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| Sunday, 13 June 2004 |
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Are we exporter friendly? This is the million-dollar question but the answer sadly borders on the negative. Why does Sri Lanka allow her own exporters to move away from her shores, giving of their resources, talents and expertise to another country which is more exporter friendly than their own? Savithri Rodrigo speaks with one of the main sponsors of the NCE Awards, Sampath Bank's Managing Director Anil Amarasuriya who feels strongly that Sri Lanka's export policies should be more geared towards keeping our exporters firmly entrenched here because if more start looking towards greener pastures, it is the country that will lose in the longer term. Given that Sri Lanka's exports have seen a relatively developmental period in the last few years both in traditional and non-traditional exports, the general consensus however is that support for this fundamental cornerstone of the economy is insufficient. State patronage is rather abysmal and has been so via successive governments. It has mostly been the individual determination of the exporter that has given impetus to exporting industries and services to place Sri Lanka on the global map. In fact, given that Sri Lanka has made a name for itself on its emphasis on quality exampling Munchee and Damro who have broken into highly competitive markets like India very successfully, some countries are wooing Sri lankan industrialists with the proverbial bag of sweets to set up operations, giving them incentives and enticements that have thus far been denied to them in their own land. In fact, it is saddening to note that some of Sri Lanka's renowned exporters may be relocating to countries like Bangladesh, resulting in the country losing out not only valuable income but also the consequential employment, development, human and infrastructure capital potential. These were some thoughts unveiled by Anil Amarasuriya, Managing Director of Sampath Bank whose customer base includes a presence in most sectors of export including tea, rubber and apparel. Discussing some vital background information on the past few years in export, Amarasuriya mentions that after the debacle of 9/11, the apparel sector picked up managing to stay abreast of competition both in the US and in Europe. "But what is concerning now is an era post-MFA. The formulation of the FTA with the US is critical at this point. In fact, we have seen a shift of manufacturing operations by our own exporters to countries like Madagascar, Kenya, Vietnam and Tanzania, a very sad phenomenon that has arisen due to quota issues and those countries persuading our manufacturers with incentives that cannot be ignored". Declaring that rubber based industries too has gone up the growth curve, Amarasuriya opines however that with the recent volatility of the rubber prices, forward sales contracts would face some discomfort. While the tea bag trend continues to eat into the traditional rituals of tea mainly due to the convenience factor, he questions the tea industry as to their readiness for supplying CTC teas to feed this trend. "Also, although a few companies like Heladiv, MJF and Imperial Teas have pursued value addition and niche marketing, the thrust into this area is just not enough, not with the competition I see looming for the tea industry in the future. We cannot always keep saying that we have Pure Ceylon Tea and sit back complacently. Tea is a matter of taste and realising that tea is a veritable pot of gold, every country producing tea wants to get on the bandwagon. I don't think the majority of our industry has realised this and by the time they do, it might be too late". Amarasuriya also critiques the policy-makers on its agricultural strategies. "Just as an example, the farmers this season had a bumper harvest after many years. Now some of this harvest could have been exported. But there doesn't seem to be direction. Our farmers grow over 100 different varieties of rice and we simply cannot meet export orders unless we have sufficient quantities of a single variety. Sri Lanka is believed to have better varieties of rice than even the famed Basmati. We need our policy-makers to become more involved in the process. The huge gap in prices between farmgate and retail markets need to be addressed. There is no proper marketing plan nor infrastructure for storage facilities. What we need is organised grouping, teamwork I like to call it like we practice here at Sampath, to work together where stocks will be held until the price is right." Amarasuriya mentions that for smaller exporters opening an LC or exporting on an open account poses huge risks. "What happens if his customer does not pay. The recourse available to him is very expensive but I am glad that institutions like SLECIC have mechanisms that take on these risks and also have processes in place to help recovery in some cases". He also laments the lack of marketing and promotional capabilities. "While an exporter would specialise in manufacturing quality products, he may not specialise in marketing it. So however good the product is, if his marketing capabilities are not true to form, he loses out. There has to be a concerted effort to look at our exporting industries collectively and work out systems that would take into account not only the larger exporters but also the small and medium enterprises, who most often need the most help. They too have an abundance of talent but we must map out a direction for them on common goals and vision". He urges exporters to ask themselves two questions. What are we good at? Do we have a competitive edge? "As a country our labour and energy costs are probably the highest in the region. The incentives given are generally short term and not sustainable". He cites prawn farming as a classic example of `band aid' treatment. "Whenever there is a disease there is much talk and prawn farmers try to find solutions. then a remedy is found and the industry is back on track for a short period. The cycle returns once again a few years later. Our approach to these problems should be more pragmatic. Look at the root cause and find long-lasting solutions". He also opines that although Sri Lanka's largest non-traditional export at the moment is apparel, "there is very little backward integration, (save for a few bigger concerns) and hence we may not be competitive in the future. It might also be sensible to identify smaller companies who may be more efficient than the larger ones and hence be more competitive price wise and leave the larger players to handle marketing and sourcing of raw materials. The same goes for tea, unless we get our act together. But what we can build up on is our literacy and dexterity as well as the aspect of tourism". Amarasuriya discourses that the Annual NCE awards is certainly a boon to exporters and declares that he is personaly aware of winning exporters who use the award as a marketable tool to further their enterprise. "It is imperative that the NCE Awards be elevated to a level where the award in itself will become one of the most prestigious and will be known by the buyer too as one which is coveted and internationally recognised". Being a totally local bank, Amarasuriya says that it is their national duty to help the economy grow, assisting local entrepreneurs and exporters to uplift themselves. Through its islandwide branch network of 63, which should increase to 70 by the end of the year, Sampath has pioneered IT within the banking industry. From introducing ATMs, to fully integrated systems to Internet banking and PayEasy even to the remotest parts of the country, the bank encourages its customers to take advantage of its IT enabling environment, while enjoying the personal interaction that it promotes as well. "We are aware of the important role we have to play and we are on a constant curve of continuous improvement, not only for ourselves but for our customers and the country at large so that even where exporters are concerned, we have mechanisms that will enable them to develop in such a way that they will contribute effectively towards the national economy. We will be a growing force in the Sri Lankan Financial Services." he added. Source-Sri Lanka exporter magazine |
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