Ranil: why take the shine off your performance?

Visa issue is bleeding the tourism industry but no action from the President 

Election time is the most interesting time for me for two reasons. The first, being policy makers, bring to surface the actual issues (needs of people) of the country, whilst the second being that we see the most unconventional and innovative communication methods being used to reach the target consumer (in this case voters) with solutions. In simple words marketing at its best.

 3 strong brands?

 There are three strong contending brands from the 38 candidates, targeting to be the President of Sri Lanka on 21 September 2024. Three of them are in a dead heat with a parity of 4-5% parity is what independent research studies reveal. Two of them are very close whilst the third candidate is fast catching the two leaders.

From top three candidates, one is theming the campaign on ‘how he rescued the country post the economic crisis with a pay off line Puluwan Sri Lanka’ signature line. The other is fighting on the premise of ‘Eradicating corruption’ who is actually leading the race as of now based on research. The strong number 2 brand is harping on ‘strong values that will drive the economic growth agenda whilst addressing corruption’. All three brands are in the game with interesting concepts given that they are focussed on the real issues of the Sri Lankan consumer (voter’s) need.

 Rs. 69 billion SOV?

 With just under three weeks before a voter goes to the polls, the Election Commissioner (EC) announced that this year a Presidential candidate can spend a maximum of Rs. 109 per voter. Which means Rs. 1.8 billion per candidate. This means the Share of Voice (SOV) as a maximum can be Rs. 69 billion (if all candidates use the quota stipulated). However, a point to note is that only 19 candidates are active. Some allege that others are just named Presidential candidates done to break the voter base. I guess the truth will emerge on 21 September. On the Rs. 1.8 billion spend allocation the Finance Law stipulates that 60% of the value can be spent directly by a candidate and the balance 40% can be invested by the nominating party. 

Whilst the concept received a positive acceptance, the issue is how can it be regulated given that ‘one’ election rally can cost approximately Rs. 300 million – the pre rally advertising and point of sale, the day of the event costs like the main stage, three colour backdrop, power speakers, two large cut outs on the side of the stage, a poster with a frame that was given to sections of the crowd with the candidates face for branding purposes, chairs and food/drink for all participants, special food for guest speakers, cost of a band/entertainment after the event, busses used for transport, etc. we also saw in some cases a giant marquee was erected. Which means the total budget of 1.8 billion will be under severe pressure given that a 30 second TV spot at prime time for an election candidate costs almost a million rupees. I have not taken into account the production costs on the above the line and below the line activity. 

The question asked by many is, how can the Finance Law of 2023 be implemented when in reality the Rs. 1.8 billion budget is actually wafer thin. The EC Director was very firm when he announced that the violation of the law can even lead to a candidate being disqualified even after winning the elections. I guess time will tell.

 2019 elections

 If one does a deep dive on the 2019 elections, the Centre for Monitoring Election Violence (CMEV) went into the details and monitored the campaign expenditure. The total campaign costs was valued at Rs. 3.7 billion with the SLPP candidate accounting for 1.8 billion spend which means 48% of the expenditure. 

Which means that by investing a 48% share of voice (SOV), one was able to capture a 62% market share as per the final count. A point to note is that there are no details about the cost breakdown of the 1.8 billion spent by the SLPP candidate in 2019. If one uses the rule of thumb that we use in brand marketing – the only cost that can be monitored is the advertising spend on TV, radio, press and to some extent social media. It’s practically impossible to track below the line activity like posters, billboards, election rally costs, entertainment and logistics, etc. However, from a policy perspective it’s a good start and the concept will mature out over time is my view.

 The brand promise

In this backdrop, we see the strong campaigns that have been unleashed by Brand Ranil as we speak. The initial theme ‘Ranil Thamai’ – meaning he is the only person who is suitable to run the country at this point, has been replaced with ‘Puluwan Sri Lanka’ which is interesting. The naked truth is that the brand has delivered (to a certain extent) and the RTB is strong (Reason to believe) putting it in marketing jargon. 

Let’s accept it, he has been able to shape the financial plan of Sri Lanka that was in shambles two years back. As at June 2024, revenue is up +42% to Rs. 1,860 billion whilst the expenditure is at -5% to Rs. 2,240 billion. The budget deficit is at a commanding Rs. -598 billion, the lowest in the last three years. Which is commendable even though it is defunct.

 Can Brand Ranil win elections? 

 In this backdrop, we see the media reports emerging that Brand Ranil has a poor track record of leading a party to victory at elections. Some go to the specifics that the brand has lost for a record 13 times in his 50-year track.

The business sector is backing Brand Ranil given that he has corrected the crippled country that he took over two years back. Let’s accept it when Brand Ranil took over the country in 2022 it was financially bankrupt with absolute anarchy on the streets with no petrol, food shortage and gas queues staying overnight. Today, as we speak the country has recovered from a -7.8% growth in 2022 to become a turnaround economy in South Asia. Sri Lanka has registered a performance of +4.5% growth in Q4, 2023 and then a +5.5% growth Q1, 2024 in the backdrop of neighbours – Bangladesh, Maldives and Pakistan in absolute turmoil.

The million dollar question is can Brand Ranil that has strong equity in certain quarters of society create a wave to swing for a 50% plus. Rationally speaking it should be a landslide victory to Brand Ranil but emotionally speaking the credibility of the brand is in question. 

A recent ‘Sentiment survey’ has thrown the following attributes on Brand Ranil – ‘aiding and abetting corruption’, screwing and protection of ‘people who have robbed the country’. This mix is working against the brand. Hence, today we see competitor brands are exploiting these week points and making a campaign that is driving a wave against Brand Ranil. It is sad to see how the shine of the ‘Performance brand’ is being wiped away. The ridiculing of the Supreme Court decision at his alma mater – Royal College went totally against his DNA as he is a lawyer too.

In summary what brand Ranil must be cognisant of is that people buy brands due to a combination of ‘rational and emotional’ reasons. Especially when it comes to elections the latter takes a higher weightage which is where Brand Ranil is working on.

 83% of people are in poverty?

 If we capture the reality at the ground end. Research reveals that 83% of households are challenged as their income does not cover their monthly expenditure as per Pepper Cube Consulting research company. The data goes on to explain that many are reaching out to their savings to bridge the gap which is the sad reality that Brand Ranil is not cognisant of. He was aware that CEB, CPC and Water Board were making serious profits in excess of Rs. 100 billion plus and this could have been passed down to the consumer so that the overall cost of living can be brought down. But the intervention did not happen. It’s sad that a blind eye was turned on this key policy decision that could have made a significant impact on the 21 September voter decision. 

Some relief has been given recently but in my view the damage to the Brand Ranil has already happened. Research reveals that Government approval ratings have increased to 28% as against the 7% that existed around two years back but we do not know if this can be extended to the brand Ranil. 

 Devil in the details

 If one digs deeper to data, Ceylon Electricity Board registered a profit of Rs. 75.7 billion in the year 2023, whilst the National Water Supply and Drainage Board reported a profit of Rs. 5.2 billion. The Ceylon Petroleum Corporation has made a staggering Rs. 120 billion in profit. In the year 2024: the first four months of 2024 CEB made a profit of Rs. 90.7 billion, CPC 13.6 billion and NWSDB Rs. 10.6 billion which to my mind is poor governance as this could have been passed down to the consumer that is struggling to put food on the table for the family. Even an affluent consumer group like A&B consumer: 69% are worried on the nutrition levels that the family is getting from the food provided whilst 49% are concerned on the widening budget deficit as per Quantum Research study, Sri Lanka.

The competitor brands are attacking brand Ranil on the ‘cost of living’ but unfortunately he is oblivious to this fact. The haphazard wage hike of the university staff triggered the non-academic staff to push for a 75-day strike that crippled the university system. This really took away the shine of brand Ranil. 

The Rs. 1,700 wage increase announcement made by Brand Ranil which was overturned by the Supreme Court took away the little shine that Brand Ranil is left with. The recent issue of passports running out and people sleeping in the garden to get one was the icing on the cake of poor leadership by the Government. Brand Ranil must understand that the cracks are appearing at a time that is denting his brand severely. 

 20%  households do not buy milk

 Another research study done by Kantar Sri Lanka reveals that almost a quarter of the households in Sri Lanka have moved out of consuming milk powder. As per the latest data from Prosoft Research Company, 64% have stopped having soups, 41% of households cannot afford to consume malted milk whilst 46% of them do not drink liquid milk. Nelson IQ states that two thirds of people live on just two meals a day which has only given ammunition for competition brands to tear Brand Ranil on stage.

The Department of Census and Statistics reporting that the research study done on the ‘Impact of the Economic crisis’, stated that almost 50% of school children are struggling to purchase their school stationary requirements/a uniform to wear to school. Research reveals one of the key criteria for the selection of a new President will be ‘corruption sensitivity’, reducing the cost of living and doing justice to the people who have robbed the country. Sadly on each of these fronts brand Ranil is under attack. The people that were responsible for bad governance in the earlier regime, now joining brand Ranil further dents the positivity that wraps around the brand. A point that the strategist of brand Ranil must understand is that a new consumer segment that is almost one million voters will come to play in the 2024 Presidential elections. They are the Gen Z and they are strongly influenced on governance issues.

Tourism – 20% drop?

 The IMF very clearly stipulates that the only way to get out of the financial crisis is to drive the generation of foreign exchange. This can be done in four ways – FDIs, exports, foreign remittances and tourism. The quick win from this basket is tourism and the target set for this year was $ 3.2 billion plus. 

The abrupt decision on 16 April 2024 by the Department of Immigration and Emigration to switch off the system that processes visa applications has created major issues to the Industry with a 20% drop in the recent past. There were no reasons given and the total tourism industry was in the dark until the COPE Chairman released a 640-page report stating the irregularities that existed in the selection and operations of the visa processing partner for Sri Lanka the consortia – GBD Technology services & IVS Global-FZCO and VF Worldwide. A fee of $ 18.50 was charged for every incoming traveller, which is a violation of Article 148 of the Constitution, as it bypassed the Consolidated Fund without a transparent procurement procedure. Even after the parliament was briefed by the COPE Chairman, there has been no concrete response from the President.

It’s strange that Brand Ranil who is talking so much on tourism being a revenue driver kept the whole tourism industry in the dark on this decision and also allowed a foreign party to take over operations of visa processing when the local company Mobitel was handling this function for almost 12 years without issues.

The tourism industry came together and made many attempts to solve the issue by consultation but failed. Then the industry chambers in unison went to the Supreme Court who mandated that the visa services adhere to the pre-existing framework until a new system is introduced. It was a serious hit on brand Ranil. Incidentally this was followed by the landmark decision that postponing the Local Government elections violated the basic human rights of the citizens of the country. 

Sadly, even today the Government has not gone back to the ETA system that worked without any issues for 12 years. Brand Ranil is forgetting that this is impacting the foreign exchange earnings of the country as the numbers have dropped by 20%. Once again the million dollar question is why Brand Ranil is allowing such anomalies. The opposition has termed this ‘2nd Bond Scam’ under the leadership of Brand Ranil. A sad day for Sri Lanka tourism that actually saved this country from the financial crisis that we were up against. 

 Summary 

 Whilst many in business want ‘Brand Ranil’ to win, sadly he is taking the shine off his ‘Puluwan campaign’ by his own actions. I guess 21 September will bring out the reality. 

(The writer is an alumnus of Harvard Executive Education and an expert in brand marketing with over 20 years’ experience in British and American multinationals including the UN).