EASL AGM 2012 Speech by Mr. Janaka Ratnayake - Chairman of The Sri Lanka Export Development Board
Dr. Koshy Mathai, Resident Representative of IMF, Ms. Dawn S Austin, Chairperson, Exporters Association of Sri Lanka Committee Members Ladies & Gentlemen
Good Evening!
I am privilege to be here today to address this prestigious gathering.
The global economy has changed dramatically since 2008 due to economic and financial crisis experienced by developed countries as well as emerging countries.
World trade statistics indicates that trade of the major emerging & and developed countries also have declined eg: China, India ,Italy and Germany.
According to the present situation……… the US economy is showing an improvement while the EU is struggling with sluggish economic growth. This is visible with a lot of matured economies taking austerity measures.
Sri Lanka being an economy with a small GDP of US 60 Billion……….. can be compared to a medium scale company in EU or USA, we had no alternative but to face the consequences of the global financial crisis.
However, export earnings of Sri Lanka which was affected by the global economic crisis in 2009, have strongly recovered during the year 2010 and 2011 registering a growth rate of 21% and 22% respectively while GDP has grown by over 8% for the last two years.
There is a decline in our exports during the last five months by 7%, slightly improved in June 2012 having a growth rate over 11%.
Export earnings have come down due to a few industries suffering negative growth, namely;
the Boat Building Industry which declined by 98%. Exports of natural rubber also dropped by 30%, Leather products by 19% , Spices by 33% and handloom sector.
It has been pointed out in many fora that contribution of our exports to the GDP has come down from 33% in 2001 to 17.8% in 2011.
Sri Lanka's GDP in 2001 was US$ 15.7 bn. and in 2011 it was US$ 59.2 bn. Contribution of exports to GDP in 2001 was 33.6% which declined to 17.8% in 2011, Sri Lanka exports in 2001 was US$ 4.8 bn. and in 2011, it was US$ 10.5 bn. with a growth of 8.1%.
If we are to maintain the same level of contribution to GDP as in 2001 the export earnings should have reached US$ 18.1 bn in 2011 and the growth rate should have been 14.1% per year.
And further, contribution of our exports to the world trade has come down from 0.09% in 2001 to 0.06% in 2011.
World exports in 2001 was US$ 6.1 trillion in 2011 US$ 17.5 trillion with a growth of 11.1% per year.
If Sri Lanka is to maintain the same share to the world trade, the exports earnings in 2011 should be US$ 14.1 bn. growing at a rate of 11.3% per year.
This has happened because world trade of over 17 trillion is growing by a bigger margin while the GDP of Sri Lanka too experienced a growth rate of over 6% over the past decade.
We also believe that our exports should contribute 30% or more to the GDP. Exports of Hong Kong/Malaysia and Singapore contribute over 100% to their GDP.
It must be mentioned that our export figures are based specifically on merchandize exports without taking services into consideration. Even though numbers are important our primary objective is to reach the target of US$ 15 bn. by 2015 as envisaged in Mahinda Chinthana.
In order to achieve this we have formulated our Strategic Plan which has identified seven thrust product sectors namely Apparel, Tea, Rubber & rubber based products, Gems Diamond & Jewellery, ICT/BPO, Food & beverages, Spices & allied products.
1. Apparel
We produce to the best brands of the world. Under the theme 'Garments without Guilt' need to expand further into niche markets as we cannot produce in mass scale. Strategies : Brand building and to penetrate and expand new markets such as Brazil,China, Japan, Russia, India
2. Tea
Ceylon Tea is the clearest tea in the world was first to achieve "Zone Friendly Tea" label. Strategies: Further increase the value addition plus national branding, individual company branding, etc.
3. ICT/BPO
Strategies : Market diversification into Middle East and African region and to brand software as a Sri Lankan software.
4. Rubber & rubber based products
Sri Lanka is the No. 1 exporter of solid tyres and accounts for 20% of global market. Export of natural rubber has declined due to local value addition. Strategies : Further increase value addition Increase rubber plantations Implement brand development initiatives to reposition Sri Lanka Rubber
5. Diamonds, Gems & Jewellery
Strategies : Encourage value addition Reactivate registration of GI of "Ceylon Sapphire"
6. Food & other beverages
Strategies : Implementation of export led supply development programmes as Private & public sector participation. Expand quality certification schemes
7. Spices & allied products
Strategies : Introduce new technology for high yield and value addition. Promote Ceylon Cinnamon Brand Expand GMP Certifications.
The economy and exports are driven by the private sector. Therefore it is vital that the country should formulate a national exports policy within the frame work of 'Mahinda Chinthana' to implement export led economic growth model.
Foreign Donor Agencies should rethink their policies to assist the private sector to build their businesses in emerging countries as we are yet to see a Billion Dollar company in our country.
When we analyse export growth in the recent past, Vietnam is a good model to follow. They have a similar production base as Sri Lanka. Exports of Vietnam have increased from US$ 4.5 bn. in 2000 to US$ 93 bn. in 2011 (a growth rate of 18.4%).
Annually over US$ 20 bn. worth of investments flow into Vietnam.
We are proposing country branding to boost Sri Lanka's image to sustain and expand the existing markets…………, to penetrate into new markets………….. and diversification of export market………., value addition………, brand promotion……….., productivity improvement………, product adaptation…………, Marketing communication & development and thereby to enhance our global competitiveness in the export sector.
Finally, let me thank Exporters Association for inviting me here today while wishing good luck to new office bearers and our exporters.