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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Saturday, February 04, 2006

Rural is rich

Daily Mirror: 01/02/2006" By Nisthar Cassim
Two young firms Dialog and Bodyline showcase richness in reaching out to the provinces for business success and greater stakeholder value

Two compelling cases on the benefits and success of going rural were showcased by two young but dynamic companies last week at a top level business forum driving home the richness in the grassroots to enhance stakeholder value.

Leading mobile telecom firm Dialog Telekom and apparel giant MAS Holdings member Bodyline Ltd, effectively showed to rest of corporate Sri Lanka or those who are skeptical how companies can strike it rich and also be good corporate citizens by going rural at the final session of the Ceylon Chamber of Commerce Economic Summit.

There were several other but much older firms (Hayleys, JKH, The Maharaja Organisation, HNB and CIC) who also showcased their success stories or the benefits of and the need to go rural but Dialog and Bodyline stood out because they are relatively new in the corporate sector yet highly successful.

Understandably passionate about operating from a rural area and encouraged by its success, Bodyline Managing Director Dave Ranasinghe made a very stimulating presentation at the Ceylon Chamber summit session titled “Dialogue with the business leaders – Invigorating the rural economy.’

Mr. Ranasinghe said that leadership was all about the art of the possible and strongly emphasized that going rural and operating in the provinces successfully is possible and the private sector must do it. He admitted that there is a notion that Sri Lankans are not disciplined, inefficient and in rural areas there will be lot of quality problems but these must and could be changed provided the entrepreneur or the firm has the will to do it and make a difference. He said that workers would get the message if the company sets an example and for Bodyline it has been possible to get the staff on time through efficient but outsourced transportation, higher productivity etc. “Bodyline which employs 2,200 people ploughs back Rs. 900 million per annum to the Horana area and such wealth can have a highly beneficial impact on the community,” he said. MAS Holdings has 21 factories in eight districts.

He said that three challenges faced by the Company when it set up operations in Horana in the 1980s were gaining acceptance and integrating meaningfully with the village, overcoming shortcomings in infrastructure such as roads, power, and transportation and the other was attracting professionals to fill middle management positions.

“These challenges will remain but the right thing to do as Sri Lankans is to go rural,” Mr. Ranasinghe said adding that effective management and leadership determines to do it right. Among measures suggested were using local contractors for transportation, using the local bank branch for leasing of buses, local operator for the canteen, sourcing of fruits and vegetables from the village itself, use of local entrepreneurs etc. He said that the inculcation of 5S method in Bodyline was also a result of a Horana School winning the national 5S competition. This he said goes on to confirm how a corporate could transform the rural society.

Mr. Ranasinghe said that MAS Holdings took a bold stand and in a win-win proposition has endeavoured to raise the standards of living in the areas they operate as opposed to putting products be it affordable or not on the shelves of rural boutique.

If Bodyline proved a manufacturing unit can produce world class product from rural areas, Dialog Telekom CEO Dr. Hans Wijayasuriya showcased how a service company could succeed from an empowered rural consumer. The formula recommended by the CEO of Dialog, the country’s most profitable company is “Invest (in rural areas), have Inclusive approach and Innovate with technology.

Dr. Wijayasuriya said that most often everyone forgets the rural consumer who is indeed the power behind most successful companies. “The rural consumer may be a low spender but look at their collective power. Divergent needs give diverse opportunities,” he added. He also said that of the 2.2 million customer base of Dialog, 1.7 million are pre-paid small customers spending on average Rs. 400 per month. For Dialog rural consumers contribute 50% of the Company’s profit while the pre-paid markets generate Rs. 1 billion in turnover per month.

“However to be successful companies must first invest in and develop these areas and bring the best out,” he said adding that of the US$ 300 million investment by Dialog in infrastructure, 60% was in rural areas including $ 40 million in the North and East.“The rural markets are fertile grounds. Companies must go out there, invigorate the rural economy, and add value and make money,” Dr. Wijayasuriya emphasized.

Pointing out the need for an inclusive approach, he said that companies will be successful if they offer a product that is affordable and ensuring it is freely available. Having identified technology as a “great social leveler,” Dialog CEO said that companies need to innovate through the use of technology especially in rural areas.

HNB Chairman and veteran banker Rienzie T Wijetilleke said that the villager or rural people must be made a stakeholder of national and micro projects if socio-economic prosperity is to be achieved.

Maharaja Organisation's Director Mano Wickramanayake said that there has been lot of talk about going rural, its benefits etc but there was little action. “We need a coherent policy with concerted and quick action,” he added. He said that there has to be greater linkages between the formal and informal sector. The need to incentivise the private sector to invest in rural areas was also stressed.

Rajan Yatawara, Chairman of Hayleys which is by far the only blue chip which has an active and widespread rural presence, said that its rural strategy had always made commercial sense especially when most of its businesses focus on adding value to agri produce, commodities or raw materials.

Agriculture specialist CIC Group Chairman B.R.L. Fernando also conceded that “there is money in rural areas” and the true potential of rural areas could be better harnessed with proper utilization of land and water resources.

Premier blue chip JKH Director Sumithra Gunasekera highlighted his Group’s successful model of sustainable development involving its leisure business which co-exists with an enriched community.


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