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By Ashwin Hemmathagama, Our Lobby Correspondent
Minister of Development Strategies and International Trade Malik Samarawickrama yesterday highlighted the economic development plans it has for the country, which are on par with the Vision 2025 as well as the progress made in attracting new investments.
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Minister of Development Strategies and International Trade Malik Samarawickrama |
Speaking during the Committee Stage debate of Budget 2019 yesterday in Parliament, he assured that the Government has clear development plans to increase the competitiveness of exports and businesses.
The Minister said that foreign exchange earnings from export of merchandise and services have increased by 23% during the last three years. “Export revenue in 2018 was $ 17 billion. The records show $16.4 billion, but $ 600 million goods which were shipped in December has been recorded in January as the exporters have delayed handing over the Bills of Lading. These figures do not include the revenue earned from tourism which was a further $ 4.3 billion. It is noteworthy to mention that for the first time in our history monthly merchandise exports has topped $ 1 billion every month for the past six months,” he said.
“Strong performance is evident in some of the ‘focus sectors’ identified under the new National Export Strategy; notably, electronics and electrical components exports that increased by 16.2% and food and beverage exports by 22.6%. The apparel sector that accounts for 33% of total exports recorded 100% of the target of $ 5.3 bn during 2018. New orders from the EU were secured as a result of the GSP+ benefit. By the export market, earnings in our two most important regions of USA and Europe have increased steadily by 5.65% and 5.15% respectively. Within the EU region, important markets like Germany, Italy and Netherlands have shown robust growth of 14%, 9%, and 17% respectively,” he added.
In its efforts to make the maximum from its international trade pacts, the Government of Sri Lanka has embarked on a renewed focus following trade and investment mission last year, leading the exports to Japan to grow by 9% last year. “It is particularly noteworthy that exports to South Asian region have grown substantially, by 10%, to reach $1,097 million, driven in large part by exports to India that grew by 11.35% from $689.4 million in 2017 to $767.6 million during the year 2018,” he said.
According to Minister Samarawickrama, Foreign Direct Investment in 2018 reached $ 2.37 billion which is the highest recorded FDI inflow to Sri Lanka. “This shows an increase of 25% compared with the $ 1.9 billion worth FDIs received in 2017. In terms of sectoral contribution, this FDI inflow comprised primarily infrastructure: 75%; manufacturing 13% and services 12%. We are now focusing strongly on increasing the contribution from manufacturing and services, especially export oriented projects. This year, BOI has already granted approval to set up an export-oriented oil refinery with a proposed investment of $ 4 billion and a steel products manufacturing plant with an investment of $ 1 billion. The refinery was launched in Hambantota on 24 March and the steel plant will be set up in Trincomalee and launched in May/June this year,” he added.
He also outlined the progress of 128 projects worth $2.5 billion channelled through the Board of Investment last year. “In 2019 so far, BOI has granted approval for 24 projects to the value of $ 5.5 billion which includes the export-oriented refinery and a steel plant. Ultimately, FDI in all forms is important for us as it is the key source of non-debt creating foreign inflows.”
Minister Malik Samarawickrama said that the Ministry of Development Strategies and International Trade is implementing several initiatives that are improving the competitiveness of Sri Lanka’s domestic enterprises by providing them with supportive policies and strategies, financial and technical support, and enabling infrastructure.
“Many of the initiatives that we have been, and are, championing are things that had been postponed in Sri Lanka for nearly two decades and was urgently needed to place us firmly on a more sustained and competitive growth path. These initiatives won›t bear fruit in a month or a year but would have lasting positive impacts on the economic trajectory of this country,” he added.
The Minister noted that the National Export Strategy 2018-2022, which has been in implementation since its launch in July 2018, is progressing well, anchored to the plans of action of six sectors and three trade support functions. The NES is a carefully structured five-year strategy with active public and private stakeholder participation aimed at increasing export revenue to $28 billion by 2022.
“In 2018 the EDB launched a flagship program to make trade more inclusive across our country. We are conscious that the export-oriented sector in Sri Lanka is not as widespread as it could be, and so we have embarked on an islandwide program to foster new exporters. The ‘2000 Exporters’ program will incubate a whole generation of new exporters in this country and make the gains of international trade more inclusive. Entrepreneurs and aspiring exporters from all parts of the country are being helped through this program, which will cover a new district each month. Already programs have been conducted for over 2500 entrepreneurs in Jaffna, Kandy, Kurunegala, Matara, Anuradhapura and Vavuniya. In addition, a “Women Entrepreneur Development” Program to transform them into exporters is also being implemented.
This year we will also include specialised sector-wise development programs based on needs in each district, and also hold private-public dialogues on trade policy matters with the business leaders in the provinces,” Samarawickrama said.
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The Minister said that the Government has also commenced a series of reforms to make it easier for foreign investors to come and invest in Sri Lanka. “The most notable of these was the launch last year of the web portal of the ‘Single Window Investment Facilitation Taskforce’ or ‘SWIFT’. SWIFT is continuously improving service delivery times, and fast-tracking the approval process of various line agencies within a set time period. 13 out of 24 identified line agencies have signed MoUs with the BOI, committing to work under single web platform to facilitate and expedite project approvals/licenses/permits by the investors. It is expected that this year it will reduce the time taken for investment approvals by 20%.”
He said that the BOI has also focused on promoting re-investment and a dedicated group for this purpose was established with the mandate of encouraging existing investors to reinvest, expand or upgrade their businesses through facilitating and solving their bottlenecks. Further, this group also entrusted with identifying new potential investors through existing investors’ channels. The Ministry of Development Strategies and International Trade (MODSIT) has also set up ‘Sector Expert Teams’ comprising officers of the BOI and the EDB to work on promoting investments to these identified sectors, thereby to increase the exports in a systematic and focused manner. These sectors include Electrical & Electronics (Solar & Insulated Wires), Automotive Components, Food Products, Ships & Boats, Tourism, IT/BPO, Medical Devices & Pharmaceuticals, Mineral Products and Export of Services (Logistics). These groups are in the final stages of preparation of promotional materials. However, the Minister noted that the Government had identified that the lack of commercial land availability is a critical constraint affecting the investment climate in the country, and so embarked on a systematic process to unlock this problem by way on building new industrial zones. “In 2018 we started work on new zones in Milleniya and Bingiriya, the first new zones in our country in 16 years. The Bingiriya zone was launched this month. Zones in Mawathagama, Milleniya and Trincomalee will also follow. These will not only ease the land constraint for investors, but more importantly generate thousands of new export sector jobs for our youth in these areas.”
As a result, he said 13 investors have already informed the BOI that they intend investing in Bingiriya, which will cover the entire Phase-1 and will provide employment to 12,000. The investment value will be over $150 million.
Outlining the key new initiative in 2019, he said, “In order to ensure that our domestic private sector has a meaningful mechanism to adapt to a more liberalized trade regime, the Government has prepared a ‘Trade Adjustment Program› for the first time in Sri Lanka. It received Cabinet approval earlier this month and will commence implementation under our Ministry in close co-operation with the Ministry of Finance.”
