company’s ability to recover. Now is also a great time to invest. Capital investments can take multiple years to realise returns, so there is an which can take several months or even years to opportunity to have assets come online as the revival of the develop, test, and deploy. But technology changes sector gathers pace. fast and what is necessary now, may be obso- While the pandemic will end, the world will be a different lete then. Therefore, companies need to be able place. It is not going to be business-as-usual for the hospitality to be more agile in terms of delivery. You need industry because people will have different expectations. As to invest in short bursts, put things out to the a business, industry and country, there has to be a lot more market and get feedback from customers and thought going into what the Sri Lankan tourism offering of end-users fast so you can either change track or tomorrow is going to be. progress to the next stage quickly. This way, you ensure the technology investment is delivering Among McKinsey Sri Lanka's clients are the top results for the present and also future-proofing 50 companies in the country. So, when you talk your systems to keep pace with the ever-evolving about cash flow management during a crisis, technology landscape. what are some of these companies missing? While there are companies with impressive Many of the top companies have sophisticated understand- digital products, I would like to see a sharper focus ings and processes to deal with their cash flow, and have on customer needs when delivering solutions. experience of dealing with major uncertainties in the past. Many invest in digital solutions without an end We work with clients to help strengthen their cash flows -consumer or a problem that needs to be solved through a variety of approaches, including scenario analysis clearly in mind. We help clients overcome this which includes understanding multiple scenarios that the challenge by first considering customer journeys business could experience and helping plan for them. and augmenting them with data analytics. At We proactively engaged the top 50 corporates in Sri Lanka McKinsey, we believe very strongly that compa- through webinars and dialogues on how to manage cashflow nies should not simply aim to create large stores through the Covid-19 crisis and how to analyse the scenar- of data and then figure out what problem can be ios they are most likely to encounter as the crisis deepens. solved with it. Instead, the approach is to identify This is a critical step because strategic planning under the the problem and then look for the data needed extreme uncertainty brought on by the pandemic was, and to solve that problem. As a company gets larger, remains, challenging.

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Where do you see Sri Lanka's economy three to five years from now? The strategic location of the country remains enviable, with one of the fastest-growing regions in the world at our doorstep and with half of the world's oil shipments passing just 400km away from us. That kind of proximity together with our pool of talent and the world-class businesses in the country give us the opportunity to partic- ipate in international value chains and access exciting markets such as China, India, and the Middle East. If we can do that, we will unleash tremendous potential. I would also like to see a fair Sri Lanka in terms of gender equality and inclusivity, which would unlock some fantastic countries like Malaysia and Thailand. In agriculture, where economic gains. We need to have a far more digital 25% of the population is employed, farmers could be trained and tech-enabled economy, where consumers to use digital technology to make better decisions about have great experiences, inclusivity improves, and crops and to understand demand signals from the market, allow businesses to make data-driven decisions so they know which crops to produce.In the case of tourism, that will lead to better products and solutions for it is about smaller hotels and experience providers using both local and global markets. tourism data to create better targeted products to meet the We need to be more integrated with South Asia needs of travelers. While a lot of work is underway, I feel and the Asia Pacific regions, and digital technol- Sri Lanka can still do much more to enable a digital society. ogy will enable that. There are two approaches One thing that can add value is to try and look at the to building a digital economy: one is to develop “Superstar Effect”. the supply-side and the other, the demand-side approach. The supply-side involves building the What is the Superstar Effect? technology itself or the software. The demand- The superstar effect describes companies, indus- side approach is about enabling individuals and tries and cities that are outperforming others and companies to effectively utilize digital technology: continues to add a great deal of distance between them, and PickMe is a good example of a company that is this distance keeps growing. Superstars capture the largest radically changing how Sri Lankans demand for share of a market, profits, or people. On average, the super- digital solutions. star companies earn seven times the revenue or generate Few countries have done both, with Estonia more than two times the return on capital investments. being a good example of one that has. India excels The companies, industries or cities share a few character- on the supply front and has a massive scale advan- istics: they tend to be highly digitally-enabled and deploy tage, so while not impossible, it is difficult for Sri advanced analytics to enable data-driven decision making. Lanka to be competitive on supply. What we can These firms possess the best talent, have vibrant innovation do instead, is to improve access to digital solutions engines, and go through technology lifecycles amazingly for individuals and companies enhancing demand. fast. Retaining superstar status is tenuous, and companies Equal access to data needs to be democratized do not get to enjoy that position for long because they tend so that every size of business can access public to get replaced often, there is always someone else catching data and build better solutions, and people can up to knock you off your perch. In this context, Sri Lanka improve their lives. In banking, for instance, dig- needs to reflect on which industries to assist and where to ital technology can potentially double the size commit resources for optimal outcomes. You do not want to of the industry by improving access to finan- be investing in sectors that are not going to be able to grow cial tools and products and helping increase the fast and sustain themselves. In terms of cities, Sri Lanka availability of credit to a wider proportion of the needs to develop those that have the potential to become population. Today, Sri Lanka has a credit to GDP economic hubs and can uplift the economy. ratios of approximately 50%, less than half that of Sri Lanka needs to continue to foster an outward-looking

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and our research estimates that if economies in the region achieved the same level of female labor force participation as the best performing country in their cluster, it would generate an additional $4.5 trillion annually to Asia's GDP: that is the equivalent of adding Germany and Austria to Asia's GDP every year! If Sri Lanka achieves gender parity, its GDP will expand by $10-12 billion annually. However, the challenge is sustainably improving gender equality, because few appreciate its complexity. Most people believe it has to do with creating opportunities at the workplace, and yes, it is a big part of the solution. However, Sri Lanka needs to have social infrastructures and

If Sri Lanka achieves gender parity, its GDP will expand by $10- mindset. We already have global companies of Sri 12 billion annually. Lankan origin, but there are not many of them. There is also an opportunity to uplift the SME However, the challenge sector to a level that can transform the entire is sustainably improving economy. There are many great SMEs with won- derful products, how do you get them to the next gender equality, level? Think about it: what is the target market for because few appreciate a small manufacturer in Kandy? Is it the citizens of Kandy, including the tourists, is it people living its complexity in Colombo, or is it everyone who visits Amazon or Flip Cart? We need to start by teaching SMEs to access these platforms and other technologies, but that alone is not enough. The enabling payment systems, first-and-last mile logistics, and other processes and procedures that enable trade must services to support women. Do companies offer creches, do be improved, so these are policy-level enablers we have an efficient and safe transport system that allows that need to be put in place. SMEs will then have women to travel to work, does Sri Lanka have childcare to start thinking about who they are competing infrastructure in place so women can focus a bit more on against and strategise around marketing, pack- their careers? Do women have the right legal freedoms and aging, and pricing. political voice? Sri Lanka performs relatively well in terms of infrastruc- How can gender equality help trans- ture and safety but does poorly in terms of political voice form the country’s fortunes? and legal protections for women. I believe people do understand the value Sri Lankans must change their attitudes towards women of gender equality, and everyone can agree that and work. In this part of the world, half the population still 50% of the global population should not have a believe that a child suffers when a mother goes to work: this different experience at work or access to oppor- is neither fair nor right. It not just about getting women to tunity. From a moral perspective, that is simply work, but also moving those in part-time work to full-time, wrong. We looked at the data for Asian countries and then upskilling their roles and responsibilities.

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Digital technology is a great enabler when it comes to fostering gender equality. Work-from-home and Sri Lankan banks can remote working can empower working mothers, do a lot more to deepen significantly increase women participation in the workforce and enable greater mobility. Women their financial services, entrepreneurs can access global value chains if and by just doing this the digital infrastructure and other pieces are in place, so this is an important step that Sri Lanka there is potential to needs to take if it means to transform its economy. double the size of the

Your clients are probably some of the financial sector trendsetters in this market, corporates that everyone else can look up to. In that context what are some of the typical problems that they are trying to solve, before Covid? The primary problem for many of these marquee companies is how to grow their domestic market share and build global brands. McKinsey partners with companies in several ways but let me just talk about one. Advanced analytics is one way that Sri Lankan companies can really start leapfrogging their competitors in the region or those in the domestic market. There is a lot you can do with advanced analytics. For instance, if a company experiences high customer churn, they can use analytics combined with machine learning to target and identify those customers most likely more depth by extending short term loans or credit cards to leave in any given month. That gives you an for instance, and this improves overall financial inclusion in advantage over everybody else in the industry society. Sri Lankan banks can do a lot more to deepen their instantaneously because you are focusing all of financial services, and by just doing this there is potential your efforts on just the customers who are going to double the size of the financial sector. Banks are too con- to leave rather than across your whole base. servative in their lending and the collateral requirement, Banks in Sri Lanka have a low cross-sell ratio, and interest rates are quite high. advanced analytics can help them identify the Advanced analytics and machine learning can help banks next best product for each of their customers. target borrowers who are most likely not to default and It is not about just selling another product but they can offer loans at more affordable rates. This uplifts the offering something that is useful to customers. amount of credit in the market and a lot of people benefit, It is similar to Amazon; you get product recom- not just the banks. mendations based on machine learning models For the first time, in 2019, credit growth in Sri Lanka started that match your needs. to decline. That is not a good thing. For a market like Sri Lanka, Financial institutions in Sri Lanka had been credit growth matters, and our approach avoids ballooning performing fantastically well before 2019, however the subprime kind. the Easter Bombings, and now Covid-19, have Let us take the manufacturing sector. There are companies impacted credit cycles. For a market like Sri Lanka, that are remarkably effective in what they do, and they have the use of advanced analytics can be one way to expanded operations overseas too, but there are still oppor- help unlock the credit potential of the country. tunities to be discovered. This is true for any company. Most Financial services penetration is high but in terms people think growth can only come if they enter overseas of depth, it is incredibly low. Most people have markets, or acquire other businesses, and while this is true, just one basic savings account or current account. we believe there's a lot more opportunity in the domestic When we work with banks, we help them create market.

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Channa De Silva CEO, LankaClear

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THE FUTURE OF TECHNOLOGY AND DIGITAL PAYMENTS

LankaClear is leading the The third is reducing non-essential imports, which transformation with innovative methods for digital transactions. will decrease foreign exchange outflow from the country. An area I want to address that has little focus is certain services offered by international organizations that take foreign exchange out of the country. Digital services like Facebook and Google take large chunks of our advertising revenue away from domestic media agencies, resulting in the country losing millions (maybe billions) of rupees in foreign exchange. Other services, like Uber, do not even have the technology or a presence in Sri Lanka but take out our foreign exchange. Similarly, if you look at the banking and financial sector, the international card schemes available lead us to pay transaction fees in dollars. Each year, we lose Rs6 to 10 billion in foreign exchange just in financial service industry only. However, if we were to activate local technology-based industries with solutions on par with international ones, we can save a massive amount of LankaClear, Sri Lanka’s national payment infra- this foreign exchange from leaving the country. structure under the guidance and supervision At LankaClear, we have also introduced a com- of the Central Bank, has been at the forefront of revolutionizing the country’s banking and financial services sectors. Channa De Silva, CEO of LankaClear, shares his thoughts on reviving the economy and the importance of finance and payment networks to move forward in a digital-first era. To grow the economy, The COVID-19 pandemic is reshaping and transforming there are economies everywhere, and recovery means a complete re-imagination of norms. In this context, what should Sri multiple Lanka do to revive and grow its economy? components. One To grow the economy, there are multiple components. is getting foreign One is getting foreign exchange into Sri Lanka because exchange into Sri Lanka our economy is very dependent on it. The second is because our economy growing local industries, businesses, and services. is very dependent on it

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peting card to international card schemes, which a economic growth — this includes the growth few banks have already issued. If people used this of business and individuals. People moving card for all local transactions, we will not lose a single into digital forms of payment transactions also cent of foreign exchange for transactions within the addresses a social issue, which has a direct benefit country. This will grow the local industry and our on the economy. If you look at the SME sector businesses with it. (80% of businesses are SMEs), they primarily deal with cash and not digital transactions. So Finance and payment networks are critical for reviving they never really put that money into a bank — it the economy and growth, so how can Sri Lanka reset remains outside the banking system. However, its finance and payments landscape for a post-COVID if we moved these cash transactions into digital, new normal? all the money that is currently sitting outside Some of these things are universal in terms of whether will come into the banking system, which will its pre-COVID or post-COVID. Since last October, be a huge benefit. Banks can lend more, and it many finance organizations have moved to the creates additional opportunities and provides digital sphere before COVID-19 got on our radar. It better access to credit. was becoming a necessity, and the pandemic only The banks cannot asses SME owners who fast-tracked any digitization already underway. One only deal in cash. There is no way of knowing reason for this change was the cost of maintaining his income and, as a result, he has no credit with cash, coins, and notes from printing to distributing the bank. This means he won’t be able to apply for to providing security and maintenance. According a loan and will instead go to loan sharks when he to Central Bank payments bulletin Q2-2020, we have needs funding. Access to credit from a bank will almost Rs769 billion cash in circulation. Keeping cash improve their businesses and also the economy. in circulation is costing the economy nearly 1.5% of GDP. If we convert even 30% of cash into digital How is LankaClear providing leadership to reset Sri transactions, we will save at least half a percent of Lanka’s economy for a new normal to build its national GDP, that can be used for social welfare and other payment network, enabling businesses and improving purposes. financial inclusion? One direct benefit to moving away from cash is According to the Central Bank payments bulletin, Sri Lankan banks have issued over 23 million debit cards into the market. That’s more than the country’s population of about 21.3 million. There are 1.8 million credit cards in the market. But when you consider the usage of debit cards, a large percentage of transactions revolve around One direct ATMs and withdrawing cash instead of online or benefit to transactions at POS terminals. So 90% of trans- moving away actions are still cash-based. from cash is This is a major issue for SMEs as the com- economic growth — this mission charged by the banks from merchants includes the growth of for payments via international cards schemes business and individuals. could be up to 3%. With cash transactions, they can avoid any fee and keep 100% of the profit. People moving into 82% of Sri Lanka’s population is rural and 18% digital or finance and urban, and a large percentage of SMEs are not in payment networks also the formal financial sector. To achieve financial address a social issue inclusivity and entice more people into digital

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transactions, we had to reduce the commission levied. Another piece of Through JustPay, our payment mode, we reduced the the puzzle is solving merchant commission to half a percent or less for documentation most transactions, which may go up to around 1%. requirements that The other issue is the penetration of technology require physical signatures. in the country that can facilitate digital transactions. The penetration of mobile phones is 139% of the pop- We’ve introduced digital ulation—so that’s over one phone per person—and signatures. With it, you can out of this, 50% are smartphones. We realised that add your digital signature to a people who are most likely to adopt digital payments PDF and send it electronically would be the ones who use smartphones, hence, we decided to target this group and convert them into making digital payments. We also introduced peer- to-peer payments via payment exchange name (PEN). Payment exchange name is when you transfer money to someone. When you use PEN to transfer money to someone, all you need to know is that person’s payment. All you will have to do is just click to mobile number and the nickname assigned by the pay. This will increase usage of smartphones for bank — you don’t even need to know his account payment transactions. number, bank or bank branch. Another piece of the puzzle is solving docu- The future of the payment industry will not be mentation requirements that require physical completely cashless, but the goal is for less cash. We signatures. We introduced digital signatures in introduced a new card into the market, Central bank 2009. With it, you can add your digital signature to approved national cards scheme, to reduce the foreign any PDF document and send it electronically, suc- exchange outflow from the country with a merchant cessfully ending the need for physical signatures. commission capped at 1%. Soon, this card will also be the transport card for buses and trains — some- What needs to be done at a policy level to enable thing the Transport Board and National Transport LankaClear to introduce new technologies and expe- Commission are working on. dite the economy’s digital transformation? We helped Central bank to issue Lanka QR stand- In order to level the playing field with international ard. This would primaily be issued on a sticker to entities, the government must encourage higher merchants to facilitate payments. All you need is or equal quality digital products and services that a smartphone and an app that can scan a QR code. are created locally. If we can do this, we can save It will contain the details of the merchant and how a lot of money. you can make the payment. We’ve already issued The government must also encourage people more than 120,000 Lanka QR codes to merchants to move into digital transactions and even shar- around the country. ing electronic documents. I read recently that it costs Rs350 billion to import paper — imagine if Briefly take us through how LankaClear is transforming we moved much of this to digital. We’d be saving the country’s payments landscape. Importantly, can you vast amounts of money! tell us about your plans for 2021 and beyond? Other areas that require focus are around data We are introducing smart messages next year. With protection and consumer legislations — a draft this feature, any payment-related SMS you receive form of the data protection act is already in place. from your bank or utility companies will include a If consumers lose trust in digital, they will move link that will take you to whatever FinTech app you back to manual options. To avoid this, strong leg- use with the information required to make your islation and laws must come into effect.

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he CHEC Port City Colombo was an ambitious project from PORT CITY: SRI LANKA’S Tthe start: the ongoing development of 269ha of land reclaimed from the Indian Ocean with an investment of $1.4 billion is set to attract FDIs worth $15 GAME CHANGER billion. Yamuna Jayaratne, Director Sales & Marketing at CHEC Port City Colombo The CHEC Port City Colombo and Proposed Private Limited, discusses how the Port Special Economic Zone is just the reset and City, the proposed Special Economic reimagining the country needs right now Zone, and International Financial Centre, will forever transform fortunes of the city, the entire country, all its people.

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DECEMBER 2020 ECHELON.LK 55 INFRASTRUCTURE

Can you define a special economic zone and how will it posi- legislation will complete the missing piece of the tively impact the country? puzzle by bringing in first-world administrative Jayaratne: I see two questions here: to answer what a special efficiency at globally competitive prices. economic zone (SEZ) is, it is an area in a country that is subject This will result in the inflow of both financial to unique economic regulations that differ from the rest of the capital and human capital including both local and country. SEZ regulations tend to be conducive to attracting for- foreign entrepreneurs, create employment oppor- eign direct investment (FDI). A difference between an SEZ and an tunities and enable talent retention. We also hope export processing zones (EPZ) in Sri Lanka is that people will live the SEZ will attract multinational enterprises to and carry out normal lives in an SEZ area. Their characteristics set up headquarters or regional offices here and in are distinct from those available to economic actors located turn, they will bring in financial recourses, technol- in the surrounding economy in which the SEZ is established. ogy, technical and managerial know-how. SEZ typically offer relief from various forms of taxation to We hope the establishment of an SEZ will businesses and individuals who qualify. They also offer supe- accelerate Sri Lanka’s economic growth. A realized rior infrastructure; have streamlined administrative processes master plan for the Port City provides 5.7 million in place that results in ease of doing business. SEZ’s have been square meters of built-up area valued at $15 bil- a useful tool for developing nations to upgrade infrastructure, lion that will be home to multinational enterprises, human capital and institutional frameworks and test out policies corporate headquarters, transient workers, and and their impact before they are implemented outside the SEZ residents. It will be the catalyst for a modern ser- in the rest of the country. vices hub that will help Sri Lanka’s transformation into a services-led growth model and elevate the economy to high-income status.

Can you discuss the ownership structure of the Port City? Can you also discuss the primary objec- The government tive of the project? of Sri Lanka owns Jayaratne: The government of Sri Lanka owns 100% of all the land in the Port City. The agreement to 100% of all the land develop the Port City as a public-private partnership in the Port City: A is a tripartite agreement between the government of Sri Lanka, Urban Development Authority of Sri realized master plan Lanka, and the project company CHEC Port City for the Port City Colombo (CPCC). An initial investment of $1.4 billion was envis- provides 5.7 million aged for the land reclamation and infrastructure square meters of development and this was in the form of FDI, and without any debt upon the people of Sri Lanka. The built-up area valued government will hold freehold title for the entire at $15 billion 269ha of land reclaimed from the sea of which 91ha will be developed into public spaces and 179ha will be marketed for commercial use. Of this, the government will lease 116ha; to the project company CPCC for 99 years to monetize or release to third To answer your question about the positive impact an SEZ can party developers to cover capital investments and have, there are several. For one, by upgrading resources and generate returns. The other 62ha of land will be capabilities within a confined area, or SEZ; policymakers can either developed by the government of Sri Lanka overcome bottlenecks in resource availability and attenuate or released to investors for development. the costs of larger-scale implementation or upgrading across I believe the primary objective for the govern- the entire country. A successful SEZ sends an important signal ment is to develop a fully-fledged Central Business that the country is open for business. The Port City will provide District with modern infrastructure to attract the first-world infrastructure and we expect the proposed SEZ capital inflow, retain and attract talent, enable

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Yamuna Jayaratne, Director Sales & Marketing at CHEC Port City Colombo Private Limited,

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knowledge transfer and ultimately fast track the development of our nation.

Who developed the Master Plan for the Colombo Port City? Jayaratne: Being a planned integrated urban development, CPCC developed the Master Plan in consultation with SWECO of Sweden, Atkins of UK, Suburna Jurong of Singapore, the Master Planners for the city of Singapore that specialize in design control regulations for buildings, and AECOM. For the first time in Sri Lanka, a Master Plan and Development Control Regulations unit (DCR) has been set out for all of the 269ha of land to provide development regulations on urban design, utilities, landscaping, and sustainability. Unilateral changes to the masterplan or DCR cannot be done by any party. No other commercial city in South Asia boasts a Master Plan developed by such world-renowned consultants. A testament to the planning excellence is the multitude of international awards won by the project such as the Silver Award for Master Planning at the Singapore Landscape Architecture Award 2017, the investment so far? the Gold Award at Yuan Ye Urban Design Awards 2018, Jayaratne: A total of $900 million has been invested to date on and an honourable mention at the International the development of the Port City and a further $500 million is in Federation of Landscape Architects AAPME Awards the pipeline. 2018 in the category of Analysis and Master Planning, Total land reclamation of 269ha was completed by January 2019 and most recently Global Best Project by International and the breakwater in June that year. The landmass including the Engineering and Construction News Magazine, breakwater was deemed as part of the Colombo Administrative Engineering News Record (ENR) at their 8th Annual District by a resolution passed in Parliament last July. Two months Global Best Projects Competition. later, Port City Colombo land titles were vested with the Urban Development Authority and subsequently lease titles were issued Can you discuss some of the salient features of the to CPCC in October 2019. proposed Special Economic Zone Act? The internal infrastructure including utility infrastructure works Jayaratne: We expect the composite new legal frame- and landscaping have commenced and will be completed by 2021. work will be conducive to promote commercial ser- EIA for the future vertical development was granted as early as vices and investment. This Special Economic Zone August 2018 and 48 development certificates have been obtained provides for extensive employment opportunities for and a land extent of 68ha is ready for construction. Sri Lankans and earnings even in foreign currencies. The first vertical building will be a mixed-development and It is expected to provide tax concessions required for will be called the Colombo International Financial Centre. specific goods, trade, banking, and foreign exchange. Groundbreaking and construction of this are expected to take place Some of the salient features of the SEZ Act will in 2021. Discussions are underway with a few potential investors include defining the business-friendly legal and and we expect firm commitments to come in once the SEZ Act is regulatory framework, establish a single-window passed in Parliament and becomes law. approvals process, introduce flexible employment laws, enable an efficient dispute resolution mecha- Could you elaborate a bit more on the strategic plots, or areas nism, and set up an attractive tax regime with relaxed within the Colombo Port City? foreign exchange controls. Jayaratne: The Port City will comprise eight key strategic develop- Can you give us a brief update on the project, and

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There are several other reasons why the Port City will stand out in the region. First, it will exploit Sri Lanka’s inherent geographical advantage where major cities and markets in the South Asian Region are within a four-hour flight. Connectivity from Port City to the Katunayake Airport will be a 30-minute drive with the elevated highway Already Colombo’s quality of life is enviable in the region and is ranked No.1 in South Asia on Mercer’s 2019 Quality Living City Ranking. The city has the highest literacy rate in South Asia and is on par with cities in the ASEAN region with a talent pool that is globally competitive and peerless in terms of skills. The Port City will be developed with an emphasis on innovation, knowledge, technology, and services, which will give Sri Lanka a competitive advantage to attract large scale investments. In addition to the first world social infrastructure I mentioned before; Port City will be a true urban oasis with 27ha of green areas, a 2km public beach, a 109ha calm water lagoon, a 70m wide water channel for waterfront activities, and an ments; of which, the more immediate would be an international international marina. convention centre, an international school (1000 students), and a specialized state of the art international hospital (500 beds). What investment opportunities are there for The development of these strategic land parcels would deliver potential investors currently? the first-world state of the art social infrastructure we envisage Jayaratne: We have released RFP’s for 10 land to be available at Port City. plots that are closest to the Galle Face Centre We are already seeing some interest in these zones. There are Road. These include four plots for the marina, two over 13 international schools that have expressed keen interest in plots envisioned for hospitality developments, having a presence in the SEZ. Several market studies have shown three plots allocated for residential development encouraging opportunities for the MICE sector. While there is and one for mixed-use development. Apart from encouraging healthy demand for the convention centre, garnering these, we are also open for discussions on other investments based on return viability is somewhat challenging. selected plots with strategic importance. As regards to the international hospital, while certain policy gaps would require being addressed, we hope to attract med- Any last thoughts you like to share? ical tourists from new markets such as Pakistan, Bangladesh, Jayaratne: Just some home truths that I think South East Asia, and the Middle East. At the moment, Sri Lanka’s we need to understand, for instance, we cannot medical tourists are mainly from the Maldives and Seychelles. be an international city without international people. Also, successful people want to live in What will the Port City look like once completed? Can you successful places. What we are trying to create discuss some of the features that will set it apart from other here is just that: an international city on par major cities in the region? with any city in the world where people and Jayaratne: The Port City is positioned as the ‘Most Liveable City’ business thrive; and where future generations of in South Asia and will be developed as an urban oasis. This will Sri Lankans will not have to leave these pristine be the ideal destination to live, work and play. We hope that shores in search of better fortunes and a better with the enactment of the SEZ Law and backed by the excellent life. Port City is just the start, and over time all infrastructure provided within it, Port City will be a catalyst in of Sri Lanka would be a magnet for business, improving Sri Lanka’s ease of doing business significantly. talent, and wealth.

DECEMBER 2020 ECHELON.LK 59 TECH

Data has gone from scarce to superabundant. That brings new benefits for companies ready to adapt and headaches for ones that aren’t. Staying relevant in today’s data- driven world: Build customer- centricity and hyper- personalisation

Ramesh Shanmuganathan Executive Vice President and CIO at John Keells Holdings (JKH) SS60 ECHELON.LK DECEMBER 2020 THE GREAT RESET

The world contains an unimaginably vast amount of digital data. That’s because there is now an abundance of technologies and tools to capture and process data from a host of sources such as smartphones, IoT devices/ sensors, websites, social media, and online feeds. The shift from scarcity to wide availability has broad benefits. It’s now possible to have economies around data in a way that is transforming, not just how business is done, but also how society is organised. Today, for some businesses, data is now an input that is far more important than capital or labour, and this is fast becoming a norm. Some businesses have figured how to make the most of this data abundance to run their business better by creating sound customer experiences/ engagement. However, despite the abundance of technology and tools to capture data, process and use this information, experts say Sri Lankan businesses are not making the most of it, at least not yet. When it’s managed well by a business, data can unlock economic value by creating better insights to reach new market segments, launch new products/services, personalise offerings, create better engagement, improve supply chain efficiencies, build better value ecosystems, and in improving the quality of decisions. Besides these benefits, data also creates challenges. Businesses now need to ensure data they harness and use conforms to high data governance, security and privacy strictures as appropriate and applica- ble. These got highlighted when the COVID pandemic increased health and business risks. A few organizations, both public and private, were ready for this disruption.

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Pandemics can be an excellent time for reflection, not just for people, but for organizations too. COVID’s impact had many businesses reflecting and reevaluating their past investments. Unlike a cyclical economic slump, which happens about once a decade, the speed and ferociousness of the pandemic’s spread and the related economic downturn caught many organizations by surprise. As governments restricted movement to contain its spread, businesses found it difficult to reach their stakeholders — be it the employees, customers, suppliers, or partners. passionate and engaged with that brand, right?” Not all organizations could reach their stakeholders for the he asks. “A business must build the same passion same reasons. Some, like hotels and airlines, saw demand dis- and engagement with their stakeholders, and appear overnight. Services like banking, critical to keeping the especially their customers, with respect to their economy ticking, were challenged with operating remotely. brands. They must understand their customer’s Banks struggled to make it possible for customers to conveniently context, expectations, journeys and points of access their services, and for companies to get new facilities. friction. They must ask themselves, ‘If each of For families obtaining their day-to-day needs, like groceries, my customers said: I want what I want when I was a challenge during the lockdown. The pandemic was unlike want it, are we ready to fulfil that ask?’” any other hurdle organizations had experienced in a long time. As a chief executive, Ramesh sees his role as Organisations that struggled to reach their stakeholders in having to inspire C-level executives of organi- the face of the pandemic had one thing in common; they hadn’t zations to leverage technology to build custom- digitised their businesses to the extent of their more successful er-centricity and hyper-relevance by simplifying competitors or to levels expected by their stakeholders and their businesses. While John Keells IT has clients especially their customers. across several sectors, the principles of building Ramesh Shanmuganathan, an established personality in customer centricity and frictionless experience providing thought leadership in the intersection of business are the same, he says. and technology says “it shook organizations in terms of their The signs of the data economy are every- core assumptions and how they have been used to connecting where, but its shape and utility have only the dots in looking at the past and not the future.” become clear to companies in the last decade. Disruptions such as these bring down the weakest first. In the mix are companies that are data majors Companies with frail margins, leveraged balance sheets, weak like ride-hailing service, PickMe. Startups that customer relationships and poor digital strategy and execution put data at their core are also formidable. to stay relevant with times. However, most legacy firms are daunted by Shanmuganathan is an Executive Vice President and Group the data challenge. CIO at John Keells Holdings (JKH), Sri Lanka’s largest company, a Data is not an end itself, instead, it can be at legacy business, founded 150 years ago. He is also Chief Executive the core of a ‘data-driven’ strategy — of using of John Keells IT, a fully owned subsidiary of JKH, which is a data to create an improved ecosystem to attract, boutique consultancy and services organization, well poised to retain, and engage the customers better. Firms simplify and transform businesses for the digital era. that lend themselves to collaborate, co-innovate John Keells IT has been working with businesses across and co-create to build and scale their businesses industries to transform their business enabled by technology by mastering such a virtuous data cycle are and in shaping the customer journey and experience since its called platform companies. inception with strategic alliances with the likes of Microsoft, For decades, John Keells IT has built trans- SAP, UiPath, Deloitte, and Cisco. formative solutions for their clients, within the Ramesh has held several strategic, C-level roles since early John Keells group and outside, both locally and 2000 at JKH and been the Group Chief Information Officer and internationally. Some of its major clients include Chief Executive of John Keells IT for a decade and a half. He uses conglomerates, airlines, airports, manufacturers, the example of the user adaption of a smartphone to underline distributors, retailers, hospitality chains, banks, the importance of being customer-centric and hyper-relevant: and insurance companies. A common phenome- “We frequently upgrade our smartphones because we are highly

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cloud is also easily accessed over the internet from anywhere and by anyone. non following the pandemic is that companies have John Keells group was an early cloud adop- woken up to the challenge of staying relevant and ter in 2012. As group CIO, Ramesh led JKH’s in-step with the customer. They are more fearful migration to the cloud with Microsoft’s Office today that some wildcatter operating from a garage 365 for the entire group. Few businesses were somewhere or one of the global platform majors thinking about the cloud back then, he recalls. will mount a serious challenge to their businesses In 2015, the group’s data centre was extended by giving their customers a better experience and to Microsoft’s Azure cloud. This enabled John personalisation. Keells group to transfer to remote work during Ramesh is of the firm opinion that companies the pandemic seamlessly. John Keells IT, as a should not get ahead of themselves in their impa- Microsoft Gold Partner, has modelled the way tience to embrace data, instead suggesting that the on Cloud Transformation for Sri Lanka’s largest path of such a transformation journey needs to go conglomerate and more across the regions it through a maturity curve with defined points of operates in. inflexions. He says it’s a four-stage maturity model, There are several reasons for the data explo- which consultancy and technology service com- sion. The most obvious is technology. Prices of panies like John Keells IT are equipped to consult, digital devices like smartphones and the cost architect, design, build and deliver. Overall for a of access to the internet have plummeted in company, it’s about changing the enterprise culture Because the last decade. Even a basic smartphone, now to be data-driven by learning how to sense and data is the most popular digital device, is packed with respond at a particle level to changing customer “ sensors digitising lots of information that wasn’t needs and aspirations and staying relevant to them. abundant trackable a few years ago. compa- Opportunity is greater in some sectors. “I THE CORE nies can think it’s in areas like retail, manufacturing, Not all companies will have properly architectured supply chain, financial services, and, because core systems, like ERP, HRM, SCM, CRM, etc. to under- of COVID, also in healthcare and education,” capture transactions and other critical business data stand Ramesh points out. and convert them to actionable insights. Having these in order is the first stage. If an organisation and aim THE CUSTOMER doesn’t have a well-oiled transaction engine, there to cater The third stage is where companies engage con- is no point in talking about customer-centricity, to small sumers with personalised products and services. hyper-relevance, engagement and personalisation, Personalising a product or service is a continuous says Ramesh. niche and independent process, whether by altering John Keells group was one of the early adaptors markets the service or reconfiguring the product. Data of these core systems with SAP as early as in 2004 anywhere is a foundation for engaging and personalising and has been investing across integrated core sys- a product or service. tems across the group with SAP spanning multiple in the When you’re amassing data, then it’s a mat- verticals. John Keells IT, as a Gold Partner of SAP, world. ter of stitching that data together, driving the is well poised to replicate this success with other hyper-personalisation, Ramesh explains. customers as well. Helping an organisation make sense of its “If I equated it to a country’s infrastructure, it proliferating data, he suggests, can take inter- would be the highways, both physical and digital. esting and practical forms. He uses the example Without these, a country cannot prosper. Similarly, of a supermarket that can generate a weekly a business needs the basic infrastructure in place, online shopping list for an individual based on and it must be a well-oiled transaction system — their past spending. “For someone who buys their info-structure.” five kilos of rice weekly, the supermarket will dynamically populate a template shopping list THE CLOUD with the order.” Moving applications and the data to the cloud Demand for personalised is driven in part by begins the second stage of a transformation. Cloud consumers, who want the option to change prod- data centres can be scaled up or down quickly and ucts and services to their specific preferences. For perform much better than on-premises hosting. The companies, the advantage is that personalised

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vass, and blue ocean strategy to guide their customers towards building customer-centricity.” “So I always ask, ‘If every consumer asked for a personalized product or a service, are you ready to deliver?’”

THE ECO-SYSTEM The quality The quality of data has also changed. It is no longer limited to a “of data has database with well-defined personal information. Data is now a real-time flow of actions online, from your devices to the internet. changed. It is For businesses, it is complex interactions of consumers across no longer limit- a range of touch points from physical stores to their follow-up ed to a database actions on digital platforms, immaterial of time, place or device. When the data is easily accessible by anyone, anytime, of with well-de- course within the stipulated governance framework for usage, fined personal the customers and other collaborators can use it to create better information. and lasting experiences for the customers. This has the avalanche effect in attracting more customers and to generate even more Data is now a data, propelling what is called the ‘data network-effect’. That’s real-time flow in the fourth stage. “Companies in the fourth phase of this transformation can of actions on- collaborate more easily. For instance, I might want to collaborate line, from your with PickMe or Uber, and maybe I want to collaborate with devices to the banks for payments. I might want to collaborate with an external party for warehousing and distribution. With the cloud and internet. APIs, building a collaborative value eco-system based business model is easier,” according to Shanmuganathan. Because data is abundant, companies can understand and aim to cater to small niche markets anywhere in the world. Unlike a factory where managers will try to eke out productivity from every machine and process, data scientists can now mine the information for new ideas. goods and services often lead to better customer It’s neither ethical nor legal for companies to pass data their engagement and retention, hence lesser customer customers have generated. The EU, with its GDPR, has legis- acquisition cost. More broadly, greater personalisa- lated this, and many other countries, including Sri Lanka, are tion can serve as a catalyst for innovation by creat- introducing privacy laws. As a result, companies cannot share ing insights that can lead to entirely new products, Personally Identifiable Information (PII). Instead, data about services, or alternative ways of operating. individuals will have to be anonymised before anyone other “Look at me, for instance,” says Ramesh. “I have than its primary gatherer can access it. multiple personas. I am a CIO, a CEO, a father, a The John Keells IT, working with the John Keells group and student and many more. My aspirations and needs other clients has the expertise, experience to partner, consult, are different based on the hat of the persona I’m architecture, design, deliver, and support the transformation wearing. Thus the date and information needed to journey across these four stages based on the maturity of the profile me as well. John Keells IT uses tools such customer and staying true to their motto, “Disruptive Minds. as design thinking, journey mapping, strategy can- Limitless Possibilities.”

64 ECHELON.LK DECEMBER 2020

INVEST

FIRST CAPITAL HOLDINGS: THRIVING IN A CRISIS

The investment institution laid the foundations for a Director/ Chief resilient business years before COVID-19, and now its Executive Officer Dilshan Wirasekara, and reaping the rewards, and confident about a 2021 eco- Chief Operating Officer nomic recovery Tharusha Ekanayake

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isted investment insti- OUR DEBT tution First Capital Holdings PLC is having STRUCTURING a phenomenal year and BUSINESS HAS is set to break its own L business record posted RAISED RS25 during the previous BILLION ON financial year. This means that volumes and revenue will close to double for the second AVERAGE EACH consecutive year by March 2021. The compa- YEAR. IN 2019/20, ny’s Director/ Chief Executive Officer Dilshan Wirasekara, and its Chief Operating Officer WE HELPED Tharusha Ekanayake, explain the reasons CORPORATES RAISE behind First Capital’s success and outlook for RS42 BILLION“ the economy, and the prospects for fixed-income and equities in 2021. AND WE HOPE TO EXCEED THIS What is your macroeconomic outlook for the year ahead and what will the NUMBER BY THE post-COVID new-normal look like in END OF THE YEAR terms of the economy?

Dilshan: I like to start with the current year, because that sets some context into our outlook for 2021. With all the challenges due to foundation for an economic recovery, but we will have to wait COVID, we estimate the economy will con- and see how the second wave is contained and when a vaccine tract 5-8% in 2020, and this is a significant for COVID-19 will be available. So far, three global pharmaceutical contraction, the largest in the post-inde- companies announced encouraging vaccine results. We believe pendence era. First quarter GDP surprisingly everything points to a recovery in 2021. contracted, and we expect the second and third quarters to be negative as well, so the Tharusha: The Budget for 2021 is balanced and progressive. There 5-8% contraction is a fairly realistic estimate. are indications that we will witness consistent policy on taxes However, this means the base affect for the and interest rates kept at reasonable levels. The Budget has many following year is low and we estimate the facets which have competing interests and need to have careful economy will recover to post 3-5% growth management to deliver the results. Implementation is key and we in 2021. are optimistic about the growth prospects for 2021. Despite the negative impacts of the pandemic, there have also been some positive What are some of the exciting trends you see for your Capital developments to fast track economic growth. Markets Advisory business? How can First Capital help cor- The government is restricting imports to boost porates reset and reimagine strategy for the new normal? local production and monetary policy rates were eased along with SRR cuts to increase Dilshan: Let me first set the context here. First Capital is one of the liquidity and credit growth by making bor- least affected organisations by this pandemic, and this is some- rowing cheaper. Banks have been directed to thing we are proud of. This is because we laid the foundations for grant loan moratoriums to help borrowers working from home three to four years ago, when we invested in with cashflow problems. All these lay the digital infrastructure to enable uninterrupted remote operations. So,

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when the lockdown was imposed earlier this WE WILL year, we at First Capital did not experience any interruptions and were able to engage CONTINUE TO with our clients as usual. I think it was more BE BULLISH ON to do with our philosophy where we wanted to empower our employees, and to give them FIXED INCOME that flexibility. We also introduced flex-hours BECAUSE WE which benefited our staff with 52% of them being females. Because we implemented KNOW IT WELL these measures very early, we were able to AND HAVE capitalise on that infrastructure, service our clients, and carry out business transactions AN INTIMATE remotely during the lockdown. UNDERSTANDING In answering the question, First Capital OF HOW THE Holdings is now having its best financial year “ since its founding over 35 years ago. MARKET WORKS In our advisory business, there is a lot we can do to help businesses ride out this crisis and uncover real value. The Country’s capital market is in a strangely unique situation with two primary needs that have emerged. First, there are certain industries and business that find themselves in dire straits and need assistance with funding and restructuring. On the other hand, there are investors or institu- and securities businesses reported impressive growth this year tions with excess funds looking for attractive with volumes surging and surpassing the previous year which was options in a low-interest rate environment. also our best year. We are also bullish that our structuring advi- The Country’s capital market is highly liquid sory business will grow as many companies will have to abandon due to the Central Bank’s monetary policy existing business models. Our M&A advisory arm will also see a easing: for instance, the banking sector has lot of new opportunities emerge as more companies take this route surplus liquidity amounting to about 150- over the coming months. 200 billion rupees. Because of the economic Though the interest rates are historically at their lowest levels, downturn, there are not many sectors that the unit trusts managed by First Capital are generating superlative are looking to raise capital or even debt, so returns than of other comparative investments along with the investing excess liquidity is a problem. flexibility and convenience which have been enhanced by the use I believe First Capital is well placed to of digital platforms. bridge the two needs, channel funds to where Our debt structuring business has raised Rs25 billion on average they are needed the most, help COVID- each year. In 2019/20, we helped corporates raise Rs42 billion and impacted businesses recover faster and help we hope to exceed this number this year. For the first six months of investors generate market-beating returns at the financial year 2020/21, we raised well over Rs11 billion, so consid- the same time. This is our role as a financial ering what we have in the pipeline we believe our debt structuring intermediary and investment institution, and volume will exceed Rs50 billion this year. In terms of fee income, we the present environment has increased the averaged Rs100 million each year and hit Rs175 million in 2019/20. opportunities to play that role and have a We are likely to reach a fee income exceeding Rs200 million this significant impact on the economic recovery. year. Our fund management numbers are even better. Last year, total funds under management reached Rs26 billion after averaging Tharusha: Our corporate debt structuring Rs10 billion annually over the previous years. By November 2020

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assets under management reached Rs35 bil- rates will be adjusted upwards to keep inflation at bay. This brings lion. These numbers demonstrate our ability us to equities. to grow the business exponentially for two There is a fairly negative correlation between interest rates and consecutive years under economic uncer- equity markets; when interest rates drop, equity markets tend to tainties’ stemming out of Easter attacks and go up and vice versa. This explains the stock market rally since COVID-19 pandemic. the economy emerged out of the March-May lockdown. By end November, Sri Lanka’s equity market had gained 1% year to date, What is the short-to-medium-term which is quite good from a global context as the CSE was the best outlook for equities and fixed income performing exchange world over in the month of September. There and what factors will shape these two is an equity market boom with the benchmark index rallying 35% asset classes over the next year, and since the lockdown lifted in May, and this is mainly because of the even beyond? How should investors low interest rate environment and investors looking for attractive approach asset allocations? returns with valuations lower than they were before the war ended in 2009. This is quite strange because several listed companies Dilshan: Monetary policy has been easing are doing much better now. The equities rally will last for another and interest rates are at a historical low. 6-12 months for as long as interest rates remain where they are. In The benchmark one-year Treasury Bill yield terms of listed company earnings, there’s room for improvement is down to 5% and bank deposit rates are too. There are many companies in the export and manufacturing around 5.5-6%. A corporate debt instrument segment reporting higher earnings compared to the previous year, yield around 8-10%. From the credit perspec- so the outlook for equities is encouraging. We see new investors tive, the prime lending rate is down to around emerging to take advantage of the equities rally. A mobile app 6%. Sri Lanka has always been a very volatile launched by the Colombo Stock Exchange in September has been country in terms of interest rates which have downloaded 17,000 times and over 3,000 people have opened CDS been very cyclical, peaking and falling every accounts to trade in listed stocks. Demographic data suggests that five years or so. However, we see real interest people between the ages of 18-35 years are now actively investing rates touch down to nearly zero for the first in equities which was not the case before. So overall, we are very time in history. We have never experienced bullish on the equity market. this before because Sri Lanka has always been a country with fairly high real interest Tharusha: We have predominantly been a fixed income player rates. One may argue that real interest rates with around 90% of our asset allocations in this asset class. The are a negative in the developed world, but reason for this is that fixed-income was the best performing asset that is an entirely different story. class over the last three-decades. If you look at the five-year gov- We believe that these low interest rates ernment bond rate, or the average weighted fixed deposit rate, can possibly be sustained for some time, those are the two best performers competing against the other despite the government’s increasing need two common asset classes, which are equity and real estate. We to borrow. The Central Bank will try to keep will continue to be bullish on fixed income because we know interest rates low to stimulate an economic it well and have an intimate understanding of how the mar- recovery, but we feel rates will not fall any ket works. First Capital is the leading Non-bank Primary Dealer further than they are now. So, interest rates with strong research capabilities and close relationships with could remain at these historic low levels for the issuers which gives us an advantage of cherry-picking fixed another 6 to 12 months. If inflation starts income investments for our wealth management clients. Another moving up from the current 5% levels, then clear advantage we have is the ability to negotiate better yields real interest rates will enter into negative on fixed-income instruments due to the total assets under our territory and we have never experienced management, about Rs35 billion, which allows us to negotiate this before. We believe the Central Bank will preferential rates compared to what individuals receive. So, we hold interest rates for as long as possible but will continue to focus more on fixed-income assets and deliver when government credit expands, interest above average market returns for our clients.

DECEMBER 2020 ECHELON.LK 69 REAL ESTATE

JLL’S OUTLOOK FOR COLOMBO’S PROPERTY MARKET

The residential market is recovering fast due to low interest rates, while the market for office and retail spaces is seeing a gradual recovery

70 ECHELON.LK DECEMBER 2020 THE GREAT RESET

olombo’s property market is experiencing There was a a recovery at various levels despite the noticeable recovery ongoing COVID-19 impact on the overall in demand for economy, a report by JLL shows. residential JLL breaks down Colombo’s property apartments in the market into four segments: residential, third quarter with C office, retail, and hotels—the report also takes an extended view at the South-West property developers Coast tourism market. The residential mar- reporting an increase ket is experiencing encouraging demand and therefore the fastest in buyer inquiries to recover, followed by the office space segment which will have a in the premium gradual recovery towards the end of 2020. However, retail’s recovery segment. Demand for will be slow, and the hotels segment will continue to bear the brunt housing was driven of the COVID-19 pandemic in the short term. by locals in contrast Despite the World Bank projecting that Sri Lanka’s GDP will contract to previous years by 6.1% in 2020 as the COVID-19 outbreak and lockdown measures weigh heavily on economic activity, the country's services sector will show positive growth in 2020 which bodes well for the property market. JLL explores what this means for Colombo’s property market in its latest report ‘Colombo Property Market Monitor 3Q2020’, authored by Shazana Zarook, a Research Executive at JLL. New York listed Jones Lang LaSalle Incorporated, better known by its brand name JLL, is a leading professional services firm that specializes in real estate and investment management. JLL is a Fortune 500 company with annual revenue of $18 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. because of the Central Bank’s monetary stimulus stance was the primary reason for piquing domestic interest. RESIDENTIAL There were no additions to the stock of apartments in JLL’s outlook for the residential real estate market is positive after the city due to the coronavirus and construction slow- experiencing a visible recovery in the third quarter. The segment down. Also, developers delayed project constructions will benefit from the government’s due to liquidity constraints. The government introduced targeted relief measures to uplift a relief loan scheme to aid developers and construction housing, and the slow return of companies, and this resulted in development activity investor confidence will lead to picking up during the quarter after coming to a stand- an increase in sales towards the still in 2Q2020. end of 2020. Property developers offered steep discounts of 5-10% There was a noticeable recovery to overcome muted demand as rent yields fell 35% Price Y-o-Y in demand for residential apart- between January to August 2020. The average monthly 2%growth ments in the third quarter with rent for a three-bedroom apartment fell to $900 in property developers reporting an August, compared to $1,400 at the beginning of the LKR increase in buyer inquiries in the year. However, average capital value remained range 45,000 – premium segment. bound during the period, in both luxury and mid-level Primary Demand for housing was driven segments, JLL reported. price per by locals in contrast to previous 52,000 SQFT years where the market was largely OFFICE dominated by Sri Lankans living JLL says the office space market will experience a gradual STAGE IN RENT CYCLE overseas. The downward revision resurgence in demand towards the end of 2020 with ini- Rents falling of housing loan interest rates tial green shoots seen in economic activity and improv-

DECEMBER 2020 ECHELON.LK 71 REAL ESTATE

Office Supply lockdown period, the JLL report said. Despite a rise in vacancy, rents of prime grade-A 2015 Completions Future supply buildings have been stable across the city. Prime office 2016 buildings completed in 2019 continued to command 2017 fixed rents that have not changed since. However, most 2018 developers and landlords offered various incentives 2019 and benefits to tide over the short-term liquidity crisis 2020 caused by the demand crunch. 0 1 2 3 4 5 6 7 8 9 Mn Sq Ft RETAIL The retail space segment will see a slow recovery and inventory will remain stable. JLL notes that many Slowly declining retailers will likely shelf their expansion plans due to Price Y-o-Y LKR cashflow challenges, but this is a short-term problem. SQFT STAGE IN per Retail sales and leasing demand is expected to grad- growth -0.7% month 324 RENT CYCLE ually accelerate as the economy continues to recover from the third quarter onwards. The city’s inventory of retail space is unlikely to expand over the next year RENT due to delays in construction, according to JLL. Only Astoria, a mixed development project, is expected to 180 160 complete 23,000 square feet of A-grade retail space 140 in the short term. 120 The third quarter saw retailers tighten operating 100 80 costs to overcome mute sales volumes with shoppers 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 keeping away from malls and stores. An import ban Colombo Property Market Monitor -3Q2020 on clothing forced some retailers to move out of malls Index ase: 4Q15 = 100 and into cheaper spaces. “While some small-scale Source: JLL businesses continued to move out, a few international and local brands in cosmetic and jewellery continued to move into A-grade malls during 3Q20,” JLL reports. No new malls opened since the fourth quarter of 2019, and existing ones offered discounts to retain ing sentiment. Healthcare, logistics, manufacturing and tech firms their tenants. This had a significant impact on rent will drive this demand and reduce overall vacancy rates across the where the net value declined by at least 15% in 2Q20 city, but rental rates will remain stable. However, the completion of from 1Q20 and continued to 3Q20, the report noted. several mixed-development high-rise projects such as Cinnamon While most retailers were able to negotiate lower Life, Ekroma and JFI are likely to insert downside pressure on rents. rentals, some landlords have not been able to charge Demand for office space was muted in the third quarter of 2020 rents from tenants during the period. despite a gradual recovery from 52-day lockdown during the first wave of the pandemic earlier in the year. JLL reports that sentiment HOTELS was cautiously optimistic with many companies deferring decisions ‘The outlook for the real estate market for hotels will to take up additional office space and reassessing their real estate continue to be weak for as long as global travel restric- portfolios to optimize both space and minimise costs. tions remain. However, Colombo continues to add No new A-grade properties were added to the market during the inventory in anticipation of a post-COVID boom. This quarter with only Cinnamon Life expected to open by the end of the influx in inventory with several projects in the pipeline year. Other developments due for a 2021 completion date have been will also pressure pricing. delayed by construction slowdowns. “There are 11 hotels comprising 3,084 rooms Overall vacancy increased to 18.7% at the end of Q3 2020 from 15% expected to open in Colombo within the next 2-3 at the end of Q2 2020 with many small to medium sized companies years. Luxury hotels form the largest segment of the downsizing and a slackening overall leasing demand following the future supply with four hotels comprising of more than

72 ECHELON.LK DECEMBER 2020 THE GREAT RESET RETAIL

RETAIL SUPPLY

New supply 1.6 Cumulative supply 1.4 1.2 Mn Sq Ft Mn 1,700 keys,” JLL suggests. Competition among high-end 1 properties will likely intensify and new supply in these 0.8 segments are expected to generate premium rates as 0.6 large international operators such as Marriott, IHG and Amari enter the market. 0.4 The global pandemic has weighed down the hospi- 0.2 tality industry which was gradually recovering from the 0 aftermath of the Easter attacks in April 2019. Colombo 2014 2015 2016 2017 2018 2019 2020(f) witnessed a 3.7% increase in occupancy in January 2020 as compared to January 2019. The onset of the pandemic and imposition of travel restrictions resulted in a 21% decline in March 2020. Occupancy levels fell 50% year-on-year during the first nine months of 2020 while revenue per Rental 0.9% 250 – available room fell 57%, according to STR. growth Y-o-Y Colombo hotel occupancy levels have picked up since the lockdown lifted in June, with September registering 580 LKR an 11.6% occupancy level. While international business STAGE IN RENT CYCLE SQFT per travel continues to be negligible, this increase is led by a Falling month resurgence of domestic tourists, dining, and events with limits set on the number of attendees by health authorities. Source: JLL There were no additions to Colombo’s inventory of hotel rooms during the year although six new properties were due for completion. “Most of the new supply is expected HOTELS to open in 2021, of which a notable upcoming hotel is the 800 key luxury hotels in the mixed-use development Cinnamon Life,” JLL said. COLOMBO - FUTURE HOTEL SUPPLY BY CHAINSCALE (2020E TO 2023F) A look at the hotel inventory of the South-West Coast showed only one notable hotel opening in 2020, which 0% 7% was the 172-room Sheraton Hotel Kosgoda Turtle Beach 57% 7% Resort. This region performed better than Colombo with occupancy levels falling 39% from January to September Luxury resulting in a revenue per available room falling by 41%, Upper Upscale according to STR. The South-West Coast has seen a slight Upscale performance uptick since July, reaching an occupancy Midscale level of 26.3% in September, driven by domestic tourism Economy after Sri Lanka emerged from a nation-wide lockdown 30% June 28th. JLL Sri Lanka is a leading professional services firm Source: JLL Hotels & Hospitality Group specializing in real estate service in the country. Based in Colombo, the firm provides end-to-end real estate services to investors, developers, local corporates, and multinational companies. Its services include research, LKR analytics, project and development services, property and RevPAR Growth asset management, integrated facilities management, -56.3% real estate capital markets and transactions across asset 4,190 classes covering commercial office spaces, hotels, land assets, industrial, retail, and residential units. STAGE IN RENT CYCLE TD RevPAR Revpar failing September 2020 Disclaimer: STR republication or other re-use of this data without Source: STR the express written permission of STR is strictly prohibited

DECEMBER 2020 ECHELON.LK 73

RESET.REFOCUS.PUSH FORWARD

The cure to the economic disruption brought by Covid-19 is not resurrecting yesterday’s economy, but repurposing businesses for tomorrow’s new normal

Echelon Studios shines the spotlight on the companies that have seized the : RICKY DE SILVA : RICKY opportunity to reshape, reset and strategically think about their business goals, actions, and the communities they impact as organisations after Covid and beyond. These are their stories. ILLUSTRATIONS BY DIVERSIFIED

Sunshine Holdings’ pursuit of stability and growth

EVEN THE COVID-19 PANDEMIC DIDN’T STOP THIS CONGLOMERATE FROM COMING OUT ON TOP

Sunshine Holdings PLC is one of Sri Lanka’s most esteemed conglomerates with a core area focus on healthcare, agribusiness, consumer goods and renewable energy. They base the business on ‘responsible entrepreneurship’ and strong family values that cultivate long-standing human relationships. Executive Director, Shyam Sathasivam, shares how Sunshine Holdings Shyam Sathasivam, has continued to grow despite the chal- Executive Director at lenges hurled at them. Sunshine Holdings PLC

76 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

How did Sunshine Holdings respond to the challenges presented over the last two years? What makes a business stable is how quickly it can rebound. After the 2019 Easter attacks, healthcare Zesta is Sri Lanka’s premium tea brand and consumer goods—our two largest sectors—bounced back to what they were pre-bombings. Similarly, by mid-April this year, we could move forward because we are in products that everybody requires across the country. Our healthcare reaches around 3,000 pharmacies, and our tea product portfolio cuts across the economic strata. So in that context, our stable business allows us to withstand such large shocks. We’re affected in a broad way like consumer sentiment, since people have less income than they expected, and it will affect growth. Still, we benefit from being in large, stable segments of the economy.

What does “reset” mean for Sunshine Holdings? We are a family business that’s pub- licly listed. We stay involved in the management and are accountable to our shareholders, and all investors. By nature, we are conservative, and given what the Sri Lankan economy has been for the last three to four decades, we are more prone to shocks than many other countries. So our the office every day. However, we adapted rapidly ability to sustain shocks has been a and continue to do so each month with more staff part of our strategy. working from home. The sectors we are in can also Our retail business, Healthguard, was already balance any surprises. Technology, present online, but it was only after COVID we for example, has been the most figured we should partner with PickMe. So the significant disrupter over the last little things helped, and we’re following a robust three years. However, we invested strategy and escalating. We’re resetting some of in technology well before these dis- our tactics in terms of plans, and focusing on ruptions since we understood the healthcare and consumer goods. sentiments of our consumers and stakeholders. Sometimes, it was as How has the group performed in 2020? simple as reaching out to pharma- The period from January to March was very good cies with sales force automation very for us. We have strong service brands and prod- early on to get timely deliveries in. ucts, particularly healthcare and wellness. In the But COVID-19 and the lockdowns consumer business, we have products across the further stretched us. Even though economic strata at different price points, from our data is technically on the cloud, our premium products like Zesta to our baseline we were still working nine-to-five in products like Ran Kahata. And, we focused a lot

DECEMBER 2020 ECHELON.LK 77 DIVERSIFIED

on creating availability across the 20 million plus population. It worked well and continues to sustain us through challenges. At the start of the financial year, from April to June, all our businesses went through significant challenges but rebounded quickly. We’ve just released results for six months as of September, and we are growing versus last year. What I think is important to note is that irrespective of a pandemic and the lockdowns, we have shown resilience and can grow in a period of uncertainty. We also have strategic investments in agribusiness, palm oil plantations, and dairy, which have also shown resilience. Renewable energy is another investment by the group. We have a mix of brands that have continued to be relevant post-supply chain shocks, along with a business that has rebounded. We also have regulated businesses, like healthcare, that by nature, move slowly compared to the tech industry. Our view is to take a long-term view of the multiple businesses in our portfolio. Further, our balance sheet is solid — as a group, we have kept debt Healthguard partnered with PickMe to deliver items to customers during the lockdown, and at manageable levels. still continues to do so

What are the main macroeconomic patterns that drive growth in the many business verticals of the ture. Any plans to launch new products will have to be with that in mind. group? Healthcare and wellness investments require more significant consumer Our concern is the low consumer income and willingness to spend. ‘Is our consumer investing more in wellness, income and the general feeling of and is this income-related?’ is a question we ask ourselves. If you look at markets uncertainty. We’re confident there with double our GDP, you will see a significant spike in elective surgeries, for will be a vaccine, but when it comes, example. It’s not that they’re ill per se — they just address issues which don’t it will have a short, feel-good element get tackled in our economy. So I believe our outlook needs to be about how we — the uncertainties will continue to position ourselves for the growth that is to come, and figure out how we play exist. It will take time to repair the out the next three to four years as things resettle. economy, businesses, and overcome shocks at a consumer level, muting What is the group’s business strategy to reset fast across verticals? And what consumer income and spending. are your plans for the future? With essentials like our tea business, All of our employees will become more digitally productive. We will look at and now our acquisition of Daintee how we can enable and augment every individual to become more productive in confectionery, we see little impact, at twice the pace than initially expected. This means significant investment in but we have to look at the larger pic- training to re-tool people. We’re heavy on business intelligence, and we expect

78 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

The technology will be key and will ensure that decision making will be faster. We’ve always had the technology and devices — it was a question of how we could use it across the business. At the consumer level, from where Healthguard is and communicating with customers, we have a far better understanding of consumer patterns and their concerns, because of the rich interaction we’ve had with them. In the pharma business, teams to use these tools online and one thing we did was to make sure the staff was even on-the-go. We aim to drive this available to pick up a call and have those conver- data usage across the board. sations with our customers, rather than merely There is a lot more willingness using data points on our website. Now it’s up to for people to change their job roles. us to use the data to figure out what solutions People’s mobility has been crucial. we need to implement, be it consumer-insight And, if there’s one thing I would want or business-process insight. to retain from the whole pandemic is that flexibility - that anyone can do How important is it for employees to improve different things each day. We’re grow- mobility in terms of functionality? And how ing accustomed to location mobility do you do that? — working from anywhere — now As with any group trying to build value, very early we need to realize we can also do on, we realized the only way we can scale is by multiple things. This mindset switch ensuring our talent can perform. The only sustain- needs to start at the corporate level. able route to success is attracting and retaining We also aim to understand what talent. The most successful companies around the our consumers will forever do differ- world are the ones with teams that can pivot and ently. Healthguard, our retail busi- make the changes necessary to keep growing. As ness, will always have a far more a family business, we clearly understood that, significant and rapid response online. and it has helped us in the past. We have fostered We went from delivering products in an environment where people feel trusted and two days to delivery in two hours. empowered with their issues addressed. So we figured out how to do it in Recently, Great Place To Work (GPTW) recog- a crisis. Now, we want to do it in a nised six out of our eight companies, and one typical scenario at an efficient level area we scored well was in enabling the use of we can scale. technology so people can produce more. We have re-engaged with employees now that we’re work- Can you elaborate further on the ing from home and we will encourage them to role of digitisation across the com- consider the flexibilities and the challenges that “ As with any pany? have come with it, and incorporate them into the group trying Most things we did before required business. Our opportunity to stay relevant will to build value, manual interaction. Our goal is to see depend on learning from some of these issues. very early on, how we can eliminate this. It was So while our businesses have been stable, our we realized only during the lockdown that we business processes have had to reset. the only way figured out how to digitise processes I think there will be two types of businesses: we can scale like approvals, so the business can Those that go back to the old processes, where vac-

is by ensuring move forward. Now I hardly sign any- cination will enable them to revert to exactly how “ thing physically — it’s just not on the things were before; and those who will attempt our talent can cards anymore. I want to enable a to make big changes to flip the switch and do perform sales representative on the ground things differently. We’re eager to make sure we to suggest a campaign to the area are a part of the latter and not fall into the com- sales manager via a request online, fortable groove of the old normal. It is how we will which in turn moves to the relevant continue to grow — we can’t reward employees decision makers and gets approved. with a lack of growth.

DECEMBER 2020 ECHELON.LK 79 BANKING

PAN ASIA BANK: A LEGACY BUILT ON INNOVATION

The bank’s single minded focus on customer wellbeing over the last 25 years has placed it in a strong position to drive growth in a post-COVID environment

Nimal Tillekeratne, Director and Chief Executive Officer of Pan Asia Bank

edness and responsibility with which we have led the growth of the country and the prosperity of our customers continue to in- ith innovation deep- spire us to be the ‘Truly Sri Lankan Bank’ with a strong sustaina- ly carved in its DNA, bility-focused vision. We pioneered many initiatives over the last Pan Asia Bank has in 25 years, using in-house expertise to engender a positive impact its 25-year journey, on society and the environment. For example, Pan Asia Bank ac- seen steady growth celerated renewable energy financing to encourage a low-carbon, W in some of the most sustainable economy by supporting solar power projects and drip challenging of times. irrigation: a forerunner in the banking industry in this regard. Also, As COVID-19 shapes the bank was the first to cater to the pensioners’ segment. a new business landscape, the bank has prov- In recognition of these pioneering efforts, the bank has won en its resilience by outperforming the industry. many awards and accolades over the years such as the Client In- Nimal Tillekeratne, Director and Chief Execu- novation Awards 2020 by Infosys Finacle and the ‘Most Fabulous tive Officer of Pan Asia Bank discusses the rea- Global Training and Development Leaders Award’ at the World HRD sons behind the bank’s success and vision for Congress 2020 being some of the recent ones. Pan Asia Bank was the future. yet again featured in the latest Business Today Top 30 rankings, standing shoulder to shoulder with Sri Lanka’s largest corporates. Can you take us through the bank's 25-year Our products and services are aimed at fulfilling the require- journey, and important milestones along ments of our customers, and to make a greater economic contri- the way? bution at all times. We have much to be proud of on the occasion Tillekeratne: Our journey over the last 25 years of our 25th anniversary. The spirit of innovation which guides us reflects the sound pillars on which Pan Asia remains strong and we expect to reach many more milestones in Bank has been built. The sense of nation-mind- the years ahead.

80 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

What kind of legacy has the bank built for it- What's the role of digital technology in the bank's over- self over the last two and a half decades, and all strategy? Tell us about some of the technologies pilot- looking forward, how is the bank preparing ed and their outcomes? for the post-COVID new-normal contribut- Tillekeratne: Technology is an enabler and not an end in it- ing to reshaping and resetting the economy? self. As the ‘Truly Sri Lankan Bank’, we prioritize customer Tillekeratne: As a truly Sri Lankan bank, we un- experiences which is a barometer for digitalization. Pan Asia derstand the needs of our customers and con- Bank continues to leverage digital platforms effectively to de- tinuously strive to offer them unique products liver banking products and services to customers and enhance while providing unparalleled customer service. operational efficiencies. Recently we introduced a new Card Despite the outbreak of the COVID-19 pandem- Management System to provide a world-class experience for ic in Sri Lanka, Pan Asia Bank has sustained its our cardholders. In addition to online banking and our Pan momentum and performed strongly compared Asia Digital App, we have partnered with Lanka QR for QR-en- to industry peers. This is largely due to our pru- abled transactions and re-launched Business Internet Bank- dent financial risk management and governance ing. Also, the Department of Pensions recently selected Pan framework. Asia Bank to be the first private Pan Asia Bank is well prepared to meet the sector bank to deploy an elec- needs of the post-COVID world. A strategic re- tronic fingerprinting facility as a structuring process over the last few years has speedy alternative to providing ensured we have the right people in the right a life certificate for pensioners. roles. The dynamic team in place is supported by a strong corporate culture. As the ‘Truly Sri How is PABC positioning it- Lankan Bank’, we have identified the real needs self in terms of creating value of Sri Lankan consumers, their financial require- Pan Asia Bank for borrowers and depositors, ments and their aspirations, and have expand- while also driving sharehold- ed our offerings accordingly. As the post-COVID has sustained er value? world evolves, we are well-positioned to inno- Pan Asia Bank has gone over and vate new products to meet customer needs. its momentum beyond expectations to meet and performed the requirements of the mar- Businesses will have to restrategize to un- ket. To ease the burden of the cover growth opportunities in a post-COVID strongly pandemic on SME customers, era. Can traditional banking help or is some- compared to we organized a webinar to help thing more needed here? 250 SMEs plan strategies for a Tillekeratne: Supporting the country’s efforts to industry peers post-COVID world. The bank pi- fight the COVID-19 pandemic, Pan Asia Bank de- oneered the promotion of green ployed a range of value-added services to ensure financing in Sri Lanka as a re- customers could stay home safe and yet access cipient of the first $7.75 million its banking solutions. We realized the need to be Green Bond launched by Swiss- even more customer-centric at this difficult time based Symbiotics. to support efforts to battle the pandemic. In partnership with a global Pan Asia Bank is re-strategizing basic bank- banking partner, Pan Asia Bank launched a superior Gold Loan ing fundamentals with new strategies revolving product, that protects the asset value in fluctuating market around the digitization of products and services, conditions. To coincide with its 25th anniversary, the bank giving customers access to our services via both launched a no-frills current account eliminating the usual fees traditional and digital platforms. There will be and charges otherwise payable up to end-December 2021. a growing demand for contactless transactions Consistent financial growth achieved within the bank’s and we are well geared to cater to customers at strong risk and governance frameworks continue to create every level of the digital spectrum. Our digital- wealth for shareholders. Despite the challenges, in 2019-2020, ization process is supported by strong compli- the bank has outperformed its peers by achieving historic ance and risk mitigation initiatives. profitability.

DECEMBER 2020 ECHELON.LK 81 SUSTAINABILITY

COCA-COLA IS MAKING SUSTAINABILITY A PRIORITY The iconic global brand is placing sustainability at the core of its business; despite the pandemic

With a focus to make a positive impact on people’s lives, communities and the planet through water replenishment, packaging recycling, sustainable sourcing practices, and carbon emission reductions across its value chain, Coca-Cola is set to expand on its mission in 2021. As businesses the world over reset and gear up for a post-pandemic phase, Coca-Cola Beverages Sri Lanka is forging ahead with optimism and plans in place for a new normal. Mayank Arora, Managing Director of Coca-Cola Beverages Sri Lanka Ltd. (CCBSL) talks about Mayank Arora, Managing Director how the company realigned Coca-Cola Beverages strategy to push through the Sri Lanka Ltd. Covid-19 pandemic, and how its mission to give back is deeply aligned with its business goals.

82 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

Coca-Cola is probably the most iconic global brand. Can you tell In the Branded Non-alcoholic Ready to Drink beverages segment, (i.e. excluding us about Coca-Cola's journey in beverages such as coffee and tea which need to be prepared, prior to serving), Sri Lanka? Coca-Cola enjoys the largest share, owning the #1 and #2 brand positions. Coca-Cola has been refreshing Sri Lankans for nearly 60 years, crafting the brands and choice of beverages that people love. Along with big The Coca-Cola Company (NYSE: KO) is the World's Largest Nonalcoholiwith over 500 global brands such as Coca-Cola, brands sold in more than 200 countries and territories. Sprite and Fanta, our Sri Lankan brands such as Portello have been 134 YEARS OF 500+ PRODUCTS SOLD IN in the country for six decades and Refreshing people Beverage Brands 200+ countries remain local favourites. To serve everywhere and territories our consumers better, we are now providing more convenient and affordable packages, and introducing new lower and zero-sugar drinks ~4,700 #1 such as Coke Zero and Sprite Zero. Coca-Cola supports the economic Products Worldwide Sparkling Juice, dairy Water, enhanced Ready to drink Worldwide in value soft drinks and plant. water and sports tea and coffee. wheel of over 80,000 traders and drinks. also provides direct and indirect employment for over 7,000 people in Sri Lanka, contributing to economic growth within local communities.

~700K ~225 ~900 30MM Invested $125B+ How important are sustainability, System Bottling Bottling Retail customer Together with global the environment, and giving back associates partners plants outlets bottling partners to the community to Coca-Cola in worldwide since 2010 a global context? Sustainability and ‘Giving Back’ is in-built in Coca-Cola’s purpose entrepreneurs globally by 2020 (5y20). Our sustainability initiatives intend to contribute to “Refresh the World and Make a to Coca-Cola’s global goal to reduce total carbon emissions across the entire value chain Difference” in people’s lives, com- by 25% by 2030, helping the business and communities we serve adapt to the realities of munities, and the planet by doing climate change. business the right way, and working together to create a better shared How has 2020 been for Coca-Cola Sri Lanka, and how did you respond to the Covid-19 future. Coca-Cola’s three global sus- challenge? tainability pillars include: (1) A World As Sri Lanka grappled with Covid-19 and businesses feared the worst, Coca-Cola Beverages Without Waste - Make packaging a Sri Lanka swiftly adapted to the changing situation. Our priority was the health, safety, and circular economy - with the goal to job security of our employees and partners. We were able to ride the first wave of the pan- “Collect and Recycle a bottle or can demic in Sri Lanka with zero job losses, no reduction in salaries, and even announced annual for every - one it sells by 2030”. (2) increments and incentives. We did so by carefully analyzing our costs and cutting back on Water Stewardship - become “Water non-essential expenditure while maximising operational efficiency. Neutral” and return a 100% of the From the outset, we demonstrated a unified and clear vision to combat the crisis and water used for the production of maintained regular communication with our employees on prioritizing safety and health. To its beverages to local communities ensure distribution efficiency, our teams from all functions of the company extended their and nature, through its local water fullest support to customers, while ensuring all health and safety measures were in place. initiatives. (3) Well-being of local Teams coordinated effectively to ensure close credit monitoring, and helping customers communities – including econom- to manage their working capital during a time when businesses were grappling with cash ically empowering 5 million women flow challenges.

DECEMBER 2020 ECHELON.LK 83 SUSTAINABILITY

ted to collecting high volumes of PET plastic bottles for recycling from across the nation. To date, we have collected over 15 million PET bottles and formed 93 partnerships to create a network that includes the private sector, government, civil society, Eco-Spindles Pvt. Ltd. (an end-to- end recycler), local waste collectors and many other stakeholders. Over 310 PET collection bins have been installed at strategic locations across 17 districts and 8 provinces. During the year, we initiated the first mega PET collection program in 40 major temples, and installed 17 large scale 5,000kg capacity collection huts across harbours in Sri Lanka to collect PET taken out to sea by the fisher community, thereby preventing marine pollution. 2020 was a monumental year for us because we surpassed Coca-Cola’s global goal of Water Replenishment, becoming the first in South West Refreshing Sri Lanka is our priority, so we continued to re-invent Handover of PCR Asia to be water positive through Test Kits and VTMs ourselves during the pandemic by leveraging technology. Coca-Cola by Coca-Cola to the rehabilitation of three ancient partnered with both pure players, bricks & clicks and food aggregators to the Prime Minister water reservoirs in Anuradhapura of Sri Lanka, Hon. leverage the benefits of the e-commerce space. As a result, we increased Mahinda Rajapaksa and Monaragala. our online sales presence from three sites prior to Covid-19, to nineteen CCBSL achieved 203% water posi- after the pandemic hit. In addition, an in-house home delivery team tivity, which meant that for every liter was put together to cater to the Western Province, the country’s main of water used for the production of commercial hub. We succeeded in getting all our distribution channels our beverages, we give 2 liters back operational by June although most restaurants and food outlets were to our communities and ecosys- still closed. tems. The projects will economically Alongside business activities, the Coca-Cola system in Sri Lanka empower these communities as it pledged Rs130 million to support communities that were affected by will effectively enable them to cul- the pandemic through the donation of 16,800 PCR test kits and 17,000 tivate all year-round and enhance VTMs. We also provided essential packs consisting food, sanitary items, agricultural income potential. first aid and Coca-Cola beverages to 6,175 marginalized families, while This year, Coca-Cola was also also partnering with NGOs to complement their essential packs with able to reap the positive benefits of beverage donations. All these initiatives were conducted together with an investment of Rs. 235 million to our implementing partner Sri Lanka Red Cross Society, that also under- implement one of the top 3 single took Coca-Cola’s disinfection program in Gampaha during the second location rooftop solar projects in Sri wave of COVID-19. Lanka! Covering 80% of the roof area at our Biyagama plant, the project has Tell us about your sustainability initiatives during the year? an annual generation of 2,733MW/h Despite the pandemic, we continued to effectively implement our sig- of renewable electricity, a reduction nature waste management programme, ‘Give Back Life’, contributing of carbon emissions by 1.9MT, and a to the global Coca-Cola ‘World Without Waste’ goal. We are commit- cost saving of Rs.45 million.

84 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

Looking ahead to 2021 and beyond, what are your plans for sustainability and CSR, and why are they important from a business strategy perspective? CCBSL, in line with its global Coca- Cola sustainability strategy will continue investing and collabo- rating with partners to meet goals and bring about solutions in waste management, women empower- ment, water stewardship, and the well-being of local communities. These are not isolated, ‘feel good’ Rehabilitation of the Samurdhi tank in Monaragala, supporting initiatives undertaken by the com- over 400 households in the rural farming community pany, instead they are necessities for the company’s continuous strategic sustainable growth. Coca- Cola’s business goals are tied hand in hand with social and environ- mental goals at the highest level. We intend to be a part of the solution, and not the problem of plastic pollution, by supporting the plastic collection infrastructure in the country and creating awareness that PET plastic is not waste, but value, as it is 100% recyclable and should not end up irresponsi- bly discarded in the environment. This in turn contributes to a circular economy, increases export Large scale 5000Kg PET Plastic Collection Hut at the Negombo Harbour earnings as the recycled products are exported to several countries and expands livelihood opportunities for local waste collectors. Coca-Cola will continue its water projects in the coming years, as water is a key ingredient in beverages and is central to the long-term success of the business and the health of communities. Coca-Cola holds a strong belief that it has a responsibility to respect and protect water resources. We will also continue our women empower- ment programs and continue to support local communities at all times, especially in times they need Donation of Packs with Food, Sanitary Items and First Aid to 6000+ vulnerable us the most. communities during the COVID-19 outbreak

DECEMBER 2020 ECHELON.LK 85 FINANCE

SARVODAYA DEVELOPMENT FINANCE: RURAL-LED ECONOMIC GROWTH The finance company, founded on the principles of its parent, the Sarvodaya Movement, is helping rural businesses through the COVID storm

ilantha Jayanetti, Chief Executive at Sarvodaya Development Finance, believes the company has the answers to building a sustainable business post- COVID-19. Sarvodaya Development Finance (SDF) reported an impressive performance for Nthe financial year ending March 2020. While industry profits fell 32%, SDF’s earnings grew 147% from a year earlier to Rs102 million. The company has a culture of dynamism and innovation, investing in technology to improve processes, generate cost savings and also give its mostly rural-based clientele a transformative Nilantha Jayanetti digital experience. The finance company is unique Chief Executive, because its profits go to its parent, the Sarvodaya Sarvodaya Development Finance

86 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE FINANCE

Movement, which redistributes the money back to which is to provide for the economic rural communities through various social develop- needs and spiritual wellbeing of com- ment and poverty alleviation programmes. “This munities. When we say spiritual model is something the country needs at a broader wellbeing, we mean those values level to revive the economy and place it on a sus- that foster harmony. Today, there tainable growth trajectory,” Jayanetti says. are over 1,500 Sarvodaya societies across the country, each comprising Why do you think Sarvodaya Development Finance’s 200-500 people of diverse ethnicities model is what is required to revive the country’s and religions. Our mission is to create economy in a post-COVID environment? an alternative economic model that Jayanetti: The Sarvodaya Movement started in 1958 fosters development and harmony to support rural livelihoods and develop communities among all people. This sets us apart in this country underserved by the various sectors from the 38 other companies of the including banking industry. These communities had finance company industry. no access to finance, and financial literacy and disci- What we mean by an alternative pline were at low levels. Sarvodaya created a devel- economic model is providing under- opment finance arm in 1984 to solve the problems. served communities and small busi- In 1994, a World Bank study on access to finance nesses access to finance with spiritual and rural development acknowledged Sarvodaya’s values because they do not meet the significant impact. At the time, we were the largest requirements of conventional banks. lender to the underserved communities. By 2011, we We have 51 branches/customer ser- received a license to operate as a non-bank financial vice centres with all but one office in institutional and came to be called what we are Colombo. In some cases, we are the known as today, Sarvodaya Development Finance. only financial institution present in a Several decades later, we at SDF continue to particular area. Over 80% of our loans uphold the founding principles of this institution are disbursed outside the Western Province. Around 80% of Sarvodaya members and over 60% of our borrowers are women because gender equality is important to us. We also have an entrepreneurship programme for youth.

How does SDF develop rural commu- What we mean by an nities by assisting business to grow? Jayanetti: We focus on developing alternative economic cottage industries, farming, and other model is providing micro and small businesses. For underserved example, the village of Karandeniya is famous for growing Cinnamon. communities and Around 90% of the global cinnamon small businesses demand is supplied from Sri Lanka, access to finance yet this village has no finance com- with spiritual values pany apart from us. We are helping cinnamon cultivators by giving them because they access to credit to expand their busi- do not meet the nesses and gain access to export mar- requirements of kets. We help communities discover and develop comparative advantages conventional banks and foster trade among several com-

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We make sure and built a thriving export business borrowers use the to Thailand. loans to develop How has COVID-19 impacted your livelihoods or a clients and your business? Jayanetti: The economic impact of business. Our lending the pandemic hurt everyone. We for consumption is provided moratoriums to more than as low as 2% of the half of our loan customers but encour- total loan book. We aged them to continue servicing their loans because it is important not to do not get our clients lose that habit. Many of our borrow- into a debt trap by ers did service their loans during and selling loans or other after the lockdown period. We reported credit products a Rs8 million loss in the first quarter but bounced back strongly to report a profit of Rs21.5 million during the month of October — the highest profit we have ever made. This proves that a genuine approach to uplifting livelihoods and business benefits everyone. I passionately believe the country needs a model similar to Sarvodaya Development Finance. Sri Lanka can get out of this crisis quickly, fast track munities. We also create access to markets in major growth, and steer the economy on cities like Colombo, Kandy, and Jaffna. We have sustainable trajectory if we adopt a introduced suppliers to the Good Market and the bottom-up approach. Financial inter- supermarket chains of the country, while adding mediaries need to go rural, provide retail outlets in main economic centres. the credit that will improve financial We make sure borrowers use the loans to develop inclusion, and impart their knowledge livelihoods or a business. Our lending for consump- to improve financial literacy and disci- tion is as low as 2% of the total loan book. We do pline across underserved communities. not get our clients into a debt trap by selling loans We deployed an Asset and Liability or other credit products just so that we can achieve Management System that allows us our own business targets. Our target is to create to have a bird’s eye view on transac- sustainable businesses that grow. Before lending, tions and allows to make decisions on we ensure the business we lend to has a market to our feet. We are continuing to invest sell its good and services. Outcomes and objectives in digital channels so our customers are made clear to borrowers. We do not just lend can carry out their transactions, pay and ask for rentals each month. We provide our their bills and even gather weather clients with professional management training in and market information that is so collaboration with the Postgraduate Institute of critical to their rural-centric ventures. Management, SLIM, Institute of Packaging, and We are attempting to transform rural Export Development Board etc. For instance, we communities by introducing digital transformed a community of pepper farmers into a technology into their daily lives, and value-added export industry by giving them access I believe the impact will be a profound to credit and technical knowledge on processing one because Sarvodaya Development and trading across borders. We have a client who Finance is laying the foundation to started lemongrass cultivation with a Rs50,000 loan uplift the entire economy.

DECEMBER 2020 ECHELON.LK 89 SUSTAINABILITY

Dr Parakrama Dissanayake, Deputy Chairman and Managing Director of Aitken Spence PLC

Preethi Wimaladharma and Shyama Wimaladharma

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servicing Swiss, other European brands of watches, and timepieces that were popular in the colonial era. These WIMALADHARMA timepieces have a nostalgic value, and even today continue to be passed down from generation to generation AND SONS: BUILDING as a family heirloom. So, retail sales and servicing watches were the core business throughout the 50s, 60s and A TIMELESS LEGACY 70s, and this remains the same to this day. Shyama: Few people would appreciate this today, but back then, watches were not a mass-market product. It Founded in 1939, this family business is built on a was almost a luxury to own a watch, and most of the passion for watches that no challenge can sour, not even a global pandemic brands were either Swiss-made or came of places like Germany, and were built to last for generations. In the 60s and 70s, we had a closed economy so watch imports were banned. We could not even get the spare parts. Peo- ple either inherited their watches or bought them when they travelled overseas. So Wimaladharma and Sons started assembling clocks and radios from the names of Rinca and Nation, and established itself as a reliable partner to ensure these timepieces are taken care of and rom all the cliched quotes about serviced so that they can be passed on to the next gen- time—like ‘Time waits for no one’ or eration. ‘Time is money’—Leo Tolstoy’s ‘The two most powerful warriors are pa- Preethi: The big break came in 1977 when the economy tience and time’ best describes how opened up. Around this time, I was already involved in Wimaladharma and Sons Pvt Ltd, a my father’s business, and later my wife sacrificed her le- F family business, is building its legacy. gal profession and joined me. Together we ran the oper- The company is the authorised retail- ations and grew the business. It was not easy. We slowly er for over 30 of the top global watch opened branches and expanded our dealer network, but brands from Swiss legacies like Rado, Longines, Tis- all this took several years to do. The economy opening sot, Roamer, and ranging to other Swiss brands like up suddenly made watches more affordable and it was Swiss Military, Continental, and Aviator along with slowly becoming a mass-market device. many other designer and ever-trusted Japanese brands. Founded a decade before Sri Lanka ended Shyama: We had to overcome several challenges along the British occupation, the second generation of the way. The scariest was the civil unrest in the 70’s and this family business, Preethi Wimaladharma and his late 80s caused the youth insurgency. We can still recall wife, Shyama, together with the third generation, one period where we were constantly pressurised and are gearing for a period of growth. warned for constant closure and opening of shops when Here, Preethi and Shyama, and their son Geshan, the riots were at its peak. It was a harrowing period, but talk about the company’s formative years, the im- we focused on the business because we wanted it to pact of COVID-19 and the future outlook. grow and continue to serve our customers. Another chal- Can you tell us about the company's lenge we had was from the open economy itself. While it helped us to increase our brand offering up to about 10 founding and its journey thus far? Japanese brands and clocks, cheap Chinese imports were Preethi: My father, Sirisena Wimaladhar- flooding the market too, and these could be discarded af- ma, started doing business in 1939 as a trader of ter several months. Our brands had value for money, and timepieces, clocks, and radios. He went around after-sales service was exceptional having the expertise the country and formed connections with dealers, and skills servicing top European brands. This helped us especially in Kandy, and built a loyal network for to maintain our reputation and also expand the business. the business. Soon, he established a reputation for We opened a service centre in Colombo, and by 2001 we

DECEMBER 2020 ECHELON.LK 91 FAMILY BUSINESS

to 35 today. New ideas that the youth brings help us innovate and kept the company going through the COV- ID-19 pandemic. Today we have number of experience centres in and around Colombo which we are planning to expand in the near future. Our next stage of growth will come from the luxury watch market, which is at the nascent, but there is tremendous growth opportunity as incomes, lifestyles and aspirations improve. We are excited about this, and I know every watch lover in this country will be excited too.

Will digital technology ever replace watches? Geshan: Wrist watches would not die in the near future. People wear watches as an ac- cessory that can be worn any day formally or infor- mally. There is a growing appreciation for the sophistication of the movements, the precision, automatic and self-wind functions in watches. As income and lifestyles improve, people tend to aspire to move up to higher-end brands. For functionalities sake, people still prefer quartz watches, smartwatches and/or just using Geshan Wimaladharma their mobile phones to know the time. However, this does not mean watches are becoming unpopular, rath- had expanded our islandwide dealership network to er there is growing interest worldwide. about 50 outlets. Also, major credit should be giv- An automatic timepiece is something to own, but en to Geshan and Ramesha for working hard with most people start with an entry-level watch. We give their teams. While Ramesha looks after the smooth- them a chance to explore other brands which is why ness of the process of our service by doing the hard we have a wide choice. As a company, we also start- yards, Geshan brings innovation and new aspects ed with Japanese brands, then moved to designer which gives us the edge and keeps us a step ahead brands and later to higher-end brands. We would like at all times. our customers to aspire to go through the same evolution. Every one of us at Wimaladharma and Sons is a Preethi: We worked hard to grow the business and watch lover, we are passionate about watches and this were able to educate our children in Sri Lanka and is what connects us to our customers who share that overseas with freedom to choose their paths. Both same passion and appreciation. my daughter and son had completed university and had the opportunity of settling down without re- What can you tell us about the market turning to Sri Lanka. But like us, they have a great for watches in Sri Lanka, and the future passion and interest in watches. Around 2009, the outlook? 30-year conflict ended, and the government re- Geshan: Before talking about the future out- moved import taxes on timepieces, and that pre- look I would like to note how the 2nd generation of this sentted a huge opportunity for us. We could now business—my parents’—held on to this business with import those time-honoured European brands and an attitude of never giving up. For what I have seen, it designer watches. However, the market was not was then that the hardest challenges were faced, with ready for these because the Japanese brands still the death of founder, Sirisena Wimaladharma during held dominance here. While people were aware of their youth. They managed to hold on and overcome some of these brands, we also had to inform and in- many challenges and kept their heads high though the fluence the market. Involvement of our children was harder 70’s to 90’s period, where many good business- instrumental in building our brand portfolio from 10 es were forced to close down. In the future, we see a lot

92 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

more room to grow the market — in my view, we are only getting started. Interest is just picking up for designer watches, but as income and aspirations improve, there will be a shift to more legacy brands and the luxury end too. We don’t see a need to get into other areas as the business grows, we need to focus on what we do well. That’s where the growth will come because watches are an inspirational product and will never go out of use, at least not in the near future. Most people use their phones to tell time, but they still wear a watch because it means something much more to them than a mere device. It’s a symbol, not necessarily a status symbol, but a callout to their growing appreciation of beautiful craftsmanship and the complexity of the movement that gives a watch its functionality, from digital watches to automatic watches with tachymeters and chronographs.

The lockdowns have impacted Ramesha Wimaladharma customer footfall at our stores, but our online retail with for outdoor activities. But all this can change depending innovation and different options on your personal preference and your personality as there is no rule in choosing your style. We try to cater to has grown over 400% over the all these needs so we have a collection of accessories that past months. Technology has allow people to change straps to suit each occasion. But been a great enabler people now tend to have more than one watch. How has COVID-19 impacted the business? Geshan: The global pandemic has taught us many important lessons: One is to focus on We will invest in showrooms and experience cen- doing what we do best, the way that suits tres so we can give watch lovers not only a choice, the situation. The lockdowns have impacted customer but an experience of each brand. It is not about sell- footfall at our stores, but our online retail with innova- ing a watch: we always encourage clients to buy a tion and different options has grown over 400% over watch that sits well on their wrists. That should be the past months. Technology has been a great enabler. the primary factor they need to consider, and we al- We carry out marketing campaigns on various new plat- ways encourage them to do so. We tell them: do not forms and continue to test latest trends. Our online store try to impress others, but first be comfortable and continues to generate encouraging volumes. We built an love your watch. islandwide delivery network and introduced same-day People are also becoming more aware of what delivery. Most of our online clients are based outside the watch to wear for each occasion. For instance, you Western Province which is very encouraging. We hope need a simple watch with a leather strap for formal to bring innovation and excitement to play in future to wear, you can have a silver bracelet for office wear, keep providing our customers a unique and a reliable ex- and maybe a hardy watch on a rubber or fabric band perience with Wimaladharma & Sons.

DECEMBER 2020 ECHELON.LK 93 BANKING

How Nations Trust Bank re-adjusted its strategy before the pandemic hit COVID-19 and the lockdowns took everyone by surprise, but this listed bank found it easier than most to adapt.

Priyantha Talwatte received his appointment of CEO of Nations’s Trust Bank just weeks after the country’s first lockdown. He eased into his role primarily because of an organization-wide transition that started in 2019. From realigning teams to recalibrating strategy to digitalisation, the bank emerged stronger than ever before.

What was the impact of COVID-19 on Nations Trust’s operations and performance? The 2019 Easter attacks compelled us to re-look at our strategic plan. The credit market had dete- riorated, and we had to review our organisational and operational structures, rationalise costs, and identify strategies for growth. So, unwittingly, we had prepared the bank for the challenges when the pandemic hit. At the end of 2019, we monitored the coronavirus outbreak and its global spread, forecasting various outcomes. Our economy did well during the first few months of 2020 — October 2019 saw

94 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

How is Nations Trust Bank containing risks? We took measures early on to meet the expected economic crunch, although, at the time (and even now), no one has a clear idea about the pandemic’s full impact. We mobilised deposits, and, as a result, built excess deposit liabilities which benefited us. Now we have excess liquidity in our reserves. With the debt moratoriums, the bank disbursed more than Rs1.8 billion in working capital loans to small businesses under the Central Bank’s laudable refinance scheme. NTB had an allocation of Rs1.6 billion for disbursement, but we worked hard to ensure as many as possible received the benefit. Our strategy now Although credit growth had halted, and tightening margins includes establishing impacted the bank’s financial performance, our strategy shift was the corporate and helpful. During the first nine months of 2020, topline revenue trade finance pillars declined 11% from a year earlier to Rs31 billion, while operating for more balanced profits declined a marginal 3% to Rs5.9 billion. After-tax prof- growth. its increased by 22% to Rs3.1 billion because of some tax cuts announced by the government.

How has NTB’s brand positioning changed over the years? Several years ago, NTB was mostly in retail and SME banking. economic activity pick up amidst some The bank grew its presence outside the Western Province and stability after the Presidential election. actively pursued an SME loan book expansion. Previously, the But around February and March, tourism bank only focused on the Western Province, where most of the felt the strains of global travel restrictions. wealth and business activity concentrated. Our strategy now Then Sri Lanka went into an unexpected includes establishing the corporate and trade finance pillars for lockdown for nearly two months. By then, more balanced growth. we had already adjusted our organisa- Retail banking will continue to be a growth catalyst. We have tional, process and cost structures, and a network of 97 branches, optimal for business growth without optimised our supply and value chains. the need to invest in expansion. These branches cover the top 100 Our digitalisation drive hit a critical cities and townships in the country. We have the largest market mass. Over 80% of our banking trans- share for credit cards at 22%, which is an enviable position — it actions are digital, so there was no real includes an extensive merchant network built over two dec- interruption to banking. All our customer ades. We enjoy the synergies of being a part of the John Keells contact points remained open under strin- Holdings group and were one of the first banks to venture into gent health and safety protocols, operating supermarket banking. 24x7 services throughout the period. We Revenue and profitability have more than doubled over the looked at global best practices around last two years in corporate banking. We’re helping our corporate health, safety, and crisis management to clients address cash flow problems and launched the Nations ensure our customers had uninterrupted Direct Commercial Payments, a cash management solution. access to banking services. The bank is also pursuing opportunities in offshore structured We have a sizable client-base that’s financing to help local corporates expand overseas. It will unlock global and on the move, so we reached opportunities to cross-sell our suite of personal and digital bank- out to them to ask how we could help. ing products and services. Many of them were overseas or in tran- During the 2019/20 financial year, our customer base for e-wallet sit, and we did all we could to facilitate and digital fund transfer platform, FriMi, nearly doubled. And their return and support their fund trans- monthly transactions values reached Rs4 billion, while its mer- fers. We acquired essential groceries and chant base increased to 3,500. FriMi will revolutionise Sri Lanka’s delivered them to customers who could payment landscape, allowing fund transfers and purchases via a place their orders online. We also started mobile number or QR code. We have combined online banking, door-to-door cash delivery services and mobile payments and e-wallets into a single platform. FriMi launched mobile ATMs. These placed us accounts for a significant market share in Sri Lanka’s national in a strong position to meet the COVID- online transactions platform, JustPay. We will continue to innovate 19 challenges head-on with confidence. and be a defining force in Sri Lanka’s payments ecosystem.

DECEMBER 2020 ECHELON.LK 95 INSURANCE

ALLIANZ INSURANCE: GEARING FOR GROWTH

Despite the unprecedented challenges caused by COVID-19, this global insurance company is engineering steady growth and unlocking opportunities in the Sri Lankan market

It’s been a challenging 2020 with COVID- 19 shaking up the business landscape globally. The disruption was unavoidable, but smart organizations soon learned to navigate the challenges, realign strategy, and uncover opportunities in the chaos. Gany Subramaniam, Chief Executive Officer of Allianz Insurance, talks about how the company is realigning for growth in a post- COVID environment, outlook for 2021, and ongoing innovations and initiatives around gender equality and inclusivity at the workplace.

GANY SUBRAMANIAM, CHIEF EXECUTIVE OFFICER OF How is Allianz Insurance approaching the year ALLIANZ INSURANCE SRI LANKA ahead and what does it mean to you to reset for a post-COVID new normal? Subramaniam: 2020 has been a challenging year for all industries The current fall in disposable income has put pres- and markets. However, we have weathered many storms throughout sure on consumer and business expenditure in the our 130-year history at Allianz. Despite the current global business short term. While this might persist through the first climate, we have continued to grow stronger and become more half of 2021, economic activity is likely to pick up in relevant to people’s lives, emerging as the world’s Number 1 insur- the second half of the year. The pandemic, however, ance brand in the recent Interbrand Best Global Brands rankings. has led to a greater emphasis on health and protection. As we continue to evolve and thrive in this new normal, we remain This change in behavior augurs well for the insurance committed to serving more than 100 million retail and corporate sector and we are fully geared to support our custom- customers in over 70 countries, helping secure people’s lives, and ers through this pandemic and beyond. All in all, we giving courage to our customers for what’s ahead. are cautiously optimistic about 2021.

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How are you resetting strategies to grow the business in Sri Lanka? WE REMAIN COMMITTED Subramaniam: A low penetration level in insurance translates TO SERVING MORE THAN into a great opportunity for all insurers and adds to the appeal 100 MILLION RETAIL AND of the market. This holds true for Sri Lanka as well and we see CORPORATE CUSTOMERS immense potential for market growth. While this remains a key focus area, in line with your theme of the “Great Reset”, IN OVER 70 COUNTRIES we too will be working on continuously realigning ourselves with evolving market conditions. Insurance has relied largely on face-to-face interactions, How is digital technology shaping the future however, in this COVID era, certain segments are becoming of Allianz Insurance? more open to online engagements. As insurers, we need to have Subramaniam: Transforming our organization simple, easy to understand products to cater to their demand. to become simple, digital, and scalable is one of Focusing on what really matters and keeping things simple, our strategic objectives. Digital for us means new we are working on reducing the number and complexity of our business models, harmonized assets, automa- products and processes and streamlining our organization. The tion, and state-of-the-art data analytics. It means Allianz Customer Model is the driver of this transformation. enabling our people and freeing up their time In Sri Lanka, we are focusing on realigning our operations for innovation and customer service. Our digital and service delivery models to provide simplified, digital-led strategy focuses on driving customer centricity, solutions to our customers. We are also rolling out hybrid work simplification, and true transformation. models for all our teams and are constantly optimizing them to In Sri Lanka, we seek to deliver a truly digital, ensure minimum disruption of services in the face of possible end to end insurance experience to our custom- lockdowns and movement restrictions. ers, unlike anything this market has seen before. This would significantly empower them, increase What changes are you making to the work environment to meaningful engagement, make purchasing a pol- ensure that employee aspirations are fulfilled, and customers icy even simpler, and reduce waiting times. get the best service and care? Subramaniam: Our team members are our principal driving How is Allianz Insurance taking on gender force. We place great emphasis on empowering them with the equality and inclusivity, in the workplace? right tools, environment, and support structures to help them Subramaniam: At Allianz, we believe in a diverse realize their dreams and aspirations. and inclusive workforce. Employing people from Our continuous engagement and ongoing employee surveys different backgrounds and making them feel they provide us with constant feedback which allows us to identify belong is a major driving force behind our success. any gaps and align our engagement and development efforts Hence, we focus on ensuring that we identify the more closely with their needs. “most suitable candidate” for every role, irrespec- In the wake of the COVID-19 global pandemic, we have had tive of their gender, age, ethnicity, etc. to rapidly adapt to the new normal and transform the way We have set ourselves global targets around they operate. This included the introduction of flexible work gender balance and seek to have 25% of our arrangements and other programs to protect the health and Management Boards and 40% of our overall tal- safety of our teams and help them gain a better work-life balance. ent pool comprise of women, globally, by the In Sri Lanka, we continue to ensure that our team members end of 2021. receive all assistance to help them through these challenging Our Global Inclusion Council ensures the times. We have also stepped up our efforts around promoting implementation of a diversity strategy in all the teams’ mental health and wellbeing in recent times. Our Allianz entities. It is chaired by a member of dedicated helplines support team members with getting over the Allianz SE board of directors and has been their fears and anxieties. in place since 2007. Our voluntary, employee-led Despite the pandemic, 1,103 team members from Sri Lanka Employee Resource Groups (ERGs) also work took part in this year’s Allianz World Run and covered a dis- towards fostering a diverse, inclusive workplace tance of 121,564km to raise funds for critical projects of SOS aligned with organizational mission, values, goals, Children's Villages. business practices, and objectives.

DECEMBER 2020 ECHELON.LK 97 EDUCATION

ACCA: OPENING A WORLD OF OPPORTUNITIES The two-in-one qualification is designed for aspiring agents of change to make a world of a difference, even in the midst of a global pandemic

What will the new normal look like, and how will businesses deal with a post-pandemic new normal? Ranasinghe: The one takeaway from this crisis is the need to build resilient and sustainable organisations, and innovation will be key to do this. Conventional business models and mindsets will have to change because consumer behaviour is shifting already: COVID-19 and the economic hardships caused by it have forced people to make sometimes drastic lifestyle changes. For example, online retail was slowly gaining traction, but the lockdowns forced many consumers to purchase goods and services online, and e-commerce surged. More people are now consulting their doctors and buying prescription medicines online. This trend will continue and only those companies that can make their products and services more relevant and easily accessible will be the ones that will thrive in a post-COVID environment. This is why innovation is so important. Education is another area that will have to innovate. Before the pandemic, Nilusha Ranasinghe most students and teachers could not Head of ACCA imagine that academic courses could be Sri Lanka

98 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

online. Now, online learning, webinars, and teaching management platforms are being used. The system of learning by rote which prevented students from thinking outside the box will have to go. We need a more dynamic approach to education which ACCA LAUNCHED COVID is now forcing us to consider. This AN ONLINE is where you start to build a resilient and COVID HUB WITH innovative economy, by changing mindsets starting with our children. CURATED CONTENT FROM RESOURCES How is ACCA giving students the skills AROUND THE and tools they need to succeed in a post- WORLD TO COVID world? HELP ACCA Ranasinghe: ACCA’s key stakeholders are MEMBERS AND students, affiliates, and members. For ACCA ORGANISATIONS Members, the qualification opens doors DEAL WITH THE to satisfying careers doing strategic work PANDEMIC’S all over the world. For employers, ACCA Members embodies the ideal strategic IMPACT AND professional they need to grow their THINK ABOUT THE businesses. This appeal and reputation RECOVERY. of ACCA as a professional body did not change even as the pandemic spread but we realised there was an opportunity to step up and lead the way. During the lockdown stages of the pandemic, we made it a ACCA qualifications deliver cross- priority to engage students via emails or mobile texts and advised sector accounting and finance knowledge, all our training partners to do the same. We collaborated with our also the skills, professional development global teams to ensure we had e-learning platforms so that ACCA and ethical values needed to transform students can continue to learn and complete their course work businesses from within. While our students and complete their exams and progress through the qualification. get tested for their technical competencies, We already had the online exam platform, so it was not something ACCA designed the qualification to develop new. The digital quotient is an important part of the qualification a holistic professional, someone who has and so we give our students hands-on experience with platforms emotional intelligence, strong ethical like this so that they are ready for the modern workplace. values, creative and visionary. For ACCA Members, we have the annual continuous We build their experience through the professional development programme which allows Members training process and lifelong development to refresh themselves, which is a mandatory requirement. programme and give them exposure to how ACCA launched an online COVID Hub with curated content digital technology is shaping the future of from resources around the world to help ACCA Members and business. All this is necessary for a finance organisations deal with the pandemic’s impact and think about professional to be effective in today’s world. the recovery. We also conducted over 50 online webinars which The ACCA qualification imparts everything initially focused on dealing with the negative impacts from the that the professional accountant needs pandemics but later we progressed to forward-looking themes to know from a technical point of view, such as what the new normal will look like, emerging business and it also has the unique option to study opportunities and sustainable growth. local tax systems so that our members can get deeply involved in an organisation’s How can ACCA Members help their organization at this time? strategic decision making and become an Ranasinghe: ACCA Members are naturally inclined to be at the enabler of growth. forefront of helping businesses rest course. This is because

DECEMBER 2020 ECHELON.LK 99 EDUCATION

ACCA For a young person who is contemplating higher education CONSTANTLY at this time, why do you think accounting is an exciting MONITORS profession that they can consider right now? GLOBAL Ranasinghe: The problems businesses world over have to solve DEVELOPMENTS are becoming complex, and this was before COVID-19. Economies AND UPDATES are trending towards more inclusivity and regulation. Digital THE SYLLABUS technology’s rapid upheavals are constantly shifting and shaping TO REFLECT the way consumers behave. Traditional business models are THE CHANGING either extinct or evolving to something entirely different. Some EXPECTATIONS industries will lose relevance while others emerge stronger. OF EMPLOYERS. Cybercrime is an ever-looming threat. Gender equality, inclusivity, and the environment are priorities. We also now have this pandemic and its aftermath to deal with. Of all the professions you can think of, accounting professionals are probably the only ones who can unravel all this complexity and build safeguards or drive changes where needed. ACCA constantly monitors global developments and updates the syllabus to reflect the changing expectations of employers. Syllabus changes do not happen once every few years like most other professional bodies. ACCA updates the syllabus yearly, or even bi-annually or quarterly depending on the urgency to so. We conduct global surveys of ACCA Members around the world, employers, and other important stakeholders to ensure that we remain relevant all times in a fast-changing world. I believe a young person should choose ACCA and a finance professional qualification because you can discover a world of opportunity and make a world of a difference. You will get exposed to some of the most interesting goals and be a part of the solution to some of the significant problems anywhere in the ACCA trains them to see things critically world and become the most sought after financial professional and strategically and equips them with in the process. the necessary skills and tools to drive You also get to join a work network of more than 750,000 transformative changes within the members and students across 179 countries, and that is where organisations they work for ethically and responsibly. Their skills and expertise your global footprint comes in. You can stand out to the best will be more relevant in a post-COVID employers because they know that an ACCA professional has environment where businesses will have an aptitude for strategic thinking, has tested technical skill, and to abandon conventional practices, reset possess professional values to drive any organisation forward, strategies, and reimagine their futures. especially in a time like this. Analytical skills, communication, Parents need not worry about sending their kids overseas for commercial awareness, innovation, ethics, a university education when they can do it from here. Not only is personal effectiveness, professionalism, ACCA a reputable qualification globally, it is the qualification of and healthy scepticism are qualities we choice for many global businesses, but ACCA also offers Degree try to foster among our students and on Applied Accounting from Oxford Brookes University. embedded in the qualification itself so that employers get a wholistic professional. Ours is a unique value proposition, we offer a Degree from a ACCA Members will be the first to adapt reputed university, and global professional qualification in just to change, and shift gear fast, and will be two and a half years, without doubling the workload, where ideal to lead strategy resets for a business online learning and examinations allow students to progress at to succeed post-COVID. their own pace.

100 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

THE PANDEMICONOMIC IMPACTT ACCA Members weigh in on COVID-19 and way forward

While it will take time to find a A digital push in vaccine, and despite the public sector widespread uncertainty Business leaders will complement the fiscal In tourism, no country word over about the global must focus on and monetary stimulus can recover on its economy, the expectation rapidly innovating around measures ensuring that the own. No company in the is" that this pandemic is new needs and be ready economy is better placed tourism sector can likewise not going to be as much for a faster recovery than to" recover. It will improve engineer a recovery on its long-lasting compared to expected – this will develop efficiency, transparency own. Over the past 10 years, prolonged recessions in "a company’s ability to adapt and is critical to improving "our tourism campaigns have the past. Banks will have to to a situation, to pivot, business confidence.” changed several times with take calculated risks to kick to think creatively and each new government. (Post- ACCA Member start the economy so that connect with employees at COVID) we need to develop Suren Rajakarier businesses can survive and a deeper level to enhance Partner and Head of a campaign that can deliver keep people employed." engagement and build Audit at KPMG Sri sustainable results over a resilience.” Lanka long period." ACCA Member Nandika Buddhipala, ACCA Member ACCA Member Rathnakala CFO at Commercial Bank of Adrian Perera Ceylon Plc Kumaragurunathan Group CEO of Sascon Associate Director, Holdings Investment Research at Acuity Knowledge Partners

A full economic recovery could take two years and not before We see our colleagues we have a COVID-19 vaccine. in the tech industry Survival is going to be Private healthcare roll out innovative everyone’s priority which is facing many additional services. These Consumers are is" why SMEs have to be at challenges despite being include mobile apps which the heart of any strategy an essential service. unlikely to chase help the government to revive the economy However, there’s plenty of fashion and make feel-good to" monitor and contain and then grow. Therefore, opportunities if healthcare purchases. The functionality pandemic risks and remote the government needs to "service providers can only of clothing will be their consultation with doctors. devote additional resources break out of traditional main priority. This is why Many retail firms are it" makes sense (for apparel to ensure the relief business models. Limiting now taking e-commerce measures are deployed online services to video manufacturers to suspend seriously and we provide effectively, if not such doctor consultancies and costly R&D exercises and them with the necessary schemes will only bring drug delivery will not be high-margin innovative technological platforms." wear because the volume disappointment and despair enough. Private hospitals will to the already broken SME have to innovate and extend ACCA Member and returns will just not be Jehan Perinpanayagam sector." online services to other enough.” CEO at Infomate (a tech com- areas like healthy living and ACCA Member pany in the John Keells Group) ACCA Member preventive healthcare." Mahesh Semage Channa de Silva Manager for Strategy at MAS Chairman of Sarvodaya ACCA Member Capital Pvt Ltd Development Finance Prasenna Balachandran (ACCA Members' quotes from Chief Risk and Control The Pandemiconomic Impact, an Officer at Hemas Holdings Plc e-booklet published by ACCA Sri Lanka in June 2020)

DECEMBER 2020 ECHELON.LK 101 TECH

HOW TO BUILD A GLOBAL STARTUP

Think global, and solve complex problems: the ingredients that propelled Rootcode Labs into the global arena

How did you conceive Rootcode Labs and grow the business into one that serves a global client base? Mahalingam: I developed an AI-based karaoke app when I Alagan Mahalingam is the was still a tech student, which was probably the inception of Rootcode Labs and my journey as an entrepreneur. The founder of Rootcode Labs, a app was a success and nominated for the Asia Pacific five-year-old company that ICT awards and was later acquired by a UK-based com- engineers digital and AI- pany. This helped me invest in building my company that focuses on product engineering or building software for based products for businesses other customers. across Europe and the US. I realised early that a successful tech company has to be outward-looking to build a scalable business, and to The company has built do this, we had to be prepared to solve complex problems tech solutions for over 400 that more advanced economies were contending with. companies across 27 countries Essentially, Rootcode Labs helps companies, from multinational enterprises to startups, build better tech-based and used by over 78 million products and services. Our clients are almost entirely based people. In 2019, Rootcode in Europe and North America, served by a permanent team Labs opened its first office in of 25 people in Sri Lanka. In 2019, we opened our first office in Europe and rebranded the company as RootCode Labs. Europe and more than doubled Founding a startup is never easy but you need to persist, the company's revenue that try new things, test, fail, and reset fast until you make year. Even COVID-19 led to one a breakthrough. I did just that and realised phenomenal growth. Our product engineering revenue grew 35% of many major breakthroughs! year-on-year in 2016, 48% in 2017, and increased to 55% in Mahalingam tells us how he did 2018. We saw a 160% surge in revenue with the opening of our European office: it was a transformative year for it and discusses his expansion us where we more than doubled the size of the company plans amidst a crisis. in terms of revenue.

102 ECHELON.LK DECEMBER 2020 THE GREAT RESET SPECIAL FEATURE

Can you tell us what Rootcode Labs does? external devices and sensors which elevate the price tags. Also, most Mahalingam: We help companies build digital devices in the market can only be used with a specific product or products from mobile apps to complex web brand and struggle to gain mass-scale adoption. applications and AI products for clients across After extensive research into the psychology of gamers, we set out 30 industries from consumer apps, banking, to to build an AI-based motion-controller for personal computers which healthcare and telecommunications, and more. required only a computer's camera. Similar to Tesla’s self-driving One of our biggest clients is an analytics firm AI which uses cameras instead of LIDAR sensors, we tracked body in the US for whom we developed a complete movements of users with high precision and map even the most Business Analytics Framework that competes nuanced of movements into virtual key-pressed commands so that with big names such as Microsoft Power BI and users can play the game with natural body movements. Tableau. Rootcode Labs built a digital charging net- How has the global pandemic impacted the business, and how do work for one of the largest energy firms in you plan to grow the business post-COVID? Portugal. We also developed an intelligent credit Mahalingam: At Rootcode Labs, we stayed true to ourselves and assessment mechanism for an exciting fintech persevered despite the uncertainties during the lockdown earlier in startup based in the US. In Dubai, we are working the year. We never wavered but worked harder on a project that will revolutionise healthcare, to achieve our goals. and in Thailand, Rootcode Labs is working with What drives us is the hunger to solve complex a leading geoinformatics research organisation problems and this helped us reach a major break- to build next-generation remote sensing and through during the first wave of the COVID-19 GIS applications. I realised pandemic when we developed and launched a While product engineering is our core area of platform called Expert Republic, where profession- business, we do have a suite of research solutions early that a als from various fields of expertise can be reached and intellectual property which will eventually successful tech for consultation and get paid for their work. become a significant revenue generator going company has We made the development of Expert Republic forward. For instance, we developed an AI-based a priority often working around the clock. We resume parser called Aphelia which can extract to be outward- presented this at the Global Hack 2020, spon- unstructured data from resumes and present in looking to build sored by the European Commission, which drew a more structured format. According to research, a scalable over 10,500 contestants. Expert Republic won the a job offer can attract several hundreds of appli- hackathon, and we got a lot of great people from cants, and finding the right candidate can be business the government of Estonia and the Estonian tech a time-consuming challenge that requires the ecosystem supporting our mission and extending attention of several people. support. Also, most products in the market use rule- That was a transformative break, but it only based techniques to extract and identify par- came because we kept pushing our boundaries. Now, some of the ticular words, but these are not flexible enough largest corporations in Europe and the US are Expert Republic users. to cover all possible resume formats. There was We had plans to expand our global presence which is delayed due also a data security requirement we had to solve to COVID. For instance, we will soon open an office in Silicon Valley because CVs contain sensitive personal infor- so we can be closer to our clients and be at the heart of global inno- mation which must be protected. Not only did vation. We do have consultants working for us in Silicon Valley and we solve these problems, but we also developed other places across the US and Europe, but now we want to build a Aphelia to be compatible and integratable with permanent global presence in these markets. Right now, Rootcode most HRM systems. It can also categorise and Labs comprises 25 people in the permanent cadre which we will grow rank prospective candidates and significantly to about 500 over the next two years. speeds up the recruitment process. We will also continue to invest in our businesses having recently Morpheus is another exciting AI-based solu- rolled out a separate unit called RootCode AI that specialises in cut- tion that we developed, enabling gamers to con- ting edge Artificial Intelligence research and development, helping trol first-person games through body real-time companies build AI-based products and solutions. We plan to launch physical actions. This concept, at its core, is not several business verticals going forward which will expand Rootcode’s entirely new, but most products require many product and solutions offerings considerably.

DECEMBER 2020 ECHELON.LK 103 STRATEGY

DOUBLETREE BY HILTON WEERAWILA RAJAWARNA RESORT: AN UNSHAKABLE BELIEF IN TOURISM’S POTENTIAL renowned international hotel chain – Hilton under Despite the economic downturn, the nature resort ‘DoubleTree by Hilton’– the fastest-growing brand opened its doors to the public which is an upscale chain of over 600 resorts across 47 countries. This is Hilton’s third managed property in the country. You will find this resort in the heart of the idyllic Bird Sanctuary of Weerawila. It is located 25 minutes away from what promises to be Sri Lanka’s second midst an economic downturn, few businesses commercial hub emerging around a port, international have the vision to continue investing for the airport, and free trade zone at Hambantota. future. However, some businesses are riding the “There was an opportunity for an international crisis relatively unscathed, and they can do so brand presence, which was why we picked the loca- because they have built resilience into their core tion,” said Krishanta Damunupola, General Manager A and are managed by visionary leaders. DoubleTree at DoubleTree by Hilton Weerawila Rajawarna Resort. by Hilton Weerawila Rajawarna Resort is one such example. “We believe tough times never last and are firmly con- With tourism globally down on its knees because of travel fident that tourism will boom in the months to come, restrictions, lockdowns, and social distancing rules to contain the which is why we timed the opening of this resort.” spread of COVID-19, it is remarkable that a new hotel property Sri Lanka’s tourism industry generated over $4.3 would open its doors at this point with an investment of Rs5.2 billion in 2018 but has since suffered a setback from billion in a 78-room resort in southern Sri Lanka. The hotel is the 2019 Easter attacks and COVID-19. However, owned by KDU Adventures (Private) Ltd. and managed by the DoubleTree by Hilton Weerawila Rajawarna Resort

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remains certain that this is Sri Lanka’s most promising industry yet. The hotel will soon enter a second development phase, which will see the number of rooms increase by 62 for a total hotel inventory of 140 keys. The building includes guest rooms, meeting and event spaces, ballrooms, restau- Krishantha Damunupola, rants and bars, and other recreational facilities across General Manager, DoubleTree by Hilton Weerawila a sprawling kilometre. Tourism has the potential to become a $10 billion industry in Sri Lanka, which might transform the for- passionate about wellness, the property has curated a range of tunes of the country, provided the industry can cater offers from a 24-hour well-equipped fitness centre to a Yoga Terrace to the needs of a diverse group of visitors from busi- and a rooftop Wellness Spa. ness travellers, to adventure seekers and a growing For the MICE sector, the hotel has much to offer: the resort is number of people who look for unique experiences, ideal for that dream wedding or even for thoughtful corporate and care about responsible and sustainable tourism. events with over 10,000 square feet of meeting space. It exhibits DoubleTree by Hilton Weerawila Rajawarna Resort a 7,788 square feet Grand Ballroom which can accommodate 600 has all these diverse needs and expectations covered. guests in a banquet setting. The Grand Rajawarna ballroom and the The resort covers 10 acres of lakefront land with Weaver Meeting room is equipped with state-of-the-art audio-visual a breath-taking 360-degree view of not one, but two equipment, and floor-to-ceiling windows that overlook the Lake. lakes straddling the property. Nature lovers will appre- The hotel’s dining experience offers a blend of local and inter- ciate the resort’s proximity to three national parks at national experiences and settings that reflect the closeness of Yala, Udawalawe, and Bundala, while the hotel itself nature. It has restaurants named after some popular residents at sits in the Weerawila Tissa Sanctuary, home to over the bird sanctuary. For instance, Spoonbill is the all-day dining 400 species of resident and migratory birds. Some restaurant with a cosy tea lounge and an outdoor barbeque grill migratory birds winter here after a long flight from offers splendid views of the garden and Lake Weerawila. The their summer homes in the arctic regions. Tailor- Redshank rooftop restaurant specialises in fresh seafood from the made excursion packages give guests the best safari Kirinda and Hambantota fisheries harbours located 30 minutes experience with a touch of the DoubleTree spirit. away from the resort. Named after the nocturnal bird Nightjar, the For those who care deeply about the environment rooftop bar offers a panoramic view of the two lakes of Weerawila and make lifestyle choices around sustainability, and is perfect for stargazing! The Hornbill is the resort’s pool bar they will be happy to learn that the resort did not and lounge offering sunshine, birdsong, and the choicest bever- cut down any trees and they tried to blend in and ages at its swim-up bar. The 75-metre pool also features a kids’ preserve a tranquil environment for their wildlife pool and gazebos. neighbours. In fact, each afternoon you can see a The Turnstone, designed with stone and woodwork as befitting herd of wild buffalo cutting across boundaries of the its name, is the hotel’s main bar and lounge. With the two lakes as property to water at the lakeside. In-house facilities its backdrop, the Turnstone has a pool table, lounge area, thinker’s treat wastewater, including sewage, making it safe to bar, boardroom, and karaoke lounge. drink prior to release. The system carefully recycles “Given the present COVID-19 situation, we are offering local solid waste in partnership with local authorities and tourists attractive offers to make memories at DoubleTree by recycling plants. The resort even safely repurposes Hilton Weerawila Rajawarna Resort,” Damunupola said. The resort soap so that the environment remains clean. rolled out stringent health and safety protocols under the Hilton DoubleTree by Hilton Weerawila Rajawarna Resort CleanStay Program to help guests enjoy a clean and safe experi- is thoughtful about the growing number of mostly ence during their stay. young travellers who seek unique experiences and Paul Hutton, Vice President of Operations - South East Asia for understanding local cultures. Far from the hustle and Hilton, says the hotel chain is excited about the launch of its first bustle of city life (Colombo is a 3 hour drive on the DoubleTree by Hilton resort in Sri Lanka. “We are confident that expressway), the hotel straddled by the Weerawila DoubleTree by Hilton Weerawila Rajawarna Resort will be top of lakes is a perfect getaway for guests looking for that mind for those looking for an idyllic getaway together with the touch of Southern hospitality and warmth. For guests service delivery of a hotel brand that’s international”.

DECEMBER 2020 ECHELON.LK 105 HOUSING

HOW ONE LEGACY PROPERTY DEVELOPER IS INTENT ON RISING ABOVE ANY CHALLENGE Kelsey Homes aims to retain its title of being renowned for its gated housing developments

The Kelsey Homes’ legacy spans 35 years with over 200 completed projects and 2,000 happy homeowners under its belt — an impressive number, making them the country’s primary property developer. Formerly known as Keells Homes, the company came under new KELSEY DEVELOPMENTS PLC management in the ‘90s and rebranded to its current name. “We’ve been through a few changes in management over the years, but one thing that 35 years of Housing Excellence hasn’t changed is our commitment to quality and exceeding expectations of 200+ Projects our clients,” explains Lalinda Kalubowila, CEO of Kelsey Developments PLC. 2000+ Satisfied Customers Listed Real Estate Company on the “We work with the best engineers and architects in the industry to make sure Colombo Stock Exchange we meet our core value of delivering products of a high quality to our buyers.” A Janashakthi Group Company Right before the pandemic hit, the real estate market was gaining

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momentum, but when COVID-19 hit, campaigns, keeping the momentum going with our clients. We also used this downtime people decided they should pause to re-look at our strategies and identified where changes needed to take place.” further spending. “People were According to Lalinda, there are two determining factors which will shape the future of worried, but thanks to the quick real estate: government policies and bank interest rates. “These two will act as a positive response from the government and catalyst because it is clear, through their recent budget and policy considerations, that health authorities during the first the government is keen to push forward the housing sector,” he says. “Interest rates wave, the public regained confidence,” have dropped, encouraging people to take out loans for investing. So, it is a system says Lalinda. “Even those returning that works well, particularly for the middle-income sector. The current conditions will home were considering investing in probably show resilience in this sector because of the affordability factor compared to the property sector. But, when you do, the high-end apartment market.” you want to visit the site to understand how it is physically laid out. Potential buyers may invest their life savings and will not make the jump unless they see Interior Design the actual picture of the property. So, of the Living Room at Urban developers need to be a little patient Gateway Kottawa by and understand the dynamics.” Kelsey Homes Like most organisations, Kelsey Homes, too, faced its share of challenges during the pandemic, but that did not stop them. According to Lalinda, they challenged the challenges and went ahead with completing phase one of the new project, Central Park, Ja-Ela. “I don’t think many would’ve even considered something like this, but because the country opened up after the first lockdown, we went ahead. Within 30 days of launching, we sold out all 70 apartments in the 1st phase! Financially, Kelsey Homes is doing well — over the last six months, the company It was a remarkable achievement for has recorded 1.4 billion in reservations. Lalinda believes this success is due to some us. I believe we also did a service to the contributing factors. One, in particular, is the boldness in which they make decisions. This industry by showing other property is clear when they launched Central Park, Ja-Ela, right after the first lockdown and the developers that now is not the time sales they closed shortly after. Lalinda shares that they have changed the team, acquired to retreat into a shell. Instead, it is the new talent and invest continuously in sharpening skills and building professionalism. “It’s time to go to the market and capitalize all about reputation,” he converses. “Most of our clients are repeat buyers, so making sure on the situation.” our team is strong is important. In terms of building a reputation, we have not faltered. Through it all, what has been Plus, our switch from traditional media to the digital space has revolutionised how important (and continues to be) is we work, minimizing costs and increasing reach. Further, being backed by a company the wellbeing of their employees. like Janashakthi PLC has been a huge boon as Well before the authorities introduced we have access to their management system, work-from-home policies, Kelsey knowledge and financial resources.” Homes’ staff were already working Currently, Kelsey Homes has a few projects remotely. They rostered certain in development in Negombo, Wattala, Kottawa individuals to work in the office and and Ja-Ela. “Next year will prove exciting for us gave them private transport to ensure as we aim to put up two to three middle-sized they remained unexposed to health projects, as well as a world-class gated housing risks. “We made sure our functions as facility that will include 500-700 living spaces,” a company continued to take place and reveals Lalinda. “Over the last few decades, we certain aspects remained unaffected have established ourselves as the frontrunners to a certain extent,” shares Lalinda. for gated housing developers, and in the next “We invested in new CRM system, year, we aim to solidify that position, increase upgraded our website, introduced 3D our market share, and continue to provide Lalinda Kalubowila, CEO – Kelsey Developments PLC virtual tours and ran digital marketing excellent customer service.”

DECEMBER 2020 ECHELON.LK 107 The King of Kotte, Veera Parakramabahu VIII (1477–1496), had a network of canals constructed connecting outlying villages with Colombo and Negombo Lagoon so that produce could be more easily transported to the main seaport at Negombo.

In the 17th century the Portuguese constructed a canal from Hendala to Pamunugama.

The Dutch established the centre of their colony at Colombo.

Around the 18th century, the Dutch commenced the construction of a series of structures, dams and canals. This system, known as the Dutch Canal, formed a continuous line of waterways between ports and the remote sections of territory under the Dutch.

The British built a new Colombo- Negombo canal. The Hamilton Canal, as it became known, ran parallel and west of the old Dutch Canal, closer to the sea, from the mouth of the Kelani River at Hekitta to the southern edge of the Negombo Lagoon at Pamunugama.

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DUTCH TREAT? No one knew the arts of canal building, dykes, drainage and land reclamation like the Dutch

BY MARK HAGER

PAST

Colombo is a wetland in case you haven’t noticed. So is the Netherlands. When the Dutch made Colombo their colonial capital, it must have felt just a bit like home. They were at the height of their powers of course, when they took over here from those despised Papist Portuguese. They had just won a century-long war against Spain and Portugal for self-rule and freedom to follow their version of true religion. Their vast Calvinist fleets scoured the eastern Indian Ocean and came home laden with precious spices, to be bought by avid consumers at sky- high mark-ups. Revenues poured into the coffers of their East India Company and cycled out to the prim burghers who Colombo-Negombo canal, also known as the Hamilton owned Company shares. In a huge wave Canal was conceived by George of globalization, that first great multi- Atkinson, the Colonial Surveyor national enterprise exercised powers of General and supported by Gavin Hamilton, the Government war- and treaty-making, adjudication, Agent of Revenue and Com- imprisonment and coinage in lands merce, after whom it is named. where it held sway.

DECEMBER 2020 ECHELON.LK 109 So it was in Sri Lanka when the Dutch Golden Age reached these shores. Back in the homeland, massive engineering marvels were already well afoot, lac- ing arcs and grids of sea-linked canals through the great towns of Amsterdam, Delft, Leiden and the Hague. Here in Serendib, work-ethic Company eyes gazed round upon the slow-moving bayous and lazy lagoons where flat- lands met tides. Visions of cinnamon, cardamom, cloves, pepper and profits danced in their heads. In a trice they began to dig. They were not Sri Lanka’s first canal-builders. Ancient Ceylonese were themselves no hydraulic slouches, as many a tank and aqueduct could attest. Discussing his weeks-long voyage through the ‘gobbs’ (lagoons) of western Lanka, the ninth century Persian geog- rapher, Abu Zayd Balki, at least seems to hint at man-made links between them. With his capital at Kotte in the 1400s, King Vira Parakrama Bahu VIII built waterways designed mainly for delivering spices and precious stones to Negombo where they could be loaded on ships for far-flung destinations. Even the more hydraulically-challenged Portuguese managed to throw down something of a channel purportedly linking Negombo Lagoon with the Kelani River. They never managed to finish it. Gin Oya, loops north- through raiding or purchase from But no one knew the arts of canal ward of Negombo for several kilometers, raiders but by buying off the cred- building, dykes, drainage and land one of the natural itors in debt-bondage situations reclamation like the Dutch. They set watercourses Mr. and also during famines when Hamilton managed to to it with a fury and thereby created sufferers would sell themselves Colombo. Their canals were sturdier utilize to link the town with Puttalam. And or family members into slavery to and far more extensive than anything the Negombo fishing secure cash and food. Maybe they harbour, below it. before. Slaves brought by the Company thought this put their slavery on a from India and East Asia undoubtedly higher moral plane than the slave- laboured on the projects, though in what raid type. proportion to hired-labour Ceylonese Flat-bottomed boats called ‘paddas’ plied the canals. and Company employees is difficult to With roofs of coconut leaves (‘cadjan’), they were either say. The Company acquired its slaves not pushed along with poles against the bottom or pulled by

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it probably exploited pre-existing natural bayous in its layout. Thus did the Company implement its spicy vision of luxury and lucre. An objective secondary to transport might also have played a role. Rulers had long dreamed of growing plenitudes of rice in the great Muthurajawela marshes

Source: journeysandscorpions.com Source: between the Kelani and Negombo Lagoon. The problem was that tides would push brackish water through the system, leaving the soil too saline for paddy. Maybe fresh water from the Kelani in flood could pour through the canal and surrounding marsh so as to flush salt away? It didn’t work. Instead, twice-daily high tides now pushed brackish water through the canal itself, making the problem worse. Even the Dutch could make hydraulic miscal- culations, but they had their transport waterway anyhow. South from Colombo, the Company endeavored to link the Kelani and Kalu rivers with canals between the Kelani and Kotte Lake, from Kotte to Bolgoda Lake and from Bolgoda to the Kalu. It also sought to link the Kalu with the Bentota River even farther south. The main idea was to bring agricultural prod-

Source: dwikimedia.org Source: ucts from the interior to the Colombo metropolis. Major components of this huge undertaking can still be seen but men in harness who sang as they walked the tow paths neither the Bolgoda-Kalu nor the Kalu- alongside the banks. Though moving animals, cargo and Bentota links was ever quite completed. people around the burgeoning capital grew in importance, The Dutch had run out of time. Negombo and its harbor remained a key concern. The sea By and by the Dutch miracle had of cinnamon that was Colombo needed better access to exhausted itself, partly through an unaf- the real sea. From the Kelani somewhat east of its mouth, fordable naval war against the British the Company excavated a waterway through to Negombo during and in support of the American Lagoon, exploiting and improving on the forlorn Portuguese Revolution. British power, rising in the effort. It is easy to glimpse portions of this canal, prop- Indies even as it lost key American col- erly labelled ‘Dutch Canal,’ on the left while driving to the onies, eventually took Lanka to itself. airport on the expressway. Choked off with hyacinth and (Starting at 1500, you can tick off roughly non-navigable in that stretch, it nevertheless has some 150 years for the Portuguese, 150 for the pleasing patches of open water. Its course meandering, Dutch, 150 for the English.) The British

DECEMBER 2020 ECHELON.LK 111 takeover was friendly; by then, Britain and Holland shared an interest in keeping French revolutionary hands off Sri Lanka. Gavin Hamilton, Britain’s Agent of Revenue and Commerce, glanced with jaundiced eye at the Dutch canal from the Kelani to Negombo. He resolved that Britannia could and should do better. Starting from the river mouth near the sea west of Dutch Canal, he launched what is now known as ‘Hamilton Canal.’ (Confusingly, this is also often referred to as ‘Dutch Canal.’) While Dutch Canal wavers through the fen, Hamilton pro- ceeds in neat straight lines, punctuated here and there by tight angling turns. Hamilton’s impressive project extended beyond Negombo. He would continue his waterway all the way to Puttalam, exploiting pre-existing natural waterways as he went. (Hamilton might have appreciated that palindrome about Teddy Roosevelt: ‘A man, a plan, a canal—Panama!’) Among other things, that waterway would facilitate bringing salt from Puttalam Lagoon to Colombo. Hamilton’s canal saw several decades as a major commercial artery but it could not stop the march of progress. With the dawn of railways and then motor vehicles, the Canal became a magnificent antiquity transport-wise. It has been much the same of course with Colombo’s canals. The Hamilton Canal, as it became known, ran parallel and west of the old Dutch Canal, closer to the sea. A kilometer or so from launch along with photographer PRESENT Negombo, the walls end Aamina Nizar. We have come far and there’s a big bloom of down the main beach road to where From the north end of Negombo Lagoon, bougainvillea as the canal empties out into the Maha the grand hotels give way to resi- Hamilton Canal cuts north through Oya. And a so-called ‘com- dences, churches and such. The boat Negombo town for several kilometers. mon’ kingfisher. waits under a bridge spanning the At the busy southerly (Lagoon) end of Canal: no dock, no snack stand, no this stretch, brightly painted launches bathroom. Right here it feels well off the beaten track but line its banks, many of them owned it really isn’t quite. by local families offering boat tours. At We motor off down the canal between old unrestored the far end north of town, I hop onto a walls. Among down-in-the-mouth dwellings of cinder block

112 ECHELON.LK DECEMBER 2020 INNOVATE CANAL BUILD

bloom of bougainvillea as the canal empties out into the Maha Oya, a few hundred metres from its sandy sea mouth. There’s a boutique hotel right where the canal hits the oya and a high- rise is building where oya meets ocean. Breakers roll in beyond the river mouth. As we approach the beach, we see some of those Negombo-ish catamarans out sailing the sunlit swells. We cross to the oya’s north bank,

Source: medium.com Source: there to enter a further stretch of the Hamilton waterway. What a different world this is! No canal walls, lush vegetation right down to the water edges: we are in the Gin Oya, which loops generally northward for several kilometers, one of the natural watercourses Mr. Hamilton managed to utilize on his way toward Puttalam. It’s lovely here. The oya twists, turns, curls and splits into branches, some of them intriguingly narrow and overgrown, requiring a canoe to navigate. After a while we pass an opening out to the sea, with a beach that looks deserted and desolate. We see kingfish- ers aplenty—pied and white-throated, along with so-called ‘common’ king- fishers, which our guide assures us are quite rare! In the shallows where we can peer through a space in the mangroves to the muddy water’s edge, a purple and corrugated metal, children run or ride their bikes up heron pads softly, freezes, then swiftly to wave and ask for toffees. Speaking with the residents plunges her whole head into the water, later, we learn that they are Tamils from Jaffna and the coming up with a wiggly hand-size fish hill country who have been here for a couple of decades. in her lengthy beak. I’ve never seen so They seem to be internally displaced people. Perchance many water monitors in such a short they are Catholic come to Negombo for its churches but I span of time. Here’s a good-size one forget to ask. They work as domestics and as tuk drivers. We looking like she just ate, lumbering at pass under some footbridges and see painted motor boats the edge of the mangroves; here a baby and skiffs tied up everywhere against used car tires. A big perched for safety on a tree branch out yellow stuffed dinosaur lies on the bank, gazing skyward. over the water, higher than our heads; After a bit the houses get quite a bit grander. The canal there’s one napping, half hidden by walls here have been restored in what’s called ‘gabion’-- underbrush on a steep embankment; blocks of rocks held together by wire mesh. A kilometer this cheeky juvenile here is swimming or so from our start point, the walls end and there’s a big right up to check out our boat!

DECEMBER 2020 ECHELON.LK 113 We are not in the middle of nowhere. Power lines and various bridges span the water, some so low you feel like duck- ing. Appealing little hotels and eateries appear here and there. We see the tall chimneys of several tile factories, some of which have an abandoned feel about them. I hear a splash behind to our right and see that a gentlemen atop a cement stoop has just thrown his black lab into the water for a bath. A little further on we sidle near the bank to sidestep a decrepit fishing skein strung across the channel. We stop to feel and examine some soft and flexible mangrove shoots that can be harvested to make bottling cork. We pass under the main Negombo-Chilaw road and soon afterward arrive at our turn-back point: a 15-foot-high sluice gate blocking further navigation. It protects against downstream flooding from heavy upstream rain. It is curious to learn that travel from Negombo to Puttalam by inland waterway is impossible today: you could not do it even in a kayak. Just south of Marawila, Gin Oya wanders off to the east, never to resume its northerly trajectory. From there it is dry land or at best wet paddy Tourist boats gap’ in the Negombo-Puttalam for several kilometers northwards to the along the Dutch Canal waterway. Perhaps the canal was next navigable waters, back from the and mangroves never completed across that stretch beach at Hotel Club Palm Bay. You could at the muddy or perhaps the sea has encroached paddle some way north from there in waters edge. and swallowed the inland channel Annankalliya Lagoon but you would soon behind an eastwardly migrating hit another dead end of water. At that shoreline. point, you could drag the kayak across paddy for a couple hundred metres and plunk down in a short patch of walled FUTURE canal leading north to meet Karambalan Oya. Long story short: only from there With their role in transport gone, the canals merge in signif- could you proceed to Puttalam entirely icance back into what they drain and flow through. What by inland waterway, crossing Chilaw and the Company may have viewed as waste land we now begin Mundal Lagoons and otherwise thread- to understand as wetland. Much of that wetland is now city ing through stretches of both walled and of course, prone to disruptive flooding by its location and un-walled watercourses. Research so far climate. By channelling and accelerating runoff, the canals reveals no explanation for the ‘Marawila help alleviate inundation. Properly reconfigured, the canal

114 ECHELON.LK DECEMBER 2020 INNOVATE CANAL BUILD

imagine reversing this trend unless many more people start getting out to see it. The canals are pathways into it. The waterways of Rajagiriya and Kotte are especially nice to be out on. (I have paddled them by kayak, but not since seeing a 15 foot croc sunning itself on a Parliament Lake island.) Good news came during 2018: Colombo’s selec- tion as a world ‘wetland city,’ one of the first 18 cities to be so designated under an international treaty. The desig- nation entails responsibility to study and conserve the wetland. Dr. Priyanie Amerasinghe, with the International Water Management Institute, helped prepare the application. She is now working on a plan to form community committees that will monitor conditions on the canals and report on them via an app. She believes the canals can be promoted for ecotourism. Urban Colombo is not terribly rich in tourist attractions. Despite the opening of multiple arcades, it is hard to imagine Source: photoblog.com Source: Colombo as a shopping destination like Singapore and Kuala Lumpur any time soon. Meanwhile, though we hear of system could do even better in that regard. Authorities are using the canals very charmingly for working on it. But the unpaved remaining wetland merits commuter traffic, this may not be their careful consideration as well. viable future because the city is just Biologists concur that wetland is among the most fer- too tightly organized around motor tile habitat types on our planet. They highlight ‘ecosystem vehicles and roadways. So the most services’ such as the Colombo wetland provides. Rice is meaningful future for the canals may grown, fish are taken, buffalo are grazed, traditional med- be the wetland itself. If tourists may icines are gathered. Evaporation from surface water and not prolong their Colombo stopovers plant metabolism lifts heat into the sky, providing natural for shopping, maybe they would do air conditioning for ground dwellers. Spongy mud cleanses so for something more unique, akin water by absorbing pollutants. Lush vegetation metabolizes to our excursion through the Gin Oya. air pollutants, rendering them less toxic, as well as carbon Bringing ecotourism and other recre- dioxide, thereby mitigating climate change. Our wetland ation to the canals, through careful harbors many dozens of bird species and charismatic large planning and branding, could boost the animals: both mugger and saltwater crocodiles, Eurasian local economy while helping preserve otters no less, and endangered nocturnal fishing cats. our wetland habitat. That’s precisely The wetland is shrinking by more than one percent a what the Dutch are doing with their year due to infill and solid waste dumping. It is hard to homeland canals these days.

DECEMBER 2020 ECHELON.LK 115 ADVERTORIAL

UNION ASSURANCE PARTNERS WITH oDOC TO OFFER POLICYHOLDERS FREE ACCESS TO HEALTHCARE

Union Assurance partners with oDoc to cyholders can avail themselves to services to manage oDoc consultations and issue facilitate free access to healthcare for its from the convenience of their living rooms, prescriptions, making the doctor-patient policyholders across Sri Lanka in response ensuring around-the-clock access to med- interaction smoother than ever before. to the pandemic. The COVID-19 pandemic ical care. They can consult a doctor under has demonstrated the interconnected nature 3 minutes, receive a prescription and get of our world – and that no one is safe until medicine delivered to their doorstep. Phone everyone is safe. consultations take place just like physical With the spread of the virus creating consultations where age, allergies and medi- intermittent lockdowns and quarantine cal history are discussed followed by the curfews that restrict movement, Union consultation. Assurance and oDoc have partnered to offer The oDoc platform connects users with convenient access to leading telemedicine SLMC registered doctors and healthcare solutions, unlimited medical consultations professionals for video consultation, audio for up to four family members, digital pre- consultation, and care through their mobile scriptions, pharmacy deliveries (for Colombo phone. They have access to high-quality and suburbs), mobile lab services (for care without the hassle of traffic, waiting Colombo and suburbs) and more. rooms and queues. All doctors on oDoc Through oDoc, Union Assurance poli- are equipped with a dedicated application

SOFTLOGIC OPENS ONE OF A KIND HYPER MARKET IN MOUNT LAVINIA WITH GLOMARK, ODEL AND SOFTLOGIC MAX

The Softlogic Group opened its brand new mark, ODEL and Softlogic Max under one favourites with our customers and we look Hyper-Market in Mount Lavinia on the 12th roof represents a winning formula for us forward to welcoming the people of Mount of November 2020. Three of its celebrated where we see a lot of synergy, capable of Lavinia and its vicinity in being a part of our retail brands, Softlogic Glomark, ODEL and delivering the kind of momentum in sales shopping destination,” he further stated. Softlogic Max have come together to create we hope for. These three brands are firm a spellbinding retail revolution. The new Softlogic Hyper-market combines the best of international and local brands all under one roof, making this the quintessential shopping destination of Colombo South. “We have always stood out in bringing the best of retail experiences to our valued customers. Creating this landmark hypermarket, encompassing three of our most celebrated retail brands, in the heart of Mount Lavinia, is part of our long-term retail strategy to build destinations where our customers can savour a true retail experience on par with many developed markets” says Ashok Pathirage, Chairman, Softlogic Holdings PLC. “Softlogic Glo-

116 ECHELON.LK DECEMBER 2020 ADVERTORIAL

SLIC INSURANCE PAYMENTS, EASIER IS NOW A GOOD TIME TO AND SAFER THAN EVER BEFORE INVEST IN REAL ESTATE?

Sri Lanka Insurance, the national insurer has fa- Considering how real estate in central Colombo cilitated an array of payment channels at this hour had been inaccessible to a majority of Sri Lankans of need, honoring customer needs while ensuring for quite some time, now maybe a window of their safety and wellbeing. The customers can enjoy opportunity to consider investing. Lower interest uninterrupted service through online service plat- rates have caused fixed income options, including forms without physical contact during the current fixed deposits, to drastically reduce. Investing in pandemic situation. Customers can renew their real estate, however, is not without risk and an insurance policies and make premium payments via Sri Lanka Insurance understanding of the dynamics of city evolution Customer Portal. The SLIC mobile App is available to download on Apple App may help. Store and Google Playstore. Colombo is the epicenter of the country with Mobile payment facilities such as Genie, FriMi, mCash and eZ cash, and high-paying jobs, leading schools, hospitals, and direct bank payments facilities through Sampath Bank, Commercial Bank, much more. Unfortunately, due to reasons such as People’s Bank, Bank of Ceylon, Hatton National Bank, National Savings limited affordability, lack of innovation in mort- Bank, Nations Trust Bank and Seylan Bank are available for the payment of gage lending, etc. the dream of home ownership premiums. in Colombo has eluded many, causing about half a The national insurer re-emphasizes the importance of protection at these million more people commuting into the city every difficult times and urges customers to stay safe and fulfill their insurance day. Mortgages, on the other hand, enable people needs from the ease of home. to afford convenience. At John Keells Properties, we have focused on mortgages to complement our offering at TRI-ZEN. Our most recent innovation— the Freedom Mortgage—aims to give homebuyers 99X: A BOLD NEW LOOK REVEALED and investors some breathing space and flexibility. It ensures that customers receive a two-year inter- 99x, a technology company co-creating digital est free period on their mortgage, a percentage to products for the Scandinavian market, has revealed be paid by the client and the bank, and much more. a new visual identity, logo, and a shorter variant of It’s important the company name that embraces its clientele’s to keep an eye simplicity and style. out for opportu- 99x Co-Founder and CEO Mano Sekaram commented on the new Identity, nities. Ultimately, stating that the new look embraces its people, and signifies unity amongst if you pick the them on their journey to increase global footprint. Delving deeper into the right real estate logo’s aesthetics, Chief Marketing and Corporate Affairs Officer Chrish and product in the De Mel commented that the essence of the brand is derived from binary right location, code, where ‘ones and zeroes’ are arranged to form their new logo. and have the 99x’s expertise has been proven through a portfolio of over 150 impactful discipline to look global digital products developed since 2004. Chief Operating Officer Shehani medium term Seneviratne adds to this on how the firm, as 99X Technology, had actively and ride out the worked towards giving back to the IT community and shaped emerging current turmoil, talent. Now, as 99x, they look forward to creating an even bigger impact both you will likely do locally and globally. very well.

WURTH APPOINTS THARINDU RAJAPAKSHA AS DIVISION HEAD - BUSINESS UNIT FOR AUTOMOBILE NEW BUSINESS.

In a bid to develop the next generation of young management team member, Rajapakse counts over 15 leaders in the organization, WURTH Lanka (Private) Ltd years of being a part of the Wurth Lanka, starting his appointed Tharindu Rajapaksha to lead the growth of career in the capacity of a Sales Representative way Automobile aftermarket, in the new business segment. back in 2005. According to its Chief Executive Officer/Managing Rajapaksha headed the product development side of Director, Rohan Amirthiah the decision to separate the the business launching many new product categories new business unit bringing it under the leadership of and was honored with Silver and Gold Pins respectively Rajapaksha comes as a part of the organization’s strong for his dedication and performance. He has also won presence in the automotive aftermarket sector. A core 110% Top Club Awards in many years.

DECEMBER 2020 ECHELON.LK 117 ADVERTORIAL

NAWALOKA HOSPITALS SEES INVESTMENTS BEAR FRUIT

Nawaloka Hospitals PLC posted a revenue of Rs8.5 billion for the tal expenditure of Rs6.8 billion during the past two years, has proven financial year ending 30th March 2020. Profit after tax for the year to be an opportune investment during this period of contagion. The in review was a noteworthy Rs15.9 million compared to a net loss 400,000 square feet centre with a mega multi-storeyed carpark of Rs587 million the previous year. While assets grew 9% to Rs17.7 boasts a strategic combination of advanced medical technology and billion, the group recorded a substantial improvement in the gross expert medical care. profit margin to 56%, up from 51% a year earlier. Each medical specialty is allocated a designated channel module “While performance in the first quarter of the year was severely within the center, offering patients privacy, adequate space to hindered due to the devastating 2019 Easter attacks, progress dur- practice social distancing and screening from infection by interact- ing the final quarter was impacted by the developing global health ing with patients from other specialties. Pharmacy and laboratory crisis,” the company said in a statement. facilities located on each floor restrict mobility within the hospital, “Nawaloka Hospital’s remarkable improvement in performance further limiting the possibility of cross infection. This well thought is largely credited to cost-saving measures that were aggressively out building plan has proven beneficial and a competitive advantage driven across the organization, expansion of the laboratory network during the Covid-19 pandemic, guaranteeing patient safety in a under the strong Nawaloka brand and growth from regional hospi- secure environment. tals located in Negombo and Gampaha,” it said. Nawaloka Hospitals Deputy Chairman, Harshith Dharmadasa said the financial year was a challenging one. “As we continue to rebound from the adverse impacts brought about by two black swan incidents—the Easter attacks and the developing global health crisis, we are proud that the Group has remained resilient and recorded a commendable growth during an extremely challenging year. “Our robust cost management initiatives and process re-engineering efforts backed by digital technologies have helped Nawaloka Hospitals outdo last year’s results and drive strong performance in 2020 while strengthening our position as a premier healthcare specialist in the country,” Dharmadasa said. The Nawaloka Specialty Centre, which absorbed a massive capi-

WURTH SRI LANKA’S AUTOMOTIVE DIVISION GETS NEW LEADERSHIP

Bringing young leadership to the fore, years. Starting his career as a Trainee Wurth Lanka Private Limited appointed Sales Representative in 2006, Kekuluwal- Suranga Kekuluwalage as the lead for its age in his 14-year tenure made almost Automotive division, as the organization year on year progress and was brand and pushes towards its “Vision2025”. The first marketing lead for the division prior to his and largest business unit since the year latest appointment. He was elected ‘Best 2000, the Automotive Division has been Area Manager’ consecutively in 2013 and the most profitable and fastest-growing 2014 and was awarded “Best Territory business unit for Wurth Sri Lanka. Manager” in Sri Lanka under the auto- According to its Chief Executive Officer/ motive category at SLIM NASCO National Managing Director - Rohan Amirthiah, Awards in 2015. WURTH Sri Lanka has held the number Suranga holds an MBA from Cardiff one position in the automotive after- Metropolitan University, UK (ICBT Campus). markets over the last 20 years, and the He has completed his MSc. in Strategic Automotive Division is now set to achieve Marketing from the Asia e-University in a larger vision under the leadership of 2014. He holds the title of “Chartered Kekuluwalage. Professional Marketer” awarded by the Kekuluwalage has been a part of the Asia Marketing Federation and Sri Lanka Wurth Lanka Auto Division for over 14 Institute of Marketing (SLIM).

118 ECHELON.LK DECEMBER 2020 DECEMBER 2020 ECHELON.LK 119 DIOGENES

DISASTER CAPITALISM IN THE MORAL MAZE Aspersions aside, our Diogenes recalls the less extreme And do we really need psychopaths in charge? view voiced by a scion of Sri Lanka’s tourism and hospi- BY SOCRATES tality industry: “People, planet and profit, the three P’s, are our watchwords—and the most important is profit, because without it we wouldn’t have the money that pays for the other two!” Quite. And he is not alone. Google ‘profit’ and you get 970 million hits, while ‘capitalism’ rates 150 million, iogenes Fernando is feeling no pain thanks to a goodly ‘disaster capitalism’ 24 million, and ‘compassionate capi- measure of Aunt Harmonium’s bootleg arrack. And if talism’ a mere 10 million. The moral of which suggests that he smells like a tart’s handbag after a liberal splash being nice is truly not what makes the world go round. D of Aunt Euphonium’s Eau de Cologne, so what? Who It also highlights something else Diogenes happened cares about the sidelong glances if it helps banish the across. It seems that back in 1982, the UK government dreaded COVID-19—and surely the legions who swear by its seriously considered hiring psychopaths to restore order protective properties can’t all be wrong. in the aftermath of a nuclear war because the police Meanwhile, he’s just had a tête-à-tête with Uncle “would be too busy helping ‘inadequate’ people”. Testosterone—or a conclave, as self-styled ‘Don’ Testosterone, The BBC quoted a government official as stating that “it a devout lapsed Catholic and great admirer of Pope Innocent is...generally accepted that around 1% of the population III, likes to call it—to plot a course through the moral maze are psychopaths”. These people, she wrote, would be "very created by the COVID Conundrum. good in crises" as "they have no feelings for others, nor Which is: should one strive to profit from something that moral code, and tend to be very intelligent and logical…” righteous citizens might regard as something one should not Furthermore, on this very day another UK media out- strive to profit from, ie, COVID? Or should one do what comes let is saying that “we have barely begun to comprehend naturally to a thrusting young entrepreneur, and make hay the damage caused by the first [COVID] lockdown, let while the sun shines, so to speak? alone recover from it. And yet we’re pushing the nuclear Surprisingly, considering his staunch devotion to gangster button once more”. capitalism, Uncle Testosterone takes the view that so-called Whoa! thinks Diogenes, the nuclear button? Have disaster capitalism might be taking ruthless opportunism a bit things come to that? Are governments once more con- too far, given the circumstances. Diogenes, on the other hand, sidering employing psychopaths to sort things out? It’s is inclined to favour the ‘every man for himself, and the Devil certainly true that the greater good—doing the best for take the hindmost’ school of crisis management. the most—demands dispassionate decision-making by : ASHWINI CHANDRAPALA Thus, while Uncle Testosterone claims the moral high ground, ‘very intelligent and logical people’ who are ‘very good Diogenes risks landing himself in a ‘swamp of moral turpitude’, in crises’. But psychopaths? as his Ancient Greek philosopher namesake, known to friend The very thought, he thinks as he reaches for the

and foe alike as Diogenes the Cynic, probably once said. bottle, is enough to drive anyone to drink. ILLUSTRATIONS BY

120 ECHELON.LK DECEMBER 2020