Value added products will capture niche markets

By Lalin Fernandopulle

The high GDP growth rate, low inflation and interest rates in the country is an impetus for accelerated economic growth which the corporate community should make full use of to reach the next level of business, said Chevron Lubricants, Managing Director and CEO and top corporate personality Kishu Gomes, stressing the need for corporates to be geared to face new challenges in the global business environment. He said that the GDP growth rate of 7.8 percent, inflation hovering around four percent and interest rates at low levels is an ideal environment for business to thrive.

It is also important that corporates have proper strategies to go beyond conventional product manufacturing to marketing niche brands that has emotional value to capture new markets.

Overall, the macro economic fundamentals are strong and prospects are high but the country needs to go beyond depending on exports of conventional products, expatriate remittance and earnings from tourism to capture niche markets with value added products that would have long-term benefits.

The crisis in West Africa where Sri Lankan companies have a sizable investment and the turbulence in the Middle East which is a major market for Ceylon Tea are adversely affecting export revenue.

The crisis in Europe is softening and the US is recovering fast which are beneficial for Sri Lakan exports and attracting tourists.

He said that entrepreneurs should not be satisfied with only increasing market share and profits which has no major impact on the economy but should go beyond borders, see new sectors and move away from traditional markets to the Asian region which is the emerging business hub.

The service sector has enormous potential to increase revenue by capturing new markets.

TheIT-BPO sector needs more professionals which could be increased only through sound higher education. The tourism industry which is a major revenue earner should woo visitors from new markets with new products that has a value proposition.

A skilled staff with quality service standards that meets high end customer needs are vital to boost tourism revenue.

“Sri Lanka is focusing on creating a knowledge hub which needs quality education and curtailing brain drain to harness talent for innovation. Skills matching and having right people at the right place is crucial for corporates to succeed," Gomes said.

Today, there is a severe mismatch of skills which has a negative impact on corporate growth. Lack of skilled staff , marketing and managerial skills are drawbacks for corporates,” he said.

Gomes said that healthy bilateral ties with China and Japan whose heads of State visited the country recently are also competitive advantages that Sri Lanka should make use of to boost trade and investments.

Sri Lanka has maintained healthy ties with its neighbours and large economies such as Japan and China. The Free Trade agreements to be signed with China will be help increase trade between the two countries.

Gomes said that Sri Lanka cannot compete on price scale but should focus on value which needs a strategic move from mere product export to value added products. Consumers look for value and therefore, SMEs should think big and strive to move to the next stage of business.

The high tax structure has been blamed for increasing overhead cost and being uncompetitive in the global market. Corporate taxes in Sri Lanka are low compared to some of the neighbouring countries. Creating an environment for investors and attracting corporates is vital.