Monday, December 30, 2013

Will Sri Lanka become like Spetses?

Our Rulers want to make Sri Lanka a hub for aviation, tourism and many other things. Will they inadvertently end up creating something like Spetses?

Spetses is a small Greek island, a an exotic playground for rich tycoons. Once a destination for cheap package holidays, the country moved up-market in the 1990's and now caters mostly to the super-rich who can afford to pay high prices for all services and products, much to the dismay of the small population of residents who find that living there is unaffordable.

The parallels between the two struck me when a friend rang me up asking if I knew of a place that would charge a reasonable rate for a holiday. Some friends had come from overseas and were looking to get out of Colombo. Many places were full and were quoting the most absurd rates.

When checking with a friend in the travel trade he told me that a couple of Eastern European and Russian charters had arrived, filling up a number of hotels. Sri Lankan expats, returning home for holidays and willing to splash out (partly to show off?) had booked up the rest.

The problem is that Sri Lanka has witnessed a continuous outflow of people over the last few decades. Some for political reasons but many because life was hard. They return for holidays and December seems to be the month that most now favour.

Hotels, clubs and restaurants make the most of it, gouging their customers with exhorbitant prices. The expats and the tourists may grumble but eventually cough up. Its either that or stay under-entertained on a holiday, which does not seem worthwhile, given the time and expense taken to get here in the first place.

For the locals, this presents a huge problem. If its just a case of planning a holiday for oneself, then its a simple case of postponing, but what do we do if one wants to go somewhere with some of those same expats? Not a happy choice to make, its either spend time with friends or worry about costs.

The holiday rush generally takes place in December, with a slightly smaller 'season' in March/April (Easter/'Big Matches) and July/August (summer). Its fairly predictable so canny locals can try to avoid these months when planning holidays, although going to the gym or finding parking at a shopping complex can be real headache.

Discretionary costs, like holidays can be managed but the bigger issue is high cost of living, a daily problem from which there is no escape. Unlike in Spetses where it is the rich visitors who have driven up prices in Sri Lanka it is the Government that is driving up prices through taxation. This causes people to leave, who then return for holidays and drive up the costs of everything for the season. A bit of a vicious circle, or a virtuous one, depending on how one looks at it.

To the expats, marvelling at the smart streets, shops, hotels and flats Sri Lanka looks to be booming. There are places to go and things to do, at a price. The expats who marvel at the skyline will look for opportunities to return. Many don't. Although things seem to be booming, somehow the opportunities don't really seem to exist. 

It does seem strange, with all the constuction and smartening up going on there must surely be jobs? There are jobs for construction workers, waiters, barmen, room boys but not a lot that would be of interest to the educated. The problem is that, apart from construction, and that too mainly Chinese, not a lot of investment is taking place.

Those that do return soon find that old evil-the cost of living, dogging them again so they leave. I know workers at my local garage who have been on several overseas stints; each time they swear it will be their last. After a while they are forced to leave again.

The funny thing is that it is actually the remittances from overseas workers that props up local demand- not many families can live comfortably without the help from overseas. It is also my (unverified) belief that this is the critical the factor that has pushed Sri Lanka to middle income status-not low-wage manufacturing/service jobs (although this factor is not absent).

From casinos to night races, from luxury shopping to boutique hotels Sri Lanka seems to be gearing up to cater to the rich. Will we then find ourselves in a trap, a country where we love to visit but can never afford to live? 

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