The New Corona Virus and its impact on Economic Sustainability in Sri Lanka – Dr.S.Sivesan

The New Coronavirus (COVID – 19) is a very stern mounting hazard not only to the Chinese economic growth but also to the global economy. In December 2019, the first New Coronavirus disease person was diagnosed in Wuhan, the capital of Hubei Province in China. As the New Coronavirus spreads across the world, all countries are struggling and taking stronger action to control its spread. But some countries may gain advantage through the virus restriction process but will have a huge effect on the world economy. In fact, the COVID – 19 pandemic is continuously spreading and escalating rapidly in many developed countries including USA, Spain, Italy and UK and causing much causality. The following table illustrates comparison between death and recovery ratio of selected countries.

Table No 01: death & recovered ratio and no of deaths per recovered ratio

Table No 01: death & recovered ratio and no of deaths per recovered ratio
Source: https://www.worldometers.info/coronavirus/, calculated Ratios

 

 In Asia region, Singapore has the lowest death rate. The government of Singapore is strictly enforcing rules and regulations for such suspension of all social activities for seniors. Meanwhile, people also constructively commit to adopt law and order enforced by the government of Singapore. For example, people are wearing face masks. Work from home strategy has been implemented. Therefore Singapore is maintaining the lowest death ratio and 18.7 per cent recovered ratio. Italy and UK have the highest death ratio.USA, Italy and France has the highest number of deaths per recovered person ratio 67%, 56.73% and 54.56 respectively. Many Asian countries including Sri Lanka, Singapore, Malaysia has lower death rate because as a result of their effective health service system and the preliminary prevention actions against COVID – 19 pandemic. By the effect of globalization, the activities of each country are interconnected with other countries.     

As the COVID – 19 continue to spread throughout the world, many governments   have taken different levels of public health measures, including nationwide curfews and travel bans. Practically, these measures are having a vast corollary on people’s day to day activities, and communities whilst having remarkable cost on national economies as well as global business activities.

Novel New Coronavirus Pandemic in Sri Lanka

The World Health Organization (WHO) on 28th of January 2020, announced Novel Corona Virus – 2019 as a public health emergency of international situation in the worldwide. It is not a new thing for world previously the WHO declared many health emergency situation in different periods. For instance:  Ebloa in Democratic Republic of the Conga (DRC) in 2019, Zikavirus disease (2016) and Ebola in West Africa (2014). At this point, it is not easy to measure the exact impact of the COVID – 19 on Sri Lankan as well as global economy, but it has already claimed the lives of more than 126,066 people around the world (https://www.worldometers.info/coronavirus/). Out of these 07 were in Sri Lanka (as at 15th of April 2020). Sri Lankan record shows that 233 people have been affected by COVID – 19. Death ratio is very lowest 3 per cent, at the same time recovered ratio is high 26. 1 per cent which is the highest compared with other South Asian countries. Further, the Global Health Security Index of Sri Lanka is 120 out of 191 countries. This index reveals that in the world, all countries are not ready to face any sudden spread of pandemics and outbreak. It is absolutely correct in the context of prevention of COVID – 19 spread, as a Sri Lankan Citizen, I am proud to point out victory of Sri Lanka against COVID – 19.  As the first country in South Asia, Sri Lanka has imposed a countrywide weekend curfew on 20 March – 2020. Further, the government is tactically using traditional and electronic Media including Facebook, WhatsApp and Viber as tool to create awareness about COVID – 19 and its effect nationally.  It should be mentioned that functions Sri Lanka Medical Council, health care workers, all public servants, Sri Lankan Forces and those who are involved in COVID – 19 prevention processes should gracefully be respected and appreciated for rendering their invaluable services. Obviously they sacrifice their personal life and their personal commitments in the period of crisis. However, the real fact is that in Sri Lanka, most of us are not aware of the possible dangers of this COVID – 19 disasters. As the government understands the reality of the prevailing scenario, it has taken necessary action to protect people from this serious danger circumstances. Through lesson learned from the regional success, Sri Lanka is strictly implementing the following key actions:

 

  1. Self – isolation or self – quarantine / Social Distancing: Japan, South Korea, Taiwan and Singapore used social distancing as key strategic tool to control spreading of New Coronavirus in their territory, and have substantiated success of this strategy. Exactly, this strategy in Sri Lanka has a reasonable affect on resistance process against COVID – 19.
  2. Kitting travel bans: the Civil Aviation Authority of Sri Lanka has declared that all international airport in Sri Lanka including Bandaranaike International Airport, Mattala Rajapaksa Hambantota Airport and Jaffna International Airport, have shuttled their commercial activities with further notice. Further, all ports are closed for their commercial functions. These have a massive consequences on Sri Lankan economy.
  3. Nationwide curfews: as pointed out earlier, the government has imposed curfews. It caused and causes many disadvantages in the progress of Sri Lankan economic development. The government and private sectors organization allow their employees to work from their home. The majority of people in the first two or three days struggled to fulfill their basic needs. Then public – private and people jointly work to achieve their essential requirement at right time.   
  4. Relief schemes has been proclaimed: senior citizen ( 559,109), disabled persons (119,300), registered farmers under the Farmers’ Insurance Scheme (160, 675), kidney patients (39,170) and all Samurdhi recipients (1,798,655) who are eligible to claim Rs. 5,000/ = per a month. A person can only receive the relief under the one category. Further, the government announced some remedies to self employees and public sectors employees to manage this situation considering the prevailing economic hardships. 

The COVID – 19 spread pandemic is destroying the indisposed Sri Lankan economy. This is the second incidence within 12 months. After the Easter Sunday attacks – April 2019, 4.5 – 5 per cent economic growth had been expected due to the political stability subsequent to the Presidential election. But now it is difficult to meet this expectation.  In Sri Lanka, manufactures and service industries are going to worse until end of this year.  The COVID – 19 spread has strong impact on private business organizations including small and medium enterprises and investment throughout the year 2020. The fall in investor sentiment globally, along with their own home country challenges faced, will negatively impact the prospects for attracting foreign direct investments in Sri Lanka during 2020. Further the unexpected expenditure of the government has continuously been increased due to medical expenditures and reliefs expenditure.

New Coronavirus Pandemic and Tourism and Hospitality industry in Sri Lanka

Tourism makes a substantial economic contribution to Sri Lankan economic development and also promotes intercultural understanding and socio – cultural connections. Tourist arrivals throughout the most areas of the world are continuously increasing.  Accordingly to the United Nations World Tourism Organization (UNWTO), international tourist arrivals grew by 4 per cent globally in 2019, reaching 1.5 billion arrivals worldwide. Out of these arrivals, around 1.9 million (1,913,702) were to Sri Lanka. It is the lowest compared with arrivals in 2018 due to Easter Sunday attacks. Sri Lanka is one of the most well – known tourist destinations with one of the country’s faster – growing industries and its third largest foreign exchange earner since 2016. Nearly 10 year after the end of civil war, Lonely Planet in 2019 (prior to Eater Sunday attacks), has declined Sri Lanka as one of the top tourist destinations for 2019.  After civil war, in 2009 447, 890 tourists arrived to the country. That number increased to record 2.3 million tourists in 2018 with help of it and as a result Sri Lanka earned $ 3 billion. The following table shows the number of tourists visited to the country from 2009 to 2019.

Table No 02: Tourism growth trends – 2009 to 2019

Source: Sri Lanka Tourism Authority
Source: Sri Lanka Tourism Authority

In 2019 from July onwards tourist traffic to the country rose continuously until February 2020 due to Novel COVID19 spread. The following figure illustrates monthly tourist arrivals.

Figure 1: Monthly Tourist Arrivals
Figure 1: Monthly Tourist Arrivals
Figure 1: Monthly Tourist Arrivals

 

In early June – 2019, in a leaked confidential assessment of the economic damage by the Easter Sunday attacks, the central Bank of Sri Lanka claimed that loss of government revenue from indirect tax as VAT was approximately Rupees 26 billion for the year. It cited major impact on the country’s trade deficit of balance of payments, which would be affected badly due to the negative impact on tourism. It stated further that many foreign direct investments have been postponed.  Consequently, Sri Lanka was promoted as the upper middle income earning country from being a lower middle income earning country according to the updated classification of the World Bank. The Sri Lankan hospitality sector is in rebuilding process and  the verge of returning to normalcy with tourist arrivals started to increase in June faster expected following the attacks. We, however, do not have an expectation that COVID – 19 and its consequential effects on tourism and hospitality industry is similar to Ester Sunday attack and its impact on tourism. Because, COVID – 19 is a worldwide issue, if you take into account, many tourist – generating countries to Sri Lanka have heavily been affected. For example, travellers from India and Chain dominated the Sri Lankan tourism market since 2017 but by continuous spread of COVID – 19, Chinese and Indian economy was devastated. They will take few months to recover from that affects. Further, people’s spending capacity is questionable. Even if Sri Lanka will remove the travel barriers, those two reasons will lead to create instability of tourist arrivals from those countries. International tourist arrival to the island between 2017 and 2018 (data is not available for the 2019), by country of origin, are provided in table 3. The United Kingdom retained its position as the third major tourist producer to the country. Meanwhile UK has the highest death ratio and its economic is collapsed. 

Table No 03: death & recovered ratio and no of deaths per recovered ratio of top five Sri Lankan tourist markets

Source:https://www.worldometers.info/coronavirus/andhttps://sltda.gov.lk/storage/documents/0cb228cd03762f638bd515fe83edd453.pdf,calculated Ratios
Source:https://www.worldometers.info/coronavirus/and.https://sltda.gov.lk/storage/documents/0cb228cd03762f638bd515fe83edd453.pdf,calculated Ratios

 

In Sri Lanka, many people involved in this industry with hope of that is, tourism can generate economic advantages with a comparatively small amount of investment when compared with other business investment options. The tourism industry is labour – intensive and, as a result, has a high impact on lowering the unemployment rate. The attacks could have a remarkable knock on effect on unemployment as hospitality industry lower expectations for tourism demand.  In south Coastal belt, many vulnerable communities depend on tourism and hospitality industry as a conduit to spur their development and economic inclusion. As pointed out earlier, in sustainability of small and medium sized enterprises, travel operators and tourist guides face difficulties without adequate income. However Sri Lanka has some positive signs to recover from these effects:

  1. The death ratio is low compared with other South Asian country and Sri Lank has a under control spread of COVID – 19. 233 people only were affected. It shows strength of health care services which will create an image to international tourist Sri Lanka as a safety place to travel.
  1. The European Union agreed to support Sri Lanka to promote tourism and hospitality industry with a EUR 3.5 million grant. It would open a new pathway to smaller tourism business operators and their employees.
  1. On 10th of April, Sri Lankan Airlines has announced Travel Waiver Policy (TWP) to their customers. TWP spell out that all who have bought their tickets from Sri Lankan Airlines on or before 30 April 2020 for flying between 26 January 2020 and 31 December 2020. The Airline shall permit changes (flight/date/routing) without charging any change fees for travel up to 31 December 2020.
  1. Tourism Act no 38, 2005 allows public – private partnership in tourism industry development. It is really good sign to bring private and public people to the centre point in the context of tourism development.

Sri Lankan government will setup a coordination committee with participation of all stakeholders. It will hold regular virtual meetings to evaluate effects of COVID – 19 and preparing strategic plan to rebuild the industry. The SLTDA has to pay attention on public – private and people participation in the industry, build knowledge based tourism industry and effective tourism promotion throughout the world.

 

 

 

 

Dr.S.Sivesan (sivesanuni@yahoo.com)

Coordinator/ Tourism and Hospitality Management, Faculty of Management Studies and Commerce, University of Jaffna – Sri Lanka

Member of the Board of Management of Northern Provincial Tourism Bureau – Sri Lanka   

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