Financial Times

Tsunami crisis: Winners and losers
By Dinesh Ranasinghe
From an economic and commercial facet, the destruction caused by the tsunami may have sprung a new breed of winners and losers of different forms in the community.

People living along the coastal belt were the unarguable losers; not only losing all their wealth, life savings but also loved ones and their very own lives. Eventually damage to industry has taken two forms. One is the loss of labour/ man-power.

A greater portion of people who lost their lives were in the fisheries and tourism industries, which are experiencing a contraction. Scarcity of labour in the coastal vicinity could hamper related industries. For instance, Prima Ceylon Ltd has affirmed the lack of manpower in the Trincomalee region to resume normal operations.

The fisheries and tourism capital investments such as boats, buildings, equipment etc. were washed away. Reinstating would take a while and would temporarily hamper income generated through these industries.

With foreign aid rapidly flowing into the country, the pressure on foreign exchange rates are easing off which would discourage exporters. The appreciation of the rupee is now impacting on exports. The tea industry has been beaten by increased domestic inflation and is now yielding a lower amount of rupees on exports.

Overall the nation would lose in the short and medium term due to the ill fated coastal infrastructure. Transportation, communication, power, etc are in a weak position and most of the factories are not linked to the national economy or have been destroyed. This would result in a temporary malfunction of those factories and thereby impair growth of GDP growth. Also a ripple effect has been experienced by insurance, aviation, shipping and many other industries.

A rational person may ask who are the 'winners' of such devastation. The fact is that there is a segment who have benefited from the massive destruction. The local construction industry would benefit through mass construction projects.

The appreciation of the rupee, which should theoretically reduce the price of imports, is not passed on to the consumers but being added to their bottom line. For instance the cement importers would benefit two fold; reduction in value of imports in terms of rupees and the potential construction boom.

Another important winner is the government; with direct foreign aid pledges flowing into the country easing pressures which were prevailing before the tsunami struck such as foreign exchange, BOP, budget, foreign debt, etc.

Though the winners are in a position to cannibalise our own countrymen for economic and commercial benefits they should not exploit the circumstances for their advantage.

They should act rationally, empathetically and ethically to help those who have suffered losses. The efforts in rebuilding Sri Lanka made by corporate, individual, foreign and local citizens should be appreciated.

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