NCE motivates:

Members to achieve export target of US$ 20 billion by 2020

The NCE which is the only private sector chamber exclusively serving Sri Lankan exporters is working as a team to improve Sri Lanka's exports and is also willing to work with the Government to negotiate with the EU to retain the GSP+ benefits.

The Chamber which has a membership of over 450 export enterprises who contribute almost half of Sri Lanka's total export earnings, is identifying ways and means for its membership to support the efforts of the Government to achieve the overall export target of US$ 20 billion by the year 2020, from the present level of US$ 7 Bn.

The membership is of the view that the very objective of providing GSP+ concessions to countries such as Sri Lanka by the EU is to ensure sustainable development.

Therefore, the withdrawal of the concession at a time when the trade is severely affected due to world recessionary conditions and in the background where Sri Lankan exporters are trying to gear themselves to overcome the decline of 17% in 2009 in US$ terms compared to 2008 is not helpful.

The membership of the Chamber is particularly conscious of the fact that the cost of production of Sri Lankan export products to the EU market is high vis-à-vis competitor countries.

For instance, the costs of energy and power and cost of finance among others are relatively high in Sri Lanka compared to her competitor countries although the Treasury and the Central Bank of Sri Lanka has been successful in bringing down the cost of interest. With the increasing power generation from the Norochcholai, Kerawalapitiya and Kotmale projects, the Government could help to bring down the Tariff on energy for the Industry Sector.

Also it is a fact that labour productivity in Sri Lanka is relatively low compared to countries such as Bangladesh, Vietnam although the quality of Sri Lankan labour is superior. The excessive number of holidays in Sri Lanka is also known to be a major contributory factor for low productivity.

The Chamber is of the opinion that to overcome the low productivity, the best solution is to introduce an incentive scheme to increase productivity, instead of increasing the salaries.

Exports of Textiles and Garments is the largest export sector to the EU market comprising high quality products.

Concerns have been expressed by exporters particularly in the SME Sector in regard to the withdrawal of the concessions at a time when buyers are demanding lower prices due to the global economic recession.

Suggestions have been made that Sri Lankan exporters are capable of adopting strategies to add value and brand Apparel products to target niche market segments where relatively high prices could be obtained.

However, although such strategies are beneficial for the long-term development of the Apparel sector, in the short-term it would result in the contraction of production volumes thereby affecting employment.

Also member companies of the chamber in the Ceramic and Porcelain products sector which includes some enterprises which are engaged in the production and export of high quality products have expressed concern regarding their ability to sustain themselves.

This is mainly because the cost of energy is around 40% of the cost of production of Ceramic and Porcelain products and due to the reason that energy costs in Sri Lanka is high in the region and compared to competitor countries. They feel a special electricity tariff should be extended to selected industries such as Ceramic, Porcelain, Garments, Rubber and other products to increase margins and to cover up the possible loss in export revenue. This is possible as the Government is establishing new power generation projects.

The chamber also notes that other sectors including Marine products and cut flowers and foliage also need support through reduced freight rates, which is the major component in their costs as these exports are volume based.

In view of this situation the Chamber proposes that the State and the Private Sector should make a serious study regarding the current situation to determine the specific assistance exporters need at least for some time.