Sri Lanka must seriously look at setting up an Export-Import Bank (Exim Bank) in a bid to rev up the exports which have now come down to just 14.9 percent of Gross Domestic Product (GDP) from 33 percent in year 2000.
“In this context, may be Sri Lanka should seriously look at setting up an Exim Bank. Such a bank must see exporters succeeding,” said Deputy Minister of Highways and Investment Promotion Eran Wickremaratne, adding that discussions are still in early stages.
The Deputy Minister went on to suggest that such a bank would not be necessarily owned by the state.
“I am not suggesting such a bank will be solely owned be by the government. It could probably be jointly owned by the private sector and the government which will have a very specific purpose.”
Sri Lanka’s economic policy largely hinges on exports and foreign direct investments.
Sri Lanka set up development banks three decades ago to fund infrastructure development as it was key economic priority at the time but gradually re-organized and re-engineered such banks adapting to the changing economic landscape.
National Development Bank PLC and the DFCC Bank PLC are two cases in point.
Countries such as United States, China and India have set up Exim Banks. Some of the countries which had Exim Banks had now gone the full circle and served the purpose for which they were set up and are now evaluating whether they really need to be in existence.
Meanwhile, Wickremaratne also emphasized the need to have credit lines designated for promoting exports similar to the credit lines that are available for SMEs, agriculture and livestock.
“I think it is necessary to create credit lines to promote exports,” he stressed.
The reason for the non-availability of such facilities is the lack of demand. The present structures don’t trigger adequate demand because traditional exporters are well established and hardly require credit.
Sri Lanka’s SME’s contribution to exports stands woefully low at 5 percent compared to 35 to 40 percent in Thailand and Indonesia.
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