Despite the decline in export earnings recorded over the past few months, Sri Lanka Export Development Board (EDB) Chairman and Chief Executive Officer Dr. Kingsley Bernard expects the country’s exports to pick up this year.

“Our export forecast for 2023 is around US$ 18.9 billion – of which merchandise exports will be 16.7 billion dollars and service exports will be approximately US$ 2.2 billion,” he said, adding that these figures are subject to change due to the “economic challenges prevailing in major markets.”

Challenges for local exporters remain, beginning with the cumulative effects of the COVID-19 pandemic, Russia’s invasion of Ukraine and uncertainty in the world market. “As highlighted in recent World Economic Outlook data, there will be supply disruptions, commodity price spikes and high inflation in the global economy,” he asserted.

Bernard also listed other challenges for local exporters: “Sri Lankan exporters are currently facing high inflation, interest rates and taxes. Exchange rate volatility is another major concern especially when imported materials are used in manufacturing. In addition, the country’s present economic situation and migration of skilled labour have aggravated the impact on exporters.”

While SMEs play a significant role as direct and indirect exporters, these entities too face the same or more severe difficulties.

“Some of the challenges they face include the higher cost of raw materials and borrowings, poor negotiation skills to link with the international market, and insufficient capacity to cater to the required quality and quantities,” Bernard opined.

He highlighted four focus areas that will ensure export driven SMEs are uplifted and supported to rise above these obstacles – namely, “transparency and accountability among stakeholders, ethical and professional practices, non-discrimination and capacity building.”

Sri Lanka is currently burdened with a negative image and perception issues in the global market, which is adversely impacting customer relationships. Yet, Bernard believes the longstanding connections that major local exporters – such as apparel manufacturers – have maintained over the years should keep the flame ablaze.

“As a marketer, I would think that customer loyalty should win [over poor country rankings],” he remarked.

Bernard elaborated: “If you look at our main industry – i.e. apparel – our production is a little upmarket; so as a result, we are more competitive in those markets. This means we’ve cultivated very good relationships with our partners without bias. I would give more weight to relationships than the country’s situation.”

The new EDB chief firmly believes that Sri Lanka must focus on introducing innovations and advanced technology to its export basket: “We have been talking about this since the 1990s and are still doing so because we’ve not reached that stage yet. I won’t say that we haven’t done anything – we’ve started processes, and made some headway in electronic and electric items.”

And he pointed to a major drawback that has slowed progress in this area, describing it as “waiting until we manufacture or prepare the finished product.”

“In the value chain, there are so many stages we can cater to. Most [successful] countries pursued this as a strategy and that is how they developed their exports,” Bernard observed.

There are prospects for the future but this requires work, as he explained: “Our strategy should be export led growth and at the same time, export led investments. When attracting investments, we must ensure that they help increase our exports.”

In terms of its competitive position, Sri Lanka remains behind regional peers such as Bangladesh and Vietnam “although we were ahead of them a few years ago,” Bernard lamented.

“Given this, we have to look at ourselves and take corrective measures now,” he urged, in concluding his LMDtv interview with Ruwandi Perera.