In the globalised world of today where the world is an oyster, one needs to explore markets which have not been explored substantially. In the past, concentration for exports was on the developed markets.
While the developed countries suffered the worst recession in about six decades, some of the developing countries gradually underwent major economic changes in order to develop.
Successful implementation of economic reforms has resulted in some such developing countries being described as emerging economies. The Arab Republic of Egypt is another such country which has undergone major changes over the years.
With a population around 80 million, Egypt is the largest Arab nation, the largest economy in North Africa and the second largest in the Arab world. With the gradual economic reforms during the past thirty years, the private sector has been recognised as the engine of economic growth and the Government has assumed the role of mediating economic growth and coordinating development and technological growth.
Egypt today is recognised as an emerging economy with an annual growth rate around 7%. Egypt’s services sector also has shown rapid development and a very recent report by NASDAQ describes Egypt as one of the world’s fastest growing outsourcing locations with two technological parks already in operation.
Like many a developing country, Egypt also has been gradually reducing Customs tariffs, making it attractive for imports. She has also entered into a number of FTAs and preferential trade agreements, indicating her desire to expand her external trade.
Sri Lanka’s trade ties with Egypt date back to centuries. In the late 1980s, Sri Lanka and Egypt signed an economic and technical cooperation agreement which was converted to a Joint Committee later in order to broaden the coverage to more areas. This committee has since then been upgraded to a Joint Commission chaired by the trade ministers on both sides.
Sri Lanka and Egypt have also signed and ratified agreements for the promotion and protection of reciprocal investments and for the avoidance of double taxation.
Egypt was an attractive market for Ceylon tea in the past, but was affected by Egypt becoming a member of COMESA (Common Market for Eastern & Southern Africa) which allowed Sri Lanka’s competitor, Kenya, to supply the Egyptian market at no duty.
Now that the customs tariff on tea from all sources has been reduced to 2% from the previous rate of 30%, Sri Lanka is again in a position to enter the market aggressively.
Tea is not the only product which benefits from the tariff reductions in 2007.Sri Lanka’s other traditional products such as coconut products, spices, natural rubber and rubber products have also benefited. With the improvement in the standard of living, items such as quality apparel, porcelain kitchen and tableware, ceramic ware, gems and jewellery are among the products which would find an attractive market.
Entering and sustaining emerging markets cannot be done in a short term. It requires planning on a long term basis. However, emerging markets are the markets of the future and therefore need to be explored.
Sri Lanka needs to diversify her markets in order to cushion herself from the loss of former markets in the developed Western world.
Therefore, aggressive promotion campaigns in targeted emerging markets would have long term results.
(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.)