EXPORT SECTOR
VALUE ADDITION WILL PAY
Dr. Jagath Peiris addresses the shortcomings of the local export sector
Compiled by Randheer Mallawaarachchi
Q: You have seen the export sector at the best and worst of times. Could you outline your views of how it has performed over the past decade?
A: It is unfortunate to note that the growth in Sri Lanka’s exports over the past two decades has not met the desired levels, in my opinion.
This is evident in comparison to the progress achieved by other Asian countries. Bangladesh and Sri Lanka reported similar export values in 2000. However, the former’s exports are around four times greater than that of Sri Lanka’s these days.
This is a matter of grave concern as there has not been sufficient attention on driving an increase in Sri Lanka’s exports.
We have achieved a certain level of progress but with the potential that the country displays compared to other Asian nations, I deduce that the statistics should be far superior to what is being recorded at present.
The core reasons for the stagnation in exports are an overdependence on a limited pool of exporters, as well as the low value that the products and services ultimately contribute to the aggregate value of exports.
Therefore, focus should be directed towards encouraging more players to enter the export trade and inducing value additions in the products that are being exported.
Q: What is your take on the contribution of the export sector to Sri Lanka’s national income?
A: We have observed the country resorting to seeking foreign aid in the form of loans and currency swap agreements. Does this mean that the local export sector isn’t contributing an adequate amount to national income for us to have to resort to such measures?
The export sector needs to contribute substantially to the nation’s income. Exports as a share of GDP have decreased from 39 percent to 23 percent in the two decades between 2000 and 2020.
Sri Lanka had to resort to obtaining foreign currency loans to bridge the shortfalls in our balance of payments and honour its commitments. The context would have been drastically different if the country had achieved the same level of growth witnessed by Bangladesh over the last two decades.
However, we do not have to imitate the same strategies that proved to be effective for Bangladesh since every country is unique.
The competitive advantage that the nation benefitted from was the availability of cheap labour.
Unlike in the past, cheap labour has been hard to come by in Sri Lanka in recent times.
A majority of the island’s flagship exports are labour driven – and this has led to hindrances as a result of the constant increase in labour costs.
Sri Lanka’s export sector faced a major labour shortage even before the emergence of the global pandemic. And a number of complaints regarding the unavailability of skilled labour have been forthcoming.
The solution that I feel would derive optimal results is outsourcing labour intensive products to countries with access to cheap labour. Meanwhile, the process of value addition could be pursued internally with the final products being reexported to the global market.
Q: As a multidisciplinary expert, would you say that excelling in multiple specialities is a must in view of the prevailing business climate?
A: I tend to capitalise on the knowledge that I’ve obtained through my professional education and four decades of work experience when making decisions and advising others.
As a firm believer in the notion that knowledge and experience are equally important when making prudent decisions, I believe that multidisciplinary expertise is vital in today’s context; it enables a person to benefit from synergistic effects.
For example, an engineer with accountancy qualifications would be in a better position to make a more prudent and quick decision, compared to a joint decision made by an engineer and accountant – because in the case of the latter, the two individuals may need to make compromises and the decision may not be the most suitable.
Q: What are your aspirations for Sri Lanka’s export sector?
A: Ideally, the export sector in Sri Lanka should focus more on high value added exports. Additionally, I believe that we should look to develop or acquire globally recognised brand names.
The development of suitable strategies for the sector’s sustainable growth in a bid to reach the ultimate goal of US$ 30 billion by 2030 should be the core focus as the country moves on from the prevailing global pandemic.
Furthermore, the involvement of multiple stakeholders and professional institutions is mandatory if we are to achieve this tough challenge.
