Following is the speech delivered by the President of National Chamber of Commerce of Sri Lanka Asela de Livera at the 61st Annual General Meeting held on January 21st at Hotel Kingsbury.
Deshamanya Prof. W D Lakshman, Governor of the Central Bank of Sri Lanka, Excellencies, diplomatic community, government officials, international agencies, business community, distinguished invitees, members of NCCSL and media officials. Welcome to the 61st AGM of the National Chamber of Commerce of Sri Lanka. I would like to thank Prof. Lakshman for accepting my invitation to be our Chief Guest and appreciate your presence here today.
I am honoured to be elected for another term as the 33rd President of this Chamber. I assure all of you that I will move forward the good work done by my predecessors to take the Chamber to greater heights during the year 2020.
Year 2020 is a very critical period for Sri Lanka as well as the world’s economy. Our economy faced many internal and external challenges in the recent past. I believe, the recent changes which took place will lead to many policy level changes that will have a positive impact on our economy.
Global economy and Asia
Continued global policy uncertainty, distortionary trade measures and growth deceleration in the economics of important trading partners are influencing growth in Asia, although the region is still the world’s fastest growing region, contributing more than two-thirds to the global growth.
Sri Lanka economy
As per the recent developments, the Sri Lankan economy is gradually recovering from the severe impact of the Easter Sunday terrorist attacks. Real GDP growth was revised to 2.7 percent in 2019, and it is expected to increase to 3.5 percent in 2020 as tourism and other activities normalize.
The slowdown in growth and decline in imports have significantly impacted fiscal revenues. The global economy is quite competitive and every single country has its own problems which they need to focus on. Sri Lanka should be seen as a country in the global economy, utilizing its strategic position to benefit from major global economies without favoring any particular country.
It is widely accepted that SMEs are contributing immensely to the global economy. Similarly in Sri Lanka the main driving force of the economy is considered to be SMEs. Approximately 75 percent of the enterprises in the country can be classified as SME and they provide approximately 40 percent of the employment in the country in diversified sectors, ensuring growth and contributing 52 percent to the GDP. It is noted that many SMEs do not use latest technology and having limited access to finance due to collaterals not being available. Further, SMEs are not directly connected to markets especially in the case of exports.
Asia is making an impact on global economy as seen over the recent years. Various studies confirm that SMEs are having the potential to enhance productivity and increase the employment both nationally and globally.
Trade and investment liberalization taking place in the Asian region, through many preferential trade agreements is providing the path for growing opportunities across borders, which will in turn ensure improving competitiveness and generating more and more jobs leading to sustainable development in the region.
From 1990s through international trade, global value chain benefits were experienced by poorer countries and paved the way for their economic growth. Fragmentation of production was the key methodology in this concept, where a production process could be broken down to many subcontracts which can take place across borders.
In other words different companies specialize in specific tasks getting involved in the production of the final product. This process involves raw material with value addition crossing the border of a country and reaching another, as semi-finished goods that may be assembled as a final product for consumption. It is vital to put in place required policy changes by authorities, in order to ensure continued participation in these global value chains.
To this end the National Chamber is very much involved in this type of activity and carries out many programs to assist the small and medium entrepreneurs to develop their businesses.
The National Chamber assists our member SMEs to acquire the latest technology in manufacturing methods, encourage them to invest in obtaining patents and branding for overseas markets, ensures obtaining internationally accepted norms and quality certification systems.
We carry out seminars to improve packaging of products and marketing. We interact with our missions abroad together with the Ministry of Trade and Commerce to get required information for our members to find export markets
The chamber is in the process of implementing a series of activities with Regional and District Chambers in the country to upgrade SMEs and Micro SMEs in the outstations. Lack of availability of SME performance related data is making it difficult for policy makers in implementing coherent policy measures, in changing market demand and gaining knowledge in innovation and creativity.
When compared with large multinationals, SMEs are going through excessive challenges such as lack of economies of scale, financial resources, technology and skilled labour, limitation of market access and shortage of finance for research & development etc.
The NCCSL together with government development agencies and financial institutions such as banks continue to encourage entrepreneurship in the country with many regional seminars being organized in the provinces.
We conduct the ‘Western Province Entrepreneurship Awards’ scheme for the entrepreneurs of the Western Province which was held continuously from 2016 to date as requested by the National Enterprise Development Authority falling under the Ministry of Industries and Commerce.
This paves the way for smaller enterprises to attain national level standards and compete with larger scale business ventures eventually through our flagship event, “The National Business Excellence Awards”.
The Export sector performance is very critical for an economy to progress. Critical factors should be addressedthrough increased export revenues being developed. Initial steps have been taken by the authorities to prepare the National Export Strategy (NES) for Sri Lanka as a joint effort of public and private sector consultative process. The main theme of the NES is “Sri Lanka An Export Hub Driven by Innovation and Investment” with key focus sectors that have been identified as information and communication technology, wellness tourism, spices, boat building, processed food & beverages, electrical and electronic components. It is of utmost importance that National Export Strategy should be revived at regular intervals enabling to bring in timely changes when necessary.
Shortage of skilled labour, unemployment
Shortages of skilled labour continue to be a hindrance across many businesses in both manufacturing and services in Sri Lanka. The National Chamber statistics also demonstrate that there is a shortfall in all the industries for skilled labour.
Trade information portal
In April 2016, the National Trade Facilitation Committee which is chaired by Director General of Sri Lanka Customs and Department of Commerce as the co-chairman was established. The government and the private sector are represented in this committee, ensuring well bonded Public Private Partnership in achieving the ultimate goal of implementing the Trade Facilitation Agreement in Sri Lanka.
This independent website is operated by the department of Commerce offering information - a one stop shop to traders who wish to import goods as well as export goods from Sri Lanka.
It is of paramount importance to urgently implement the National Single Window in Sri Lanka in fulfilling our commitment under the Trade Facilitation Agreement with the World Trade Organization (WTO). It would provide immense benefits for the trading community.
FTAs and anti-dumping protection
Sri Lanka has already signed bilateral Free Trade Agreements with India, Singapore and Pakistan. It is expected to enter into more FTAs in the near future with China and Thailand in this background.
Sri Lanka is firmly positioned as an investment destination in the Asian region which has nearly 48 percent of the world population.
The availability of power/ electrification, broadband connectivity (mobile phone connectivity) 3 major developed ports, high standard of public education and healthcare, skilled labour force, developing infrastructure are viewed favorably by investors.
Although the local population is around 22 million the extended market of several billions in countries nearby such as India, Pakistan, Bangladesh and China investors view Sri Lanka positively. However, only steady and consistent policies will pave way to attract FDI to the country.
A well thought out common mechanism to protect our domestic industries from unfair trade practices is a necessity. Most of the emergency economies like India, Brazil, and China are already practicing anti-dumping measures with the view of protecting their domestic industries.
Chamber Digital Platform
Microenterprises, defined as constituting a workforce of up to five people, (account for over 90 percent of very small entities in Sri Lanka), yet they only account for a very small portion of GDP output. Sri Lanka has around 3000 small and medium enterprises with a turnover of less than 150 million registered as exporters who collectively contribute less than 5 percent of Sri Lanka’s exports. We are sadly still a plantation export economy in structure. In contrast, China for instance has over 40 percent contribution by SMEs for export and the average in Asia being in the region of 30 percent.
There is a vital necessity for SMEs and Micro SMEs in Sri Lanka to access overseas customers through a credible authentic web platform. A solution similar to Alibaba to China and Indiamart to India could be considered as examples. By creating such a platform for Sri Lanka, the National Chamber believes that potential Sri Lankan products will reach their market destinations easily.
To meet this requirement the National Chamber has embarked on a nationally important mission to develop and professionally manage a web based platform named “fromSriLanka.com”. This is being launched today and more of this will be explained later.
I would like to speak a few words on agriculture as it plays a vital part in an agricultural based economy as ours. Food and security in crops is very important to our economy. We need to value add our agricultural products and find markets for newly developed products with proper certifications and standards to sell to the world market.
Unfortunately much of the produce is lost due to unavailability of proper storage, and transport facilities.
I must place on record my sincere gratitude to my fellow Office Bearers, Council Members for their commitment and untiring efforts for making last year successful. A very special word of thanks to the secretariat headed by Secretary General, for his commitment and the secretariat staff for their untiring support rendered to me during 2019.