Exporters Association of Sri Lanka

No: 50, Nawam Mawatha, Colombo 02, Sri Lanka.
Tel : (+94 11) 2421745 - 7 Fax : (+94 11) 2437477

Chairman's speech 2013 - 2014

ADDRESS AT THE 16TH ANNUAL GENERAL MEETING OF THE EXPORTERS ASSOCIATION OF SRI LANKA

Our Chief Guest Mr. Mohan Pandithage, Chairman / C E O of Hayleys Plc, Guest of Honour Mr. Bandula Egodage, Chairman / C E O, SL Export Development Board, Out-going Chairperson Ms. Dawn Austin, Distinguished Invitees, Past Chairs, Fellow members of EASL and Ladies and Gentlemen.

Four years after the on-set of the Global Financial Crisis, Global Economic growth weaken further in 2012, pushing several advanced economies into double dip recession, while adversely affecting the economic growth in most other countries. Growing number of advanced economies experienced down-word spiraling dynamics due to high unemployment, sluggish domestic demand, high public debt burdens, heightened sovereign risks and fragility in the financial sector. Further growth in major emerging markets and developing economies also decelerated notably. Meanwhile growth in most low income economies performed relatively better in 2012.

Sri Lanka achieved an economic growth of 6.4% in 2012, which is remarkable by any standards considering the sluggish growth rates recorded by the rest of the world. Central Bank has reported a growth rate of 6% in 1st quarter of 2013 and it is said that they are on track to achieve the projected 7.5% Growth rate for 2013. Meanwhile IMF has projected the economic outlook of Sri Lanka to grow by 6.8% this year and, 7.2% in year 2014.

Sri Lanka has notably seen a weakening of its export capacity to GDP ratio falling to a low of 17% in 2012. This clearly indicates the declining share of the global export market. In 2012 earnings from exports contracted by 7.4% and further continued to contract by 6.6% year on year during the first 5 months of 2013.

In order to grow exports, we need to have a paradigm shift from what we are doing now. As a country, we need to add value to products and services branding of products, developing products to the NICHE end of the market which will in-turn give a higher return.

Moving from traditional markets to immerging markets in Asia, which is expected to grow around 6%. The country should move away from primary export and simple manufacturing to more sophisticated exports to achieve a higher growth levels.

Although, Sri Lanka has entered into several by-lateral and multilateral trade agreements within the region, many of them are heavily underutilized. Greater regional integration will help Sri Lanka to capitalize on Asia, while product diversification and sophistication would give greater market share.

We also need to empower the human capital by investing in education and technology in order to move forward. ADB has approved a grant of USD.200m to help the Government to revamp it's secondary school education to check unemployment and meet the current urgent need for a skill work force, which is another encouraging initiative by the ADB. Although the interest rate on deposits has come down the prime lending rates remains relatively unchanged. Which is in-turn hurting the development of the SME sector. However, the much larger exporters are eligible to borrow in foreign currency at much lower interest rates. The disparity between the rupee deposit rates and the lending rates has to be immediately addressed to keep the SME sector buoyant.

Whilst, appreciating a strong currency is conducive for a country economy, there are periods where exporters undergo difficulties when the local currencies appreciates.

The latest global trend is to invest on R&D, which is essential for development of the economy. Sri Lanka‘s expenditure on R&D is around 0.11% of the GDP. The amount spend on R&D is relatively lower when compared with other Asian Countries. The Government should take an initiative to encourage R&D with Public, Private partner-ship. Once again the R&D expenditure has shown a decline as a percentage of GDP in Sri Lanka over the years.

Increase cost of fuel and energy has been a major drawback on industries and businesses. Sri Lanka is one of the countries which has highest electricity tariff in the region. This high tariff in turn has made cost of all goods high, making the products uncompetitive.

There is no immediate sign of fuel and energy cost coming down and it is up to us to manager the cost effectively by increasing productivity by using energy efficient methods.

Although the cost of production are escalating, the integrity of the products exported should not be compromised which could affect the country's good name.

Sri Lanka's Human Development Index ranking has reached the best levels in Asia. Similarly ease of doing business (Having most business friendly regulations) and global network readiness index has also improved by few notches. But we cannot stop at that and need continuous improvement.

Finally, I take this opportunity to thank Mrs. Dawn Austin the outgoing Chairperson for her leadership qualities demonstrated during the past two years in addressing and resolving many issues pertaining to the Export Sectors. On behalf of the members of the EASL, I wish you all the success in your future endeavours.

I also look forward to receiving the support of all the Managing Committee members to serve the export sector effectively as it has been done in the past by my predecessors.

Thank you.