Service sector - an engine of economic growth

by L. S. A. Wedaarachchi

The service sector has become an engine of economic growth for developing countries and it gives the opportunity to diversity trade, create jobs and enhance economic development said Doreen Conard, chief, trade inservices section International Trade Centre (ITC) Geneva, Switzerland.

Emphasising the high utility of exporting business and professional services, Conard said that the service sector is the fastest growing component of international trade.

"At the beginning of the 21st century the services trade accounted for nearly a quarter of world trade, but by 2020 this figure is expected to rise to 50 per cent, she said.

She was addressing the final event of the project for the promotion of exports of business and professional services implemented by the International Trade Centre (ITC) in Geneva in collaboration with the National Chamber of Exporters of Sri Lanka (NCE) at the Taj Samudra Hotel. Prof. Lakshman Watawala, chairman, BOI was the chief guest on the occasion.

"Services represent a considerable part of national economics, whether it is in developed or developing countries. The service sector represents most of the developing countries, a significant portion of their GDP, on average 60 per cent and 80 per cent of the working population. The service sector represents more employment opportunities than the industrial and agricultural sectors together", she said.

Conard said that in most countries, the importance of the service sector for economic development has been recognised.

"Thanks to the technological advances, the marketing and delivery of many services is facilitated, increasing their export potential. In the context of globalisation of world markets, services play a vital role in facilitating all aspects of economic activity," she said.

There are many factors that hold businesses back in developing countries "The services sector faces numerous challenges. The main challenge is the lack of awareness. In this diverse, fragmented sector, it is hard to find data and trade statistics are understated. Public officials may not be aware of the scope and the depth of the services economy", she said.

As a result of the initiative taken by the National Chamber of Commerce (NCE) to promote the export of services in Sri Lanka, the Asia Trust Fund of the European Commission approved and funded this project. The ITC - NCE project on successful service exporting commenced last August to build the capacity of relevant services, industry associations, trade support institutions and training institutions in Colombo, Galle and Kandy.

The Association of Small and Medium Enterprises in Tourism (ASMET), the Information Technology Association for Enabled Services (ITEAS) and The Institute of Supply and Materials Management which participated in the project were awarded for excellence in the promotion of trade and services.

Kulatunga Rajapaksa, President, NCE, Rasa Weerasingham, Executive Director NCE, L. S. G. Tilekaratne, Director NCE, Roshan Lyman, Trade Counsellor of the European Commission, Sujatha Weerakoon DG - EDB, David Hashim CEO, and Senior Partner Veritas Architects Malaysia, Eric Alvarez, chief, office of Asia and Pacific, Latin American and Caribbean section of the ITC participated.