Sri Lanka should be ashamed of her failure to explore the vast export potential created due to the ideal economic geography around her which is increasingly becoming favorable with India and China in close proximity, said the IMF Resident Representative in Sri Lanka and the Maldives, Dr. Koshy Mathai.
"Sri Lanka's exports to India and China have been 5% and 1% respectively in 2011 of total exports. This country has a huge opportunity to explore to take a greater advantage of its proximity to the large and growing Indian economy towards its north with a growing population", Dr. Mathai who is also an Indian American remarked in dismay of the country's poor export performance at the 15th AGM of Exporters Association of Sri Lanka held last week at the Cinnamon Lakeside.
Commenting further he stressed the importance of increasing or at least maintaining the contribution of exports to GDP pointing out the declining trend compared to its peers.
"Export earnings have recorded a growth of over 20% during the last two years which is commendable. But at a time where everything is moving upwards you just cannot ignore or justify the declining ratio of exports to GDP", he said while recalling a disagreement once he had with the Chairman of Export Development Board, Janaka Ratnayake at an earlier forum who was also present at this event as the Guest of Honor.
The contribution of Sri Lanka's exports to the GDP has declined from 33% in 2001 to 17.8% in 2011. If the country were to maintain the same level of contribution as in 2011, the export earnings should have reached US $ 18.1 billion in 2011 with a growth rate of 14.1% p.a.
The export earnings declined by 7% during the first five months in 2012 demonstrating a slight improvement in June with a growth rate of over 11%.
Meanwhile, Vietnam, a country with a similar production base to Sri Lanka increased their exports from US $ 4.5 billion in 2000 to a whopping US $ 93 billion in 2011 at an 18.4% growth rate.
Endorsing the bold policy package adopted by the Central Bank at the beginning of this year to arrest the current account deficit, Dr. Mathai forecast good time's ahead although there could be short term pain. "Certainly the current exchange rate policy should increase your bottom lines. There could be short term problems with building capacity to cater to the increase in demand. Therefore it is important to build capacity in the medium term to long term because exports are the key ingredient for Sri Lanka in achieving accelerated growth trajectory", Dr. Mathai said addressing the exporters.
The first Indo-Sri Lanka CEO's forum held yesterday as part of ‘The India Show' was an ideal platform to explore ways of expanding two way trade and investment and strengthening links between business associations of the two countries.(DK)