20 percent growth anticipated in export income

by Lalin FERNANDOPULLE

Sri Lanka's export income will increase by around 20 percent by the end of this year despite a four percent decline upto May, said Export Development Board (EDB) Chairman Janaka Ratnayake during a meeting with stakeholders on the performance of the export sector last week.

He said exports plummeted during the first half of this year due to economic turbulence in Europe and the USA which are key markets for Sri Lankan exports.

Apparel exports, a major foreign exchange earner slumped five percent this year. Many export sectors such as boat building, spices and handloom recorded negative growth affected primarily by the global economic crisis. Spice exports were affected by the prolonged drought.

Spices and handloom exports declined by around 40 percent while tea exports dropped by seven percent this year. Spice exports during the first and second quarters of the year were affected badly due to the drought. The pepper yield is expected to double in the third-quarter of 2012 after a bad spell in the first and second-quarters.

Ornamental fish exporters said the lack of quarantine facilities and importation of new species are affecting the growth of the sector which has potential to generate foreign exchange to the country.

Huge potential

"The Government should allow importation of species for breeding and set up an entrepot for the sector", ornamental fish exporters said

Coir product exporters said that the sector is neglected though it has huge potential to generate more foreign exchange to the country. "The export of raw material should be banned', they said. The IT/BPO industry recorded a growth despite challenges such as high energy, branding and infrastructure costs, industry officials said.

Ratnayake said that Sri Lanka should put a halt to exports of raw material and focus on value added exports which will help compete with other countries. Sri Lanka's export value to the GDP declined from 32 percent to 17 percent from 2000-2011. Germany's exports to GDP is one trillion dollars, Hong Kong 140 percent to the GDP and Singapore 120 percent to the GDP.

Asian markets

Sri Lanka should focus on Asian markets for its exports. Exports to India increased by 12 percent. The EU and the US are major markets for Sri Lanka's apparels, gems and jewellery and spices. The export income was US$ 10 billion last year while a US$ 15 billion target has been set for 2015 and US$ 20 billion 2020.

Ratnayake said that export income rose 21 percent in 2010 and 22 percent last year despite many challenges. "We are optimistic that export revenue will reach US$ 11 billion this year with the sector rebounding during the second half of the year", he said.

Exports to the US recorded a marginal growth early this year while exports to Europe tumbled drastically owing to the debt crisis which has stifled growth in many countries in the region. Seven of the 17 EU member countries are adversely affected by the crisis.

Boat builders said that export income dropped by around 90 percent this year due to the low import demand from EU countries.

They said that the industry needs high skilled workers to compete with boat manufacturing countries and added that exporters solicit support from the Government to tide over rough times.

Boat manufacturers said that the import of cheap boats to Sri Lanka is eating into the industry and added that a cess be imposed to protect the industry.

"The EDB is focused on export diversification, market promotion and development, brand building and promotion of value added exports to boost export income and achieve the target envisaged for the sector", the EDB chief said. The EDB will promote the Sri Lankan brand logo through export products. Sri Lanka launched the Ceylon Cinnamon logo last year to boost exports of the product. "The Government should support the export sector unconditionally", Ratnayake said.