EU, Mid East crises hit exports

by Lalin Fernandopulle

Sri Lanka's export volume has declined and the reasons attributed are the lack of clear policy direction, the financial turmoil in Europe and the crisis in the Middle East. The West is a major market for Sri Lankan exports.

Past President of the National Chamber of Exporters and Chairman of Heladiv Tea Group, Rohan Fernando said the Tea Exporters Association will present a policy document on the tea export industry to the Government to increase tea export revenue to five billion US dolalrs by 2020. He said that the Government should look at the proposals positively and implement them to boost export revenue. A discussion among all stakeholders of the industry is vital to get over the crisis.

The decline in export volumes continued this year as well with earnings in January plummeting 18.2 percent Year-on-Year (YoY) to US$ 726.7 million, Central Bank data revealed.

Export revenue has been dropping despite trade deficit narrowing 24 percent YoY to US$ 780.4 million.

Earnings from all major exports dipped during the month.

The decline was mainly driven by earnings from industrial exports that dipped 20.7 percent YoY to US$ 557.7 million.

Textile and garment export earnings dropped 8.9 percent YoY to US$ 333.9 million while rubber export earnings declined 19.8 percent to US$ 62.8 million. Earnings from agriculture product exports fell 18.2 percent YoY to US$ 726.7 million with tea export earnings declining 7.9 percent YoY to US$ 167 million, data revealed. "As demand for exports remained fettered by the slow recovery of major export destinations, namely, the EU and the USA, the decline in export earnings continued into 2013," the Central Bank said. The drop in export volumes has been a global trend since the financial crisis hit US and European markets in 2008.

Crisis-hit countries look for cheaper and alternative sources for imports and have cut down on non-essentials.

Past President of the Federation of Chambers of Commerce and Industry of Sri Lanka, Nawaz Rajabdeen said the decline in exports is a global trend and that there should be an action plan and a presidential task force to boost exports.

"Exporters should focus on non-traditional export items such as spices and value-added rubber-based products", he said. Exporters also said the withdrawal of the GSP Plus scheme had an impact on the decline in exports.

National Chamber of Commerce of Sri Lanka sources said that bilateral trade discussions have helped explore new areas for exports and boost trade between countries.