Diversify export basket to improve external trade

Thursday, 3 January 2013 00:00 -     - {{hitsCtrl.values.hits}}

One year ended and another began. As we look back on the year gone by, we see the impact of the financial crisis in the West not only impacting the West, but the developing world as well. With consumer spending declining in the West, exports from developing countries have also declined.

Sri Lankan exports too have not been spared the adverse effects of the situation in the West. The global picture for the new year is also not rosy, with hardly any signs of an immediate recovery. Therefore the wish list for 2013 will have to based on finding export opportunities elsewhere.

In the new year, many things can be done to improve Sri Lanka’s external trade – a priority requirement in order to improve exports is to diversify the export basket. If one analyses Sri Lanka’s export statistics, it is apparent that the number of goods in the export basket has not changed very much even in a decade.

Granted that the products available for export as at now do bring in good revenue, and those products may have established markets. But these markets may see saturation levels or face more competition particularly from other preference receiving countries. This is one of the reasons that Sri Lanka should pay more attention to export product diversification which would enable access to new buyers and new markets.

The small and medium segment of exporters in Sri Lanka comprises a substantial percentage of exporters. Many of them are dealing with innovative products and services, but do not have the monetary and other resources to expand and make a name for themselves.

They need to be encouraged and helped as much as possible as their future role in enhancing export earnings can be substantial. This can be achieved by the Government agencies and private sector chambers and associations collaborating in identifying the SMEs showing more promise and giving them necessary support.

Sri Lanka’s dependence on the markets of the developed world has to be reduced. The US and the EU will take a long time, definitely more than one year to overcome their financial and economic woes. Together with the other developing countries which export to the US and the EU, Sri Lanka too will continue to face a downward trend in their exports to these markets. In this context, the need to find alternative markets gains urgency.

Ways of finding new markets are many. Participation in internationally known trade fairs is a comparatively cost effective method of meeting new buyers, getting to know market trends and gradually exposing SMEs to the world beyond their shores.

Trade officers stationed in Sri Lanka Missions overseas are the best guides in selecting the appropriate fairs for participation. Trade officers sent by the Dept. of Commerce are an excellent source for guidance on various markets and the products suitable for such markets. However, these officers also need guidance from the manufacturers and would be exporters on the products, export capacity, etc., if they are to help find markets for their products.

Professionally organised trade fairs in Sri Lanka are a multi-purpose tool. Such fairs not only showcase the exportable products, but also showcase the country, which enables tourism promotion. However such fairs cannot be a one-shot operation, but must happen regularly as an annual event so that foreign buyers mark it as regular event in their diaries. This would also reduce promotional costs of the fair.

Exploring opportunities presented by the various preferential trade agreements and other preferential schemes can open up hitherto untapped markets for new products. A close study of these agreements would indicate such opportunities.

Markets and trade opportunities can be identified by some of the above-mentioned methods, but there need to be products in sufficient quantities. This is where the Government agencies, chambers, and associations could play a significant role .Together they can find new products and services for export.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)

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