Global competition and policy options for Lanka

The location of Sri Lanka has a strategic significance and this has been proven by the historical trading activities between Sri Lanka and ancient China, Egypt, and the Roman Empire. There is ample evidence to show that Sri Lanka was a main trading hub in Asia. The reasons for occupation of Sri Lanka by the colonialists from Portugal, Holland, and Britain do not require further elaboration.

After three millennia, things have changed the landscape of the world. With the advent of technological advances, entire economies of the world have changed rapidly. With drastic changes in climate, there are new emerging shipping routes which have hitherto never been used for commercial transport.

If there is a rapid trend in receding ice around the North Pole, the Arctic could be used more reliably for navigation, at least during summer months. The Northwest Passage crossing Canada’s Arctic Ocean could become usable on a regular basis by 2020 and there is a possibility of commercial shipping between Europe and Asia, thus obviating the need to cross Suez Canal, which is time consuming, uses up more fuel, harms the environment, and is costly. This would significantly reduce the shipping operations in the Asian ports.

One report says that “China became the latest country to navigate the Northern Sea Route last week when its vessel ‘Snow Dragon’ arrived in Iceland. Linking the Pacific Ocean to the Atlantic, the Northern Sea Route allows ships to cut down on travel time from Asia to Europe by edging through the icy waters between north Russia and the North Pole. China’s adventure shows its growing interest in the route. But they’re not the only ones whose appetites have been whet by the thawing of the Arctic: many in the Northern Hemisphere would welcome a commercial course that could rival the current route.” (Source: France 24 International News). These are the real factors that would contribute to global competition in the years ahead.

Technological innovations

The innovation in technological advances would drive less developed countries away from the competition. Since the global competition is highly regulated in favour of the developed countries, it would be extremely difficult for developing countries like Sri Lanka to keep pace with changing technologies that would require infusion of capital to upgrade the infrastructure.

Telecommunications and information technology are vital areas where State infrastructure needs continuous upgradation. The international trade law is subject to further changes in favour of the protectionism pursued by developed countries and also due to rivalry from the emerging economic powers like BRICS.

How could a Government beset with a mounting debt burden be able to assist and position local enterprises to face global competition? What incentives could the Government offer for local industries in improving the productivity and innovation in Sri Lankan products in order to compete in global markets?

What industrial research is being undertaken by the State industrial research organisations (research includes universities but they are shut due to Government inability to engage the Teacher Union in a meaningful dialogue) in support of local industries? Has the mandate of Industrial Development Board of Sri Lanka been fully realised?

What efforts have been made by the Export Development Board in positioning local companies to participate in export opportunities? Can the Government change the ambit of Export Development Board to an Import Export Bank of Sri Lanka by repealing the legislation and introducing a new legislation?

What is the level of performance by our diplomats stationed overseas to look into economic opportunities? Are they pursuing their own agendas at the expense of public money? Is there a holistic policy alternative by the Government to brace for ever-changing global competition?

The debt ratio has escalated due to haphazard borrowing from commercial banks and meaningless investments in infrastructure that have no immediate benefit to the economy. The only remedy to deescalate our debt burden is by increasing our export potential. In order to increase exports the local exporters needs to be kept abreast of global competition. This would be a difficult task unless government changes policies in support of the local industries.

The performance of the business lobby in Sri Lanka is pretty abysmal and a greater participation is required in order to secure incentives for the local industries. The business chambers and export development forums require much broader engagement of government and legislators on policy issues.

Barriers to access to global markets

The World Trade Organization (WTO) is a central global institution which governs global trade. WTO consists of over 150 countries and has direct influence over the conduct of 95% of global trade. Decisions of the WTO are made by the member states and various factors would come into play when making decisions and some developed countries with global influence could articulate trade policy in a manner that would protect their industries.

In 2001 the first such Ministerial round was held in Doha Qatar and it was thus came to be known as Doha round of talks followed by similar discussion in various parts of the world and known by the city in which discussions were held. The main objective of the Doha round was on anti-dumping (AD) and subsidies and countervailing measures (ASCM).

In the real world, trade pricing is the crucial factor in securing contracts. There is a flood of Chinese manufactured low quality goods, without any quality control and assurance (QC/QA) standards penetrating the global markets. A number of traditional manufacturers have been driven to bankruptcy owing to the Chinese factor. It is important that an international convention be adopted by WTO member countries to stem the low quality goods from being dumped in global markets. WTO too should actively look into the mass scale breach of patent rights and remedial action be taken against such violators.

Positioning Sri Lankan manufacturers

Given this extremely difficult global competitiveness, how do we position Sri Lankan companies to secure contracts in global markets? A product cannot be marketed overnight unless an awareness of the product is communicated first to the global market. The communication is the first shot in global marketing.

A local manufacturer needs to approach the global markets through effective communications and through promotions. Sri Lankan exporters and manufacturers should participate in international trade fairs and the Government must assist local industries in this regard. It would be difficult to accommodate all tea exporters in one exhibition and but the cost can be mitigated if our diplomatic missions make a collective effort to promote all brands of Sri Lankan tea at every available opportunity.

Product innovation is the next step in attracting customers. It requires continuous innovation in order to be competitive. Minister Rajitha Senaratne was actively involved in securing a construction contract from Qatar for Sri Lanka State Engineering and Construction Corporation. Colombo Dockyard under the able direction of Mangala Yapa continues to secure overseas contracts. These are the real efforts of Sri Lankans who have the vision for a better Sri Lanka. Have these individuals been honoured in Sri Lanka?

(The writer is a freelance journalist and a political lobbying and government affairs consultant.)