Exports: Consistent policy, brand development crucial

by Lalin Fernandopulle

Sri Lanka's exports are on the decline and if it is to increase and be competitive there should be a consistent policy and brand development to tide over a tough global scenario, exporters said.

The National Chamber of Exporters Secretary General and CEO M. Shiham Marikar said ad hoc policies and changes related to existing policies, which has become the norm dampens entrepreneurship, business confidence and investors from engaging in business activities, which stifles export expansion.

Policy makers should be consistent in the pronouncements they make to avoid wrong and negative signals been given to investors and business entrepreneurs. The government should agree on core national policies related to important aspects of the economy such as trade, finance including taxation, agriculture, industry, education, skills development, health, investment promotion including technology and environment

He said in a competitive environment of international trade branding is vital to introduce competitive products and services to the international market. Sri Lanka lags with a few Sri Lankan brands of products and services. Since the development of brands is costly, it is important that State assistance and incentives be provided to exporters in the sectors which have potential to develop brands to compete in the export market.

The setting up of the proposed Export Import Bank (EXIM Bank) proposed in the 2016 Budget should be fast tracked. A specialised financing institution, such as an EXIM Bank is vital to provide innovative financing products to accelerate the development of exports, which the existing banking structure in the country is unable to provide. Assistance for the development of brands is one example of the specialised services that could be provided by an EXIM Bank, Marikar said

The Chamber recognises the need to enter into Preferential Trade Agreements and Free Trade Agreements to develop of exports. However, care should be taken to avoid pitfalls during the negotiating process of such agreements to derive the expected benefits to the country. In this regard it is important that the government and the relevant State authorities enter into close consultation with private sector stakeholders.

Expenditure on Research and Development of hi-tech products as well as innovation for 'differentiation of products and services', plays an important role to introduce competitive products and services.

Chairperson, Export Development Board, Indira Malwatte said the export income target envisaged for 2016 is US$ 14 billion and for 2020 US$ 20 billion. We have prioritised sectors. The main earners, the bread and butter line which is apparels, rubber based, tea and ICT. The EDB has conceptualised an approach for each sector.

"We are trying to link our components with the global value chain instead of trying to do everything. The new trend it to play to your country's strength and specialise in a specific area", she said.

Former Central Bank Deputy Governor W.A. Wijewardena said Sri Lanka has completed its export cycles from tea, rubber and coconuts in the 1970s and, thereafter, garments which makes it all the more important to move to a new paradigm in exports to capture new ground and expand volumes.

He said Sri Lanka should be a part of the Asian supply chain such as India and boost export revenue. "We need to move from garments to complex products such as the manufacture of pharmaceutical products. Bangladesh has made great leaps in the manufacture and exports of pharmaceutical produces. We need to encourage setting up pharmaceutical plants by the private sector to go for exports.

"Our focus should be do increase research and development with allocation of more funds.

The Industrial Technology Institute has made many breakthroughs in medicine and agri research. One such breakthrough is the dengue test that could be done within a short time today instead of having to wait for days in the past. Extraction of chemicals from tea to manufacture perfumes is another innovation of the institute," Wijewardena said.

Sri Lanka's exports have grown only 2.1 times from $ 5.5 billion in 2000 to $ 11.5 billion in 2014. The export performance in 2015 was at $ 10.5 billion, a dismal growth of less than two percent. In contrast Bangladesh recorded an export growth of 4.7 times and Vietnam, 9.4 times from 2000-2014. Sri Lanka's exports as a share of its GDP has been falling due to the sluggish pace of export growth.

Apparel, tea, rubber-based products, ICT and coconut-based products accounted for the top five export items during the past five years.

The export income increased from US$ 8,974 million in 2010 to US$ 11,878 million in 2014.