Export strategy for long-term growth

Prime Minister Ranil Wickremesinghe kicked off the first-ever national symposium to carve out Sri Lanka’s national export strategy on Thursday. Over 150 public and private sector representatives who will plan the next export growth cycle of the country are participating in the two-day event.

The development of an National Economic Strategy is a central component of the ‘EU-Sri Lanka trade-related assistance: Increasing SMEs trade competitiveness in regional and EU markets’ project, which is funded by the European Union and implemented by the International Trade Centre.

After two consecutive years of export decline, this initiative by the Ministry of Development Strategies and International Trade and the Sri Lanka Export Development Board (EDB) is crucial for the nation and will hopefully set a positive economic path for the coming years.

Sri Lankan exports painted a bleak picture over the last couple of years, dipping by 5.6% to $ 10.5 billion in 2015 while last year the dip was 2.2% to $ 10.3 billion. In 2014, exports were up 7%. 

The symposium unveiled the design process for the NES and provided a platform for public and private stakeholders to discuss their strategic vision for Sri Lanka’s export growth.

The Government stated that it hopes to support Sri Lanka’s economic vision of strengthening the competitiveness of the country’s private sector to achieve inclusive and sustainable growth. The consultative process will lead public sector institutions and private sector enterprises to design a common plan for growing and diversifying Sri Lanka’s export products.

The Prime Minister’s Economic Policy Statement emphasised that new strategies were required to undertake necessary reforms to increase, diversify and introduce innovation in export development. This would in turn increase revenue, create employment opportunities and reduce Sri Lanka’s trade deficit.

Exports will play a pivotal role if the Government’s vision of making Sri Lanka the next economic success story in Asia is to become reality. Historically though, Sri Lanka has not been able to reap the benefits of the exports due to a number of limitations, with an average growth rate of 4.7% post-independence. According to government officials, exports have declined steadily from 27% of the GDP in 2000 to 13.4% by 2015.

With the emphasis clearly on FDI, Sri Lanka must now be able to compete on the global stage in terms of exports with value addition being a key factor to success. FTAs with countries such as India and China will open the doors for our local companies to a market exceeding three billion consumers. Exposing local products to the global market will not only significantly increase the scope for exports but will also naturally improve the marketability of Sri Lankan products as its survival will be dependent on it. If Sri Lanka’s exports are to see a significant improvement, companies need to also build capacity and competitiveness of their exports, which would mean attracting significant Foreign Direct Investment (FDI) into manufacturing and service industries.

However, if trade agreements are to be optimally utilised, then they need to have a broader impact. In a world facing a globalisation backlash, it is no longer enough to simply be part of the herd. The Government has to now focus on an economic policy framework that can not only benefit long-term growth but also visibly affect all levels of society for the better.