EXPORT SECTOR
Rebound Potential
Chitranjali Dissanayake reviews Sri Lanka’s export performance and scope
Sri Lanka recorded US$ 8.6 billion in export earnings in the first nine months of 2020, achieving 72 percent of the revised annual target of 13.4 billion dollars. While this marks a decline of 17.7 percent compared to the corresponding period of the previous year, Chitranjali Dissanayake says the country experienced an impressive comeback in recent months given prevailing conditions.
“Between March and May last year – i.e. during the initial outbreak – merchandise exports amounted to only US$ 1.5 billion,” she explains, continuing: “From June to September, this rose to 3.9 billion dollars, growing 157.5 percent.”
Elaborating on this, she points out that this was largely due to the increase in exports of apparel (192%), spices and essential oil products (241%), spices and essential oils (242%), food and beverage (125%), fisheries (173%), electrical and electronic components (157%), coconut products (132%) and rubber-based products (131%) among others.
Dissanayake attributes these achievements to exporters’ efforts to sustain their businesses during the pandemic, as well as the government’s proactive actions and dedication to extending support to sustain production for exports.
While conditions were challenging over the year, she emphasises that various opportunities have materialised including personal protective equipment (PPE) production, which led to large corporates adapting their operations.
“We believe that some sectors might recover quicker than others; the apparel industry may experience a strong revival while agriculture, food processing and certain industrial product sectors are likely to emerge from the situation as demand is growing,” she posits.
Citing feedback from Sri Lankan missions abroad, Dissanayake reveals that “products such as fresh fruits, vegetables, herbal medicines, tea, daily food items, canned and packed essential food items, household appliances, rice, cookies, confectioneries, processed food, and professional and IT related services have witnessed increasing demand overseas.”
This has been observed in countries such as Japan, Saudi Arabia, Iran, Cyprus, Russia, Belarus, Uzbekistan, Israel, Indonesia, Egypt, the UK, Canada, South Korea, Australia and Turkey. The Sri Lanka Export Development Board (EDB) expects Sri Lankan exporters to capitalise on these opportunities.
Over the years, Sri Lanka has depended on a few export markets. Dissanayake maintains that companies facing difficulties should be willing to diversify into new markets, declaring “it’s time to enforce these changes.” Meanwhile, businesses should also seek new sourcing destinations to maintain their production lines.
Prior to the coronavirus outbreak, the EDB aimed to identify various measures to diversify Sri Lanka’s export revenue streams, conducting discussions internally and with various stakeholders.
A product of this was the National Export Strategy (NES), which focusses on diversification through the ICT, wellness tourism, spice concentrates, boat building, processed food and beverage, and electronic, electrical and machinery sectors.
Additionally, all export sectors are expected to benefit from strengthened trade support functions (TSFs), which include national quality infrastructure, innovation and R&D, logistics and trade promotion.
Insisting that there are great opportunities to establish free trade agreements (FTAs) with China and others to engage in new export opportunities, Dissanayake stresses that “the world’s centre of economic gravity is returning to Asia and estimated to account for two-thirds of the global middle class by 2030.”
“Therefore, we should shift our focus from the EU and US, to export to emerging Asian and other nontraditional markets while looking to establish stronger links with these countries,” she declares.
Following the World Bank’s downgrade of Sri Lanka’s classification to a lower middle income economy, Dissanayake states that there may be a delay in the expiration of the EU’s GSP+ concession, which will be beneficial.
She asserts: “However, I believe that Sri Lanka won’t remain as such for long as we have the potential to emerge from this low growth scenario and move up the ladder to become a strong country economically.”
Dissanayake concludes: “As a nation, we must pool our efforts towards achieving this goal – especially given the prevailing landscape.”
