ME, energy crisis may hit exports

By Lalin FERNANDOPULLE

The devalued rupee has helped boost exports but the crisis in Iran and Syria is a looming threat to exports said former National Chamber of Exporters Chief, Rohan Fernando.

He said that though the devalued rupee benefits exporters, the escalating energy prices and the tension in the Middle East could have a drastic impact on exports.

Tea exporters said that the current auction prices are good but the uncertainty in key export destinations such as Iran and Syria is a huge blow to exports.

The Middle East accounts for a major share of Sri Lanka's exports and it is a large buyer of Ceylon Tea.

Sanctions against Iran and the instability in the region have impeded trade with many countries in the Middle East.

The high cost of energy adversely affects many energy intensive export industries such as the ceramics industry. The rising cost-of-living spurred by the depreciation of the rupee affects labour intensive sectors such as tea and rubber.

Export Development Board Chief Janaka Ratnayake said that export revenue would reach $ 12 billion by the end of this year with the support of the mega trade fair to be held this month in Colombo and the weaker rupee which will boost exports.

The EDB said that exports would reach $ 15 billion by 2015.

Currency depreciation increases export revenue but impoverishes wage earners who have to pay higher prices for imported commodities and reduces capital for investments. Sri Lanka imports over 90 percent of its commodities widening trade deficit with a balance of payment problem.