ECONOMYNEXT – Sri Lanka’s private security firms are seeing a spike in demand which they cannot meet after Easter Sunday bombings but there are fears that the boom may not be sustainable, industry officials said.
"We are seeing a large increase in demand of about 75 percent," says General Manager of LOKX Security Services, Major (retired) Surangoda De Silva.
"We don’t even have security surveillance equipment, we are already run out of stock," he said.
The Easter Sunday bombings sent government departments, private companies and schools scrambling to get security officers to carryout searches or simply check the identity and keep records of the visitors.
"We are even getting inquiries from the montessories," said De Silva said.
Before Sri Lanka’s civil war ended in 2009 hardly anyone could enter into a building without showing their ID cards and giving reason and the person they wanted to see and bags were checked.
But on Easter Sunday, the bombers walked in to hotels with heavily laden bags, mostly unchallenged, except for the Zion Church in Baticaloa, where a parishioner gave his life grappling with a suicide bomber.
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Despite the immediate growth in demand for security services, economic conditions are likely to dampen demand in the long run.
Sri Lanka is currently going through an economic downturn after two currency crises came in quick succession amidst policy errors involving a soft-pegged exchange rate regime generating prolonged liquidity shortages on top of a political crisis.
In the December 2018 quarter the economy grew 1.8 percent.
In the first quarter of 2019 bank balance sheets were seen shrinking and credit contracted after period of liquidity shortages.
Industry veterans fear that the growth may not be sustainable.
"Industry is crashing, it is in decline,” says Major Tissa Aluvihare, ex-President of Sri Lanka Security Service Providers Associaton.
“It will be even more (after the attack) because there’s a huge problem in the cash flow.
“Business are not functioning, the economy has burnt because of the circulation of money and companies don’t have the liquidity anymore.
"It’s a catch 22, the entrepreneur wants but he’s unable to pay.”
The industry is also finding it difficult to get people.
Many young people are moving to other service sector jobs, industry officials say.
Aluviahre says about 70,000 people are employed by the companies in the association.
Another industry official said at one most of the workforce for security forces came from North Western province. But with the province becoming more economically active, the supply is drying up.
The charge per security point ranges from 1200-1500 rupees for a 12 hour shift.
A highly trained armed security guard may have a premium of about 2500 rupees.
To deploy a security guard only on daytime per month, costs on average 42,000 rupees.
To attract more people, firms may have to pay higher salaries. But industry officials say in the current environment it is not possible to hike charges.
“How can we ask clients to pay more in this situation?” the head of a security firm based outside Colombo said.
Officials say even existing companies are finding it hard to pay the bills and are delaying payments. (Colombo/May20/2019)
