Notes from the Field

Kandy Revitalization Project Bridges Rift between Sri Lanka’s Public and Private Sector

August 10, 2011

Nestled in a valley surrounded by tea plantations a few hours’ drive east of Colombo, Kandy is a UNESCO World Heritage Site famed for its natural beauty and cultural significance. In July and August during the 10-day “Esala Perahera,” Sri Lanka’s most celebrated Buddhist festival, Kandy is inundated with pilgrims and tourists.

Kandy tea plantations in Sri Lanka

Kandy is listed as a UNESCO World Heritage Site, famed for its natural beauty surrounded by tea plantations. Although efforts have been made to increase tourism here, the economy remains sluggish. Photo by Karl Grobl.

Kandy’s Temple of the Tooth, revered as one of the country’s most important temples as it enshrines a tooth relic of the Buddha, is the centerpiece of this celebration, which features processions of gloriously decorated and illuminated elephants, drummers, and fire-dancers.

Kandy’s business people and local government recognize tourism as the biggest opportunity in more than a generation for the city to accelerate economic growth. Like other regional towns in Sri Lanka outside the bustling Western Province, Kandy’s economy has been sluggish. Often testy relationships between and among political parties, government, business, and citizens create another major impediment to growth and prosperity.

Historically, the relationship between the public and private sector in Kandy has been distrustful, full of criticism, and lacked true dialogue. However, starting in 2007, The Asia Foundation, with the financial support of the Australian Agency for International Development (AusAID), helped change this situation. We convened a series of dialogues with key municipal council staff, including prominent elected officials, and local business people. A working group calling itself the Kandy Development Committee emerged from these dialogues, with representation from both sides. In line with their shared vision for improving livelihoods while protecting and promoting Kandy’s culture, and as an initial confidence-building measure, the Committee prioritized a joint initiative that would preserve Kandy’s distinctive status and demonstrate to the players involved, once very skeptical of the potential for private-public partnership, that further collaboration and problem-solving was achievable.

Running through the commercial center up to the venerable temple complex, Dalada Veediya Street is the very first thing many visitors to Kandy see. For their first project, the Committee targeted making this signature street more welcoming through the design, production, and installation of 49 historic streetlamps. The Municipal Council contributed funds and committed to maintenance, and the private sector gathered donations from bank branches. These funds went into a joint bank account, with two signatories from the public sector side and two from the private, a demonstration of trust and cooperation between two groups which had frequently, and publicly, been at odds.

Street lamps in Kandy

As part of a broader revitalization project, new historic streetlamps were installed along Dalada Veediya Street in Kandy.

Part of a broader beautification initiative, including new sidewalk paving and greening, these improvements were so successful that the Committee extended the project to four additional areas, including the Central Market and one of the busiest thoroughfares, Trincomalee Street. The Committee expects all the improvements to be completed by 2014, with the final phase starting by the end of the year. When completed, the total historic streetlamps in Kandy will increase to at least 160.

On a recent field visit to Kandy, business owners on Dalada Veediya and adjoining streets told us that the public enjoys the beautification, and that they’ve noticed people walking on the street later into the evening. “Kandy should have a different appearance than Colombo,” said a retailer of math and science school supplies on Trincomalee Street. “We want to show the dignity of this historic city to visitors. Right now Trinco Street is very dark, whereas Dalada Vidiya is very beautiful.” A woman who runs a jewelry market within the arcade of the Queen’s Hotel observed that the lamps are particularly valuable during the annual festival, the city’s most significant event both religiously and in terms of the revenue generated for local businesses, as they improve the experience of visitors and encourage them to stay out later and shop longer.

The deputy mayor also said that the private sector has improved tax compliance, while local business people commend the municipality for dealing with their problems and complaints more openly and directly than before. The chair of the Central Province Chamber of Commerce said, “Now we are friends. Now we have more authority, and more access to the Municipal Council.” Thanks to this, they intend to address other issues in the community, such as traffic management.

The short-term success of the Kandy streetlamp project suggests long-term benefits. While it furthers the tourism goal mutually viewed as key to Kandy’s prosperity, and supports pride in the city’s history and culture, those interviewed were unanimous on the most important outcome of the project: the realization of shared goals and potential for collaboration which has inspired the pursuit of further public-private solutions for economic development obstacles.

*This is the first in a series of articles about The Asia Foundation’s efforts to improve the business environment in 15 of Sri Lanka’s largest regional towns, and provides a snapshot of the relations between the private sector, government, and civil society and the potential for private-public partnerships in each place to improve economic opportunity and create jobs.

Tamara Failor is a program associate for The Asia Foundation’s Governance, Law, and Civil Society programs and Jayantha Wickramanayake is a senior technical advisor for policy and planning and local governance in Sri Lanka. They can be reached at tfailor@asiafound.org and jwickramanayake@asiafound.org, respectively. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.

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