Chairman's speech 2014 - 2015
ADDRESS AT THE 17TH ANNUAL GENERAL MEETING OF THE EXPORTERS ASSOCIATION OF SRI LANKA
Our Chief Guest his Excellency Yashvardhan Kumar Sinha, High Commissioner of India to the Democratic Socialist Republic of Sri Lanka. Guest of Honour Mr. Anura Siriwardena, Secretary to the Minister of Industry and Commerce Heads of Government Institutions Distinguished Invitees, Past Chairs, Fellow members of EASL Ladies and Gentlemen
In spite of external and local challenges the resilience in the Export Sector is gathering momentum as Export earnings have seen a positive trajectory.
Economy is expected to gather pace in line with improved economic growth as our major export markets in USA, EU and Asia has shown gradual signs of Economic recovery.
External trade of the first half of 2014 grew from a year earlier to reach USD 5.4 bln showing a 16% year on year first half growth. This positive growth momentum was due to significant expansion in all major export categories which is very encouraging for our efforts towards reaching USD 20 billion export goal by 2020.
In 2013 exports gain moderately recording a positive growth of 6.4% to USD.10.4 billion in contrast to USD 9.8 billion in 2012. This growth was attributed with the recovery of Sri Lanka's traditional market such as USA and EU.
On the other hand, Sri Lanka's exports to GDP share has steadily declined starting from a peak of 33% in year 2000 to reach 17% by 2012. Further Sri Lanka's share in the world export market also has steadily declined notably.
Risk of falling into a middle income trap can result in manufacturers and exporters often find themselves unable to compete in Export Markets with low cost products in other competing countries and also lag behind advanced economics in high value products.
This seems inevitable as our per capita income will reach USD 4,000 by the year 2016 or even before.
To avoid middle income trap we need to identify strategies to introduce new processes to find new markets to maintain export growth.
The risk of getting caught to a middle income could be mitigated to some extend by increasing exports to immerging markets and developing markets in Asia, while continuing our exports to traditional markets.
Lack of Job specific skills with high demand threatening the countries sustained economic growth. The work force lacks technical and soft skills, which are needed to sustain the growth in the export industry.
A large share of the work force has shifted from Agriculture to industry and services. Demand driven Technical education and vocational training programs has not evolved adequately to meet changing demands of the sector.
Registration of trade marks in foreign countries is costly and time consuming. At present exporters have to submit applications to each country separately bearing the cost of translating documents, hiring lawyers, paying different amounts of fees. Further this process could take a time frame of 2 to 5 years to register a trademark in another country.
In order to avoid delays and costs, Sri Lanka should gain access to the Madrid and Lisbon agreements, which can facilitate registering of trademarks, in more than 80 countries with one single registration.
Lack of private sector credit growth in the country indicates to some extent that Export Sector is not investing adequately in infrastructure and machinery to improve productivity instead rely on labour intensive techniques, at a time there is access to cheap credit for development.
The sector should also look at attracting export related foreign direct investments with the formation of JV's taking into account of the tax holidays in place and with the unprecedented investment made in the development of ports, airports, and road networks in the country to attain USD 20 bln by year 2020.
India is the 3rd largest export destination for Sri Lanka which accounts for 6% of total exports. Most of the exports from Sri Lanka to India are under the Indoor-Sri Lanka Free Trade Agreement. The By Lateral Trade between the two countries now stands at USD 3.6bln, in 2013, with the balance of trade favouring towards India.
In terms of size and population of India our export sector is looking forward to penetrate into the ever increasing demands of the Indian market by engaging in trade.
Also, it should not be forgotten that India is one of the leading investors in Sri Lanka with the presence of major Indian Companies.
The Exporters of Food category are faced with a issue with Indian Authorities for not accepting standards testing and certification issued by accredited Labs in Sri Lanka for products conforming to Indian standard requirements. Instead Indian Authorities draw samples from each and every shipment and test them in their own labs resulting in undue delays at Port and added cost. On the other hand Sri Lanka standard Institute has entered into a unilateral agreement with export inspection council of India to accept Test reports & Certificates when Indian products are imported to Sri Lanka. Therefore Indian products do not face undue delays and additional costs when entering Sri Lanka.
In this regard the proposed solution is to sign a bilateral agreement of mutual recognition of standard, testing and certification requirements.
Under ISFTA India has imposed a cap on 1st of April, 2006, permitting only 2500 tons of pepper to be exported to India annually. Since the introduction of the cap, no exports of pepper has been made to India under ISFTA. Sri Lankan exporters are now requesting Indian Authorities to remove the quota restrictions and to restore the free trade to the original status when the agreement came into operation in the year 2000.
The exporters are of the view that creating a resolution center to address ISFTA implementation issues be beneficial for both parties engaged in trade with India.
Finally With peace and political stability in the country, the Export Sector will be a key drive of the economy. Therefore, we are looking forward to work with close co-operation with the government to achieve the targeted USD 20 billion of exports by 2020.
Thank you.
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