Sri Lanka launches export strategy backed by FTA access, business support

 

Sri Lanka will push for free trade agreements with Southeast Asian
countries and introduce a trade adjustment scheme to help domestic
industries transition to competitive enterprises Prime Minister Ranil
Wickremasinghe said, as authorities introduced a National Export
Strategy (NES) to win global markets.

NES 2018-2022 will focus on developing the export sector by improving
quality infrastructure, trade information and promotion, logistics and
innovation.

Sri Lanka hopes to nearly double exports to 28 billion US dollars by 2022.

“The key objective of NES is to increase capacity of Sri Lanka’s export
industries, improve trade performance and ensure different sectors of
the economy become more competitive to get a share of the global
market,” Wickremasinghe said Thursday.

“This is not only a strategy for national exports, but also to create
better jobs and improve incomes of the people of this county,” he said.

The premier said authorities would meet with export industry
representatives every six months to monitor and drive implementation of
NES.

Sri Lanka was among the first countries to adopt open market economic policies in 1977.

“South Korea and Singapore which were among the early starters have surpassed us today,” Wickremasinghe said.

“All developed economies of Asia are export economies, but we neglected
this sector. Even China started after us, so did Vietnam. Bangladesh was
a late starter, but now they are ahead of us.”

The government has pledged to develop the exports sector and adopt more
open market economic policies, the Prime Minister said.  

“We got back GSP Plus and we concluded a free trade agreement with
Singapore with both countries agreeing will not apply to movement of
people despite what some shout about.

“We’re talking about an FTA with China, followed by Thailand, Malaysia
and Indonesia. We want to deepen trade with India. We’re covering the
whole Bay of Bengal which is going to be new markets for our exports,”
Wickremasinghe said.

However, there are natural fears about opening the economy.

“None of us want any domestic enterprise to be adversely affected. For
the first time a trade adjustment policy will be introduced with tax
incentive available for domestic industries to become more competitive,”
the Premier noted

“We’re not opening up tomorrow to destroy them. They create as many jobs
as export industries and are an essential part of the economy and they
should be assisted to adjust to the new trading environment,” he said.

The government has launched Enterprise Sri Lanka to assist local
entrepreneurs and is also setting up new export processing zones to
attract FDI to export industries.

“We will set up a development bank to finance local enterprises but
before we do that, we will ensure 10 billion rupees is available for
local industries. These are some of the efforts we are taking,”
Wickremasinghe said.

Authorities are planning to introduce legislation to cover single window
facilitation for investors and improve the ease of doing business.

“Bangladesh, Kenya and South Africa have these laws and it’s high time we had them too,” Wickremasinghe said.

“These are the policies we are following to ensure that the people in
this country have better jobs, better incomes, better housing, better
education, and better healthcare. Improving trade is the only way to
achieve all this,” he said.

 

-A long way to go-

Speaking at the launch of NES, Minister of Development Strategies and
International Trade Malik Samarawickrama said the government was
committed to rebalancing Sri Lanka’s economy.

“The focus has been to rebalance Sri Lanka’s economic model from one
over-reliant on government investment and public infrastructure to a
model that is more outward oriented, private sector-led and knowledge
intensive.

“This is necessary attract transformative FDI that produces goods higher up the global value chain,” he said.

Samarawickrama says the transition will be challenging.

“But is the only option for Sri Lanka if we are to create better jobs
for our young people and make a sustainable transition into a higher
income economy.”

“Inward-looking, protectionist trade policies have not brought the results that we seek,” he said.

In 2017, Sri Lanka recorded its highest annual export earnings of 15.5
billion US dollars and is expected to record 17.2 billion US dollars
this year.

FDI was 1.9 billion US dollars in 2017, and is forecast to reach 2.5 billion US dollars this year.

“These numbers suggest that we are a long way off from where we want to be as a country,” Samarawickrama said.

Annual export earnings of Singapore is around 480 billion US dollars,
Taiwan’s is 340 billion US dollars and Malaysia’s is 250 US dollars.

“Even Bangladesh a much later entrant is at 41 billion US dollars,” Samarawickrama said.

In terms of FDI, Singapore attracts about 77 billion US dollars a year,
Vietnam 12 billion US dollars and Taiwan 9 billion US dollars.

“If we only concentrate on a domestic market of 21 million people, we
will never be able to achieve the rapid economic growth we aspire to,”
Samarawickrama said.

“Our only choice is to integrate with global markets,” he said.

Rapid changes in technologies and protectionist trade policies elsewhere
makes it imperative for Sri Lanka to act fast to drive exports growth.

“Technological advancement has made physical goods more virtual and
e-commerce platforms are empowering SMEs to take their products to
global markets.

“This paradigm demands that we adopt new approaches for competitiveness,
or we risk being left behind. This is why I believe that the NES is so
timely and ushers in a very import era for all Sri Lanka,”
Samarawickrama said.