Recommendations for a National Exports Development Strategy 2016 - 2020
The External sector of the country is presently at a vulnerable position owing to declining external reserves, negative growth in exports, rising external debt service payments due to high external debt etc while economic growth has been moderate. To accelerate growth and address the external sector issues in a sustainable manner it is imperative that an aggressive exports development program be initiated.
Sri Lanka's poor performance in exports, relative to its competitor countries, can be mainly attributed to the small basket of exportable products where nearly 60% of the merchandise exports are accounted for by the two product categories of tea and garments. While our main export markets have remained with the USA and EU, the scope for market diversification has been limited due to the product basket.
The Exporters Association of Sri Lanka (EASL) strongly advocates to the Government to give high priority to build the competitiveness of exports by developing a National Exports Development Strategy (NEDEVS). However, as past experience provides ample proof it is not sufficient to simply develop a strategy but it is essential that the Government extends its fullest commitment towards implementation of the strategy.
The EASL has identified several key factors that impact on the competitiveness of the export sector and recommendations to address them which are detailed in the attached paper. These include strategies to increase exports of the current product mix by deeper penetration into existing markets and to new markets and investment in new products and services through attraction of both foreign and local investments. We have identified the recommendations in terms of priority level to initiate action as either high (within one year) or medium (within three years). The priority level has been assigned on the basis of importance as perceived by the EASL and other factors such as budgetary constraints and ease of implementation. In instances where the Government needs to allocate funds we have placed it under medium priority even if it needs urgent action as the budget for this year has already been approved. The proposals have been grouped under a few key themes. It is proposed that these be considered in developing the NEDEVS. The following paragraphs provide a summary of the proposals.
Primarily it is important to create a macroeconomic environment that is conducive to exports including a competitive exchange rate and managing fiscal and monetary policy to maintain inflation and interest rates at low levels avoiding wide fluctuations. Concurrently it is vital to introduce necessary institutional reforms to support export development. In particular, this requires the reactivation of the Export Development Council of Ministers as the Policy making body for exports and restructure of the Export Development Board, the executive arm of the Council, which is entrusted the task of driving exports.
The needs and expectations in the global market changes rapidly and Sri Lankan exporters lack knowledge about the buyers requirements and changes in consumer demand patterns in overseas markets. The Sri Lankan foreign missions can be used to fill this lacuna. They can identify the consumer demand patterns and regulatory changes in the respective countries, pick products and services that have potential to be exported from Sri Lanka and communicate the information to Sri Lanka.