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Sunday, 3 January 2016

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Sri Lanka's exports down - State Minister

Sri Lanka's exports, as a share of world exports, has fallen over the past 10 years. However, the Government hopes to boost exports to 30 billion US dollars by 2019, said State Minister of International Trade, Sujeewa Senasinghe.

"The people are a little confused by the Budget. So are we. However, I think it is an export-oriented Budget which will take the country in the right direction," the State Minister said.

"The world has moved forward but Sri Lanka has gone backwards. Our exports have come down from 0.9% share of the world's GDP ten years ago to 0.6% and in local GDP from 34% to 14%. We need to think anew," he said.

The State Minister said as Sri Lanka's rupee is under pressure due to the import of luxury goods, increasing exports would help relieve the pressure.

He said it was the money printed by the Central Bank to finance Budget deficits and low interest rates under the previous regime that had caused a credit boom which was creating currency pressure.

Senasinghe said he hoped to encourage foreign investors to partner with Sri Lankan firms so that there would be a transfer of technology.

"We hope to make it easier for exporters to tie up with foreign investors to get new technology and market knowledge with the help of the Board of Investment," he said.

"At one time we had industries with a value addition of 20 to 30 percent. Today, we have industries with 60 percent value addition. We want it to reach 80 percent soon," the State Minister said.

"Today, our foreign relations platform is better. It suffered for the past six to seven years," Senasinghe said.

Under the new government's development program over 5,000 industries will be launched in 45 export development zones islandwide, the Minister said. As a first step, the government hopes to set up an export zone in Trincomalee with Korean investment generating over 40,000 employment opportunities.

Sri Lanka cannot be developed by taking decisions based on emotions because international cooperation is vital for development, he said.

Senasinghe said there are two important approaches to upgrade the export sector in a short period. The first should be to focus on the sub commodities of the main export commodity. These sub commodities should also be promoted along with export products. The second is value-addition.

The State Minister said that during a recent visit to Korea he was told that the Koreans first imported a car from the US or Japan and reverse engineered it to learn how to build a car.

Several East Asia countries have free trade zones and low or negligible import duties have been used by investors to build global supply chains, where production of a product is spread across several countries.

Though the mathematical percentage of value addition is low in each country, in many cases large volumes using capital intensive production methods had given better paying jobs.

Creating free trade conditions and allowing investors from the West and Japan to innovate and build global supply chains have pushed up gross export volumes to several times of the gross domestic product in many East Asian countries.

The activities of the Export Development Board should be parallel to the government's economic development program.

"Our aim is to make exporters as comfortable as possible and remove red tape as much as possible. In this Asian century, countries around us - Thailand, Malaysia, Singapore, and Korea have developed," he said.

"Branding, new technology, thinking in new directions are the ways in which we can achieve what other developed countries had achieved. Sri Lanka had borrowed US dollars at an average interest rate of 6.9% over the past few years for the State's investments and we have to pay Rs 1,200 million annually as loan re-payments," Senasinghe said.

"We have certain State investments such as the Hambantota port and Mattala Airport which do not give benefits. We have to carry these burdens. This is not an excuse but this is the true situation," the State Minister said.

The government hopes to increase the value of export from $11 billion to $ 35 billion over the next five years.

The State Minister said that this target could be even increased to US $ 50 million if exporters could get their act together.

"We hope to revive our export manufacturing. Countries such as Korea and Japan revived their economies with the help of a few major companies.

"The people might not understand this, the public will always want concessions but we can't build this country on concessions. We must create a suitable environment for the export industry," he said.

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