Amunugama commends packaging industry, outlines way forward

• Following is the speech delivered by Minister Dr. Sarath Amunugama at the ‘Lankapak 2017’ exhibition held at the BMICH recently

​​Rohan Victoria and all the distinguished members of the head table, dear friends, I want to begin by thanking the Sri Lanka Institute of Packaging for inviting me to be here this morning and to say a few words. Of course, this is not the first occasion when I have attended your meetings, so I would like to take this opportunity to thank you and congratulate you on behalf of the Government for the excellent services that you are rendering the country and particularly the Sri Lankan economy. 

If you look at the Sri Lankan economy, the Agriculture Sector is declining. The Services Sector is improving and the Manufacturing Sector has hit the plateau. That is not a very good division as far as the economy is concerned. Actually like most developed countries we should try to improve on all fronts. But particularly we should try to improve in the Manufacturing Sector. The Services Sector I think including the Tourism, Banking and Financial sub sectors, will improve anyway. Agriculture might decline. But the key question is, how do we expand our Manufacturing Sector?

During the last few years we have rethought this issue. We have to leverage several factors. The first of course is our strategic position in South Asia. If we become a manufacturing hub I think it will be very easy for us to go in to the markets in our region because these markets have been transformed. Just a few kilo meters away is the growing market of India. We are having very close ties with China and in the next couple of years there will be large scale investment by China and India in the manufacturing sector. We know that with the Hambantota Harbour there will be an export development zone and we are hoping to have at least 300 new industries, particularly heavy industries to be located there. 

So the future is good for the packaging industry. You are very vital because one of the key requirements of the Sri Lankan economy today is value addition. We have very competent people. We have industries which need to transit from bulk exports or low level exports to high value and value added products. 

I think most of your packaging, the bulk of your packaging, is related to the tea sector. If you look at the tea sector we are used to or we were used to making bulk sales, may be to the Middle East, maybe to other countries, but basically we were shipping unprocessed tea. The vital necessity of course is now to add value to that and one of the best ways to do that is through the packaging and the container manufacturing sector.

On my visits abroad, I make it a point to check with the tea distributors abroad and almost all of them have told me that they prefer to get the tea packaged in Sri Lanka, partly of course for economic reasons. If you do the same packaging in Europe or in the Middle East you will have to pay much more. So they give the specifications and you package it in line with the requirements of your clients. I have gone to exhibitions, I have gone to display centres, where they have a whole host of value added tea products based on packaging. 

In other areas also, for example in areas which are getting the benefit of GSP plus, they all need modern packaging. So I look on you as a very, very important sector.

I know and I appreciate the fact that you need to bring down your costs. This is very important in this time of budget making. One phenomenon is that for a variety of reasons the cost of production is going up. We live in a highly competitive world. I am very happy that our friend from Thailand is here. They are used to competing. They know how to control their costs of production so that they become highly competitive. We have to learn from them. 

In Sri Lanka if you look at electricity costs, water costs, salaries, etc., all of these have increased with very significant impact on your COP. So these are matters that have to be relooked. I have been looking at the costing of the Ceylon Electricity Board. I think in a couple of years we should be able to have at least a 25%-30% cut in the cost of electricity in Sri Lanka if that Corporation gets it act together. If we get the proper mix of energy – of hydro power, of diesel, of coal and LNG and also alternative energy sources that we are trying to develop – it is quite feasible to cut our cost by 25%, because today we are fuel dependant. We are very largely dependent on imported diesel and you know how tricky that is. The market is fluctuating. When there are crises in the Middle East the price goes up and all these finally lands at the feet of the poor Sri Lankan consumer. 

So you must make a demand that all these State agencies which are not being run efficiently should be reformed so that ultimately the cost to the manufacturers in Sri Lanka is reduced and then they can compete openly because you have the talent, you have people, you have the trained staff. But these external costs must be controlled so that you can be competitive. 

We must remember that ours is a limited domestic market. From the presentations made today it is very clear that our products have to be packaged and sold abroad. No doubt there is a local market, but the test of good packaging is if you could compete in the international market. So we have the product and I think we have the people, it is very necessary that we all make a combined effort to see that the Sri Lankan manufacturer gets the benefit of the many economies that the State Sector can provide. 

I don’t want to take more of your time. Again I want to thank you and to congratulate you for all the good work that you have been doing. You have been contributing immensely to our economic growth as seen in the role of the manufacturing and services sector in our economy and on behalf of the Government I thank you and say that we should all jointly try to reform these white elephants so that Sri Lanka will again be very competitive regionally and globally.