THIS COUNTRY’S LIFEBLOOD
So much can be done to turn a nation’s exports into a value driven trade
The export sector today
Exports are the lifeblood of the nation for economic development and prosperity of the people.
Barriers to sector growth in Sri Lanka
Inadequate production capacity, a shortage of skills in production and management, the technology gap and ineffective integration with regional value chains.
Implications of these barriers
Constraints to achieve economies of scale, reduce production costs and be more competitive; a dearth of value added products to diversify exports.
The future of the local export sector
This depends on the ability of product and market diversification with cost competitiveness to participate in the international market.
And the local export sector must focus on
Innovation and differentiation to increase product offerings, improve productivity to reduce the cost of production, and be more competitive.
Strengths of the local export sector
A trainable and competent workforce, adherence to ethical practices (e.g. non-employment of child labour), and conformity with environmental and quality standards.
The outcome of this
Sri Lanka is resilient to global economic changes.
Weaknesses of the export sector
Inability to attract beneficial foreign direct investment (FDI), and inadequate local investments related to R&D and innovation.
The reason for this
Lack of policy consistency and prevailing political instability.
There’s an absence of measures to provide meaningful investment as well as a lack of agency to attract investments free of corruption.
What more can be done about this
We must have adequate financial support schemes to drive investments in exports and expansion of production activities.
The main threat to the export sector
Constraints to expand and achieve economies of scale.
This can be combated by
Promoting investments both foreign and local to expand production capacity.
The local market in a nutshell
Limited in size and potential with only 22 million people, and relatively low per capita purchasing power.
This is because
Almost 80 percent of the population have limited buying power and live in rural areas.
The global market in a nutshell
Huge with a relatively large percentage of middle-class people that have buying power in developed and developing countries – for example, China and India.
This translates into
Diverse market opportunities for a range of products with large volumes for the local sector.
Prospective export avenues
Organic products, ethical consumer goods, products based on e-commerce and service exports.
Sri Lanka’s innovations in new markets
Ethical consumer goods and organic products.
Evolving consumer trends or behaviours
Health consciousness with a preference for organic products, and attraction to ethically manufactured and eco-friendly products.
Customers generally prefer
Value added and innovative products that cater to specific consumer needs.
For regional expansion of the export sector Sri Lanka needs
Opportunities to integrate with regional value chains and wider market opportunities.
This can be achieved by
Production of intermediate goods and components in addition to finished products to link with regional value chains.
Productivity is affecting industrial and economic growth
Corruption is affecting industrial and economic growth
Trends in the global export sector
A growing trend in protectionism, volatile market conditions and increasing competitiveness.
The way forward through these challenges
Be more competitive, and serve niche markets with value added and high-tech products.
Competition drives innovation
Sri Lanka’s competitiveness
Competitiveness is constrained due to Sri Lanka’s export product basket not being diversified and relatively low productivity.
This should be addressed by
Investments in R&D and innovation, and enhancing production skills to improve productivity.
The impact of the digital age on Sri Lanka
This provides great opportunities especially for SMEs to directly enter export markets.
This also results in
Sri Lanka being able to integrate with global value chains.
Impact of social media on the world at large
There are many impacts both positive and negative, the former being in reference to wider and speedier access to diverse views.
Its negative impact
Social media is a platform that could disseminate incorrect views very quickly with the tendency to cause disruption in governance.
The export sector in five years’ time
It should be able to achieve US$ 30 billion with political stability and a solid business environment.
Mantra for success
The ability to be competitive with sustained commitment and hard work.