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Wednesday December 7th, 2022

Despite challenges, trade fairs will stay

ECONOMYNEXT – As all economic activity across the globe slowed down with the onset of the coronavirus pandemic, governments and businesses put Trade Fairs on hold. Now, in the second year of the pandemic, and the gradual recovery of the global economy, organisers are looking at different methods in which Trade Fairs could be re-introduced.

Trade Fairs are integral to the economy; it is an opportunity for businesses to promote their products and make sales and more importantly, it is a platform to check out the competition, expand business networks, learn about customer preferences, and to connect with existing clients and establish new ones.

In a time almost all businesses are conducted digitally, would this be the preferred option for Trade Fairs too?  Or, are hybrid versions possible?  How could businesses showcase the capabilities and efficiency of products, if clients are unable to touch and examine innovations?

As the President of JWC, Jochen Witt explained, virtual connections work perfectly well in one to one, or one to many audiences.  Not so in the case of Trade Fairs.

It will, at least for the next year or so, take on a hybrid form, Witt told a Webinar on the ‘Comeback of Trade Fairs’, organised by the Friedrich Naumann Foundation for Freedom(FNF), South Asia, on October 4th.  The webinar is part of the ‘Restart Asian Economies’ series conducted by FNF. The webinar was moderated by Canadian-Pakistani TV host and socio political analyst, Wakar Rizvi.

With business travel and airline capacities not expected to bounce back until at least 2025, and digital advancements taking centre stage, the trend of Trade Fairs being held across borders will take longer to make a comeback. Instead, he points out, with fewer or no restriction of movement within a country or a region, Trade Fairs will be contained within the domestic sphere. The people, he points out will be selective about the events they attend and organisers must take care in ensuring the returns are worthwhile to both exhibitor and visitor.

With cancellations a constant possibility, organisers are offering standard size booths to mitigate costs, while additional expenses such as sanitizing is shared between organiser and exhibitor.

JWC, he says is considering a hybrid version, where, while face-to-face shows would be followed by digitally connecting clients and businesses, throughout the year.  It is a concept that will try to compensate for the limited reach of a face-to-face trade show and will involve year- long events that will include training, and new interests and matching between businesses.

Panelist Sambit Kumar Mund, Senior General Manager, Business Development, Hyderabad Trade Expositions Ltd. is optimistic. While digitally connecting stakeholder will continue to be part of Trade Shows, he says he is confident that physical set ups will bounce back at least by the next quarter. Trade fairs are increasingly taking on a domestic focus he says, adding however that the scale of the exhibitions have shrunk by fifty percent.  India is seeing a decent recovery of its economy, and both the Central and State governments are focusing on the manufacturing sector, which is key to Trade Fairs. However, he notes that the hesitancy on the part of mid- level managers and project managers to take risks has resulted in constant postponements.

Despite the challenges, Hydrebad had been the first trade venue to open in India. However, the move comes with several changes to make it more attractive to exhibitors.

Where previously, fair participants were required to pay a fixed rate for the venue, organisers now require only a percentage of the revenue as rental fee. As well, the organisers of the fair take care of arranging for licenses etc. so exhibitors, who are mostly from outside the city, can focus on displaying their products and networking.

Small and large players are getting more innovative he says, adding that one trade show had an international pavilion, where Israel displayed their products for visitors to view digitally.

All of the shows follow globally accepted standard operating practices says Mund, who explained organisers are mindful that the trade fair should not turn into a hot spot for the virus. Ensuring the presence of para-medics, ambulances, on-call doctors and a medical centre is the responsibility of the venue’s management.

It would, Mund says,  be useful for businesses to consider different approaches to conducting business, in keeping with the new normal. Regional coordination, for instance better relations between India and Pakistan, would help, he points out.

Though ensuring Trade Fairs attractive to stakeholders without the sensory aspect is challenging, Witt points out that in Germany the 2G and 3G rules are enforced. (The 2G rule permits only those who are vaccinated or who have recovered from Covid 19 to enter business premises, the 3G rules, also requires a negative PCR test.)

With all safety protocols in place, Dusseldorf had, in September held a trade fair for caravans and mobiles homes. The event had attracted 175,000 visitors.

Shaira Saleem, Chairperson, Women Entrepreneurs Association, Maldives  who said that her country is making preparations to attend a Trade Fair to be held in Germany, pointed out that while the Maldives tourist industry has been able to stay the course the pandemic has taken its toll on ancillary businesses. To ensure safety, tourists to the Maldives during the pandemic are required to remain within one resort, as are hotel staff.  While that served the purpose of controlling the spread of the virus amongst tourists, it has meant that businesses providing other services have suffered; for instance women who started businesses in 2019/2020. Even though there has been assistance from the government, with the circulation of currency within the country limited, big businesses as well and small and mid-level enterprises have faced losses.

While digital display and attendance is the preferred option, Saleem states that most Maldivians are not yet digitally savvy for that. However, she is confident that with time, things would get back to normal.

According to Mund, ancillary services such as hotels in India have slashed their prices by as much as 50 percent, and have adopted diversified business models. Already, restaurants are full and the industry is expected to bounce back by January.

Even though the pandemic resulted in workers branching out into different career paths, investor confidence remains high, says Witt. The scope and structure of Trade Fairs may change, but, he is confident that such shows will not be a thing of the past. (Colombo/Oct09/2021)

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Crisis-hit Sri Lanka sees recovery in cruise ship tourism from zero

ECONOMYNEXT – Seventeen cruise ships are scheduled to arrive in Sri Lanka next year with
Queen Mary 2, one of the largest and popular ships, Colombo’s harbor master said, as the island nation is looking for alternative avenues to boost its faltered tourism sector.

The rise is expected to bring thousands of high end tourists with higher spending capacity after two years. The island nation saw a record high 54 ships in 2019, rising from the previous year’s 42, Nimal Silva, Colombo Port Harbor Master said.

“The 2019 was one of the best years and in 2020 there were more than 60 scheduled vessels to
call but with COVID pandemic all hell broke loose,” Silva told EconomyNext.

Fourteen cruise ships are scheduled to call from January-May next year and another three are scheduled to arrive in Colombo in November, when the peak tourism season begins.

Cruise tourism cycle begins in Sri Lanka from October to May with a dip during the monsoon
seasons.

Sri Lanka welcomed two cruise ships in November after almost two years.

Three ships are scheduled to arrive in December and Azamara Quest, carrying at least 722 tourists, arrived in Colombo on December 3 and is now heading to Hambantota.

On December 18, Le Champion carrying 264 will arrive in Colombo and depart to Mumbai and the third vessel, Silver Spirit will arrive in Colombo on December 23 carrying up to 648 passengers.

There are two scheduled in January, one in February, and four in March next year, according to the harbormaster.

“Next year more ships could schedule, so far these are the confirmed ones now,” he said.

This also generates income for the port and the prices are charged according to the size of the
vessel.

Silva said the first medium sized-cruise vessel, 229 meters long, generated about 14,000 dollars
for docking in the port for a day.

He said Queen Mary 2, a 325 meter long ship and one of the largest cruise ships in the world, is also
scheduled to call at Colombo in February. It can carry up to 3200 passengers.

Silva said almost all the ships that were scheduled have arrived on the island and therefore, he is
confident all the ships including Queen Mary 2 will arrive in Sri Lanka.

“Only one ship has been canceled thus far. There are no last minute cancellations if there were some they would have informed us by now,” Silva said. (Colombo/Dec07/2022)

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Sri Lanka President says 2015-2019 policy struggle was ‘warfare’

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe said his attempts to reverse the inward-looking protectionist policies and fix state finances during his last term as Prime Minister was opposed both by politicians and business interests.

“In the 4.5 years as prime minister it was an effort to take this economy out in a different direction,” President Wickremesinghe told an economic forum organized by Sri Lanka’s Ceylon Chamber of Commerce.

“We were able to get a surplus in the primary budget. But it was warfare.

“Politicians wanted to protect their power, businessmen wanted to protect their profits and many others wanted to see what the country would provide them free of charge.”

Wickremesinghe was unable to bring private investment to the port under apparent internal political opposition. Relations with President Maithripala Sirisena also soured and he appointed his own economic advisors.

Meanwhile Wickremesinghe’s free trade agenda was hit by monetary instability as the central bank printed money under flexible inflation targeting and triggered forex shortages which were followed by trade controls.

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Sri Lanka President calls to expand Nixon shock as rupee falls

Wickremesinghe’s ‘Yahapalana’ administration also went on a spending spree called ‘100-day program’ in 2015 triggering a currency crisis in 2015/2016 as the central bank printed money to suppress rates.

The central bank however had already started injecting liquidity and losing reserves (by terminating term repo deals) from the fourth quarter of 2014 as domestic credit recovered from a 2012 currency crisis before his administration came to power.

The rupee fell from 131 to 152 and stabilization policies led to an output shock. The International Monetary Fund then taught the agency which had already depreciated the currency from 4.70 to 152 to the dollars seeking bailouts 16 times, how to calculate an output target.

Under Finance Minister Mangala Samaraweera taxes were raised and budget were fixed in 2018 to bring deficits back to pre-2015 levels, though state spending went up from 17 to around 20 percent of GDP under the spendthrift ‘revenue based fiscal consolidation’ where cost cutting was dropped.

The central bank then printed money by purchasing bonds from banks to target the yield curve, jettisoning a bills only policy established by ex-Central Bank Governor A S Jayewardena, through term reverse repo and overnight injections taking the rupee from 151 to 162 to the US dollar.

The central bank also created money by entering into a swap with the Treasury in 2018, a type of strategy used by speculators to bring down East Asian pegs putting, further pressure on the currency from around July 2018 onwards.

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What went wrong; Sri Lanka’s illiberal economics and unsound money : Bellwether

Stabilization policies then led to another output shock. As forex shortages came Sri Lanka resorted to heavy external borrowing as it was unable to settle maturing loans with domestic borrowings.

After two currency crises and output shocks, macro-economists of the new administration cut taxes saying there was a ‘persistent output gap’ and printed even more money for stimulus (close the output gap). (Colombo/Dec07/2022)

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China calls for joint effort to ease Sri Lanka’s debt burden, no mention of restructure

ECONOMYNEXT — A top Chinese official has expressed hope that countries and multilaterals like the International Monetary Fund (IMF) work with Beijing to play a constructive role in easing Sri Lanka’s debt burden, stopping short of an assurance on debt restructuring.

Chinese Foreign Ministry spokesperson Mao Ning was quoted by international media as saying on Monday December 05 that China attaches high importance to Sri Lanka’s difficulties and challenges.

She was responding to a question on media reports that an IMF team will be in China this week to discuss faster progress on debt restructuring for countries including Sri Lanka, which is negotiating for an IMF bailout.

“On Sri Lanka’s debt issue, I’d like to stress that we support the financial institutions in working out ways with Sri Lanka to properly solve the issue,” said Ning.

“We also hope relevant countries and international financial institutions will work with China and continue to play a constructive role in helping Sri Lanka overcome the current difficulties, ease its debt burden and realise sustainable development,” she added.

She said China has long-standing sound cooperation with the IMF and other international economic and financial institutions.

The spokesperson avoided any mention of debt restructuring, a prerequisite for the IMF extended fund facility (EFF).

Nearly a fifth of Sri Lanka’s public external debt is held by China, according to one calculation. The emerging superpower has been generous in Sri Lanka’s time of need, extending much needed assistance in the form of rice, medicine and other commodities.

The latest arrival in the Colombo port from China was 2 billion Sri Lankan rupees worth of essential medicines and medical supplies, delivered on Tuesday.

However, critics say China is doing everything but what Sri Lanka really needs: agreeing to restructure its outstanding debt.

At least one Sri Lankan opposition MP has demanded that China agree to a restructure.

Related:

Sri Lanka debt restructuring: opposition MP warns of “China go home” protests

Tamil National Alliance (TNA) legislator Shanakiyan Rasamanickam, who had been on the warpath with Beijing over an apparent lethargy in helping the crisis-hit island nation restructure its debt, recently warned of a “China, go home” protest campaign similar to the “Gota, go home” protests that unseated the country’s powerful former president in July.

The MP told parliament last Friday December 02 that Sri Lanka owes 7.4 billion dollars to China, a nearly 20-trillion dollar economy, and if the latter was was a true friend, it would agree to either write off this debt or at least help restructure it.

Colombo has been vague at best on the status of ongoing restructure talks with Sri Lanka’s creditors, and opposition lawmakers and others have expressed concern over what seems to be a worrying delay. Rasamanickam and others have claimed that China, Sri Lanka’s largest bilateral creditor, is the reason for the apparent standstill. (Colombo/Dec06/2022)

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