Excelling exports

By Cheranka Mendis

Sri Lanka’s first half export earnings reached US$ 510.4 million, recording a growth rate of 40.9% over the corresponding period in 2010, with expectations of hitting US$ 10 billion by year end despite the usual lull in the next few months.

According to provisional data from the Export Development Board (EDB), growth has been experienced across all segments of the industry. The biggest boost came from the textiles and garments sector, which recorded earnings worth US$ 2,161.36 million, backed by the manufacturing sector, which recorded US$ 1,168 million as revenue.

EDB Chairman Janaka Ratnayake told the Daily FT that riding high on the growth wave experienced throughout the year, the country could reach US$ 10 billion by the end of the year. However, he warned that the 40% growth rate experienced during the past few months was not expected in the second half of the year.

“However optimistic we may be, we are not expecting the 40% growth pattern to continue within the next six months. A lull period has been observed from July to September over the past few years, only to bounce back from October and continue until December,” Ratnayake said.

The target is to keep afloat 25% growth on merchandising exports during the next few months, he noted. He stated that Sri Lanka did not count the services sector into the total export figure as yet. “When we say exports, we only take into account the merchandising exports. The real export figure should take into account both that as well as the services sector.”

The US$ 10 billion export target therefore will only look at the merchandising side. When remittance, FDI, tourism earnings, banking and insurance and ICT are added on the service side, the real export figure could amount to US$ 18-20 billion by the end of the year, Ratnayake said.

“We estimate an approximate US$ 5 billion from foreign remittance, another US$ 800 million as tourism earnings and another approximate US$ 400 million from ICT and other sectors. When you round up all this and add other sectors, we would be able to reach US$ 18-20 billion from foreign sources as foreign earnings. This would cover almost 40% of GDP,” he said.

Meanwhile, export performance of the first six months shows an increase of agricultural products by 21% valued at US$ 1,165 million in the first six months of the year; with tea exports increasing by 11% (US$ 699.73 million), natural rubber by 39.3% (US$ 116.91 million) and coconut by 47.8% (US$ 174.8 million). Exports of fisheries products grew by 26.2%, bringing US$ 111.02 million to the table.

Industrial products exports rose by 48.9%, valued at US$ 3,820.4 million. Diamonds, gems and jewellery grew by 19% during the first half of the year as well. Petroleum products, which saw the highest growth rate during the period – 183.9% – brought in revenue of US$ 250 million.

Sri Lanka’s major export markets are led by the USA, followed by the UK, Belgium, Italy and India. It has been estimated that Sri Lanka sold US$ 1,060.6 million worth of goods to the USA (35.9% y-o-y growth), while UK bought goods valued at US$ 667.25 (51.2% y-o-y).

India, which falls in fifth place, grew by 22.56%, recording export revenue worth US$ 258.83 million. Emerging markets, as pointed out by Ratnayake, are Germany, UAE, Russia and Singapore, which fall into sixth, seventh, eighth and ninth places respectively as important export markets.

“It should also be noted that exports to the likes of Hong Kong, Indonesia, China, Malaysia and Thailand are also on an upward climb. This is important as we are determined to see a shift in the markets in the future, with heavy emphasis on the Asian region.”