Exports expansion

Countries around the world are competing to increase their exports, with Sri Lanka struggling to keep up with the competition. Even though Sri Lanka is in the fastest growing region and right next to the fastest growing country in the world, it has struggled to increase its exports to diversified markets. Constraints in exports and investment have also slowed the overall economy with Sri Lanka expected to grow at just 3% in 2019 despite being in a region that is growing at an average of about 7.3% this year. 

Sri Lanka has also struggled to bridge a persistently high trade deficit with policies traditionally directed at trying to decrease imports, especially of vehicles and oil, rather than understanding the connection between imports and exports to encourage the latter. These regressive policies, together with limited foreign direct investment, technology transfer, an ageing labour force, a disproportionate public service, corruption, slow technology adaptation and delayed reforms have put expansion of exports at a challenging point. It is also difficult because Sri Lanka has to compete with other economies, which are more nimble, resource rich and use innovative mechanisms to push their exports forward.

Some of the basic points that have been highlighted by exporters over the years is to have simpler and more consistent polices which are administered by fewer Government institutions and agencies. Speaking at an event to launch a strategy to encourage Sri Lanka’s private sector to increase exports to India at the International Trade and Development Strategies Ministry this week, private sector representatives called on the Government to also have a stronger presence in regions where Sri Lankan businesses have invested to provide liaison services and improve engagement between the companies and Local Government.

They also highlighted the need to establish organisations that can help companies to navigate the often complicated rules and regulations of other countries, establish supply chains and get support to have an ongoing dispute resolution mechanism. Assistance in negotiating non-tariff barriers was also recommended by them, especially since Sri Lanka as a smaller country often does not have the diplomatic clout to deal with larger countries such as India or China. The possibility of negotiating collectively under the South Asian Association for Regional Cooperation (SAARC) was also put forward as having one set of regulations, particularly on sectors such as food exports, will reduce cost and boost trade. 

Tackling export competitiveness is often viewed with a large lens where major programs such as pushing Sri Lanka up the Ease of Doing Business index compiled by the World Bank gets attention. While these measures are important, it is also necessary to look at support gaps identified by companies themselves and seek to establish a holistic process. This also assists to evolve mechanisms for comparatively new spaces such as online transactions that are already revolutionising the retail space and changing the exports game by enabling smaller companies to export. But the starting point is often in understanding the consumer and creating a product, preferably backed by a strong brand, which can catch the attention of consumers. 

Given the complexity and difficulties, it is understandable that exporters often seek Government assistance. Being heard is in itself a challenge.