By Nishel Fernando
Sri Lanka is gearing towards an export-oriented economy as the exports increased by 50 percent during last three years, while the government with the private sector would continue to introduce business-friendly economic policies and strategies to enhance the competitiveness aimed at diversifying the country’s export basket, Development Strategies and International Trade Minister Malik Samarawickrama told Sri Lanka’s top exporters, this week.
Addressing Presidential Export Awards 2018 held this Tuesday, organised by the Export Development Board (EDB), he said, “We are on track to achieve the target of US $ 17.2 billion in total exports for 2018. This shows that our exports have increased by 50 percent over the past three years. This shift towards a more export-oriented economy, after years of being too domestic-economy-focused, is an important move in the right direction – in the direction of a more dynamic and private sector-oriented growth model.”
However, the minister stressed that the country has a long road ahead, catching up with its peers in the ASEAN region, who export 10-15 folds more than Sri Lanka.
“To put it in context, Singapore’s exports are US $ 480 billion, Taiwan is US $ 340 billion, Thailand is US $ 254 billion and Vietnam is US $ 250 billion.”
Samarawickrama emphasised that export diversification is crucial to become a truly export-oriented economy—an area Sri Lankan exporters remain weak.
“Although under GSP Plus we have around 6,000 items open to us, we keep sending a handful of few products lines. We must diversify this by looking at what the markets want, what products are required and catering cleverly to this.”
He announced that the EDB would launch the ‘Enterprise Innovation Programme’ to support transformative innovation to diversify Sri Lanka’s product basket next year.
According to the EDB, the programme would provide grants for SME exporters – medium-scale exporters as well as large-scale exporters to invest in innovation to diversify their export baskets.
The programme is likely to be presented to the Cabinet during next three weeks by Samarawickrama, seeking approval for a Rs.200-300 million allocation for the programme over the next two years.
The EDB also recently launched the ‘Market Access Support Programme’ to provide market intelligence through grants to potential exporters, where the EDB already has received 250 applications.
Speaking of the EDB’s 2,000 Exporter Programme, the minister said, “We are going district by district – finding and fostering a whole new cohort of potential exporters, to make this trade-led growth more inclusive than ever before. Our vision is for every enterprise to aspire to export and giving them assistance to make that aspiration come true.”
He also revealed that the much-awaited ‘Innovation and Entrepreneurship Strategy’ would be launched soon to foster a climate for new high-tech products and services to emerge and also for start-ups to thrive.
Prime Minister Ranil Wickremesinghe last week revealed that a new investor incentive scheme would introduce to the IT/BPM sectors shortly.
The minister also revealed that the government is exploring solutions to address the worker shortages faced by several sectors in the country, limiting the potential to expand their businesses.
“We will discuss this at the highest level and come back with a solution in a short time. I intend to discuss with the president and prime minister and find a solution soon,” he said.
However, the minister insisted that Sri Lankan industries should be opened to the idea of attracting the know-how from aboard similar to Singapore, Malaysia, Thailand, etc.
“We should not miss getting the know-how from any part of the world. This is the same way that apparel industry grew – we shouldn’t be afraid to get the know-how from anywhere – to add to our existing talent, to complement it.
This is also important for the IT-related services sector. This sector has the potential to generate hundreds of thousands of the kind of jobs that our young people are aspiring to. And we need to marry our talent and competencies with targeted talent from abroad. We are also supporting the universities to turn out more engineering and IT graduates,” he pointed out.
The minister acknowledged that the exporters are facing challenges with the new Inland Revenue ACT and said that the Finance Ministry has agreed to amend the taxes to encourage the small-scale exporters.
“We recognized the issue the exporters faced with the new tax law and now the Finance Ministry has agreed that even if you export a small volume, you will pay the lower tax rate on the profits made from what you export. This will encourage even the smallest enterprise to export,” he said.
In addition, Samarawickrama said that the government would carry out a ‘Trade Adjustment Programme’ for local firms to face with competitions arising from trade liberalisation.
When it comes to attracting FDI to tradable sectors, he said that the Board of Investment (BOI) would roll out several investment promotion programmes in three cities in Germany, in Mumbai as well as Shanghai.
“We have an investment promotion drive in Germany next week and this will be followed by visits to Shanghai and Mumbai soon. Our mission to Japan earlier this year has already generated many strong leads, which we are now pursuing,” he noted.
Samarawickrama also announced that the government would set up two new industrial zones in Milleniya and Bingiriya within next year, as public-private partnership projects with the help of the BOI.