29 August 2016 12:00 am
By Chandeepa Wettasinghe
Sri Lanka must address internal barriers to exports that it can control, before placing all its efforts on creating Free Trade Agreements (FTAs), Verite Research, a Colombo-based think tank recently said at a seminar themed ‘ A Ship Without Sails: Trade Access Without Competitiveness’.
“The question is whether we are focusing too much on FTAs and too little on the multiple areas on which we can assist to improve exports and export competitiveness?” Verite Research Executive Director Dr. Nishan De Mel asked.
Even though the Sri Lankan government blames the global environment for the continuing decline levels of exports, Dr. De Mel said that other countries are increasing their exports by working with the same constraints.
Verite Research Economic Research Head Subhashini Abeysinghe said that the country must develop export-oriented infrastructure and increase credit lines to grass root levels
in order to increase the country’s export volumes.
“High demand for market protection instead of market access, and a large number of opposing firms instead of supporting firms shows that there is a problem with capacities and competitiveness. While FTAs are important, in this scenario, we need to build our capacity and competitiveness,” she said.
She noted that companies have to continuously invest in improving internal processes and invent innovative products in order to compete globally.
However, Abeysinghe said that even if there is a healthy private sector, the shortcomings of the public sector will hold the country’s exports down.
“There has been very little cooperation among export agencies. What they have been doing for the past 15 years is not having an impact. And they are doing the same things and expecting different results,”
she said.
She added that the disconnected efforts of these agencies sometimes serve to undermine each other.
Earlier this month, Primary Industries Minister Daya Gamage had also noted that only around 20 percent of public sector employees in export facilitating agencies are productive.
Abeysinghe noted that the private sector should enjoy a healthy macroeconomic environment, a stable tax policy, and easy access to government information.
Abeysinghe noted that the progressive move in the budget to have Commercial Sections of
Sri Lankan Embassies conduct
market research is not being implemented properly.
“I don’t know how many private sector companies actually received these market reports. This is generally an expectation of Commercial Sections of many countries. It’s great the budget proposed that but actually getting it into implementation the private sector has to follow up and ask what’s happening,” she said.
However, Abeysinghe stressed that the government must also continue negotiations of FTAs, since investors that are looking to invest in export-oriented ventures will always look at how many FTAs a country has.
She added that upcoming Sri Lankan FTAs should address paratariffs, non-tariff barriers and other obstacles in the export markets, since existing FTAs only address customs tariffs at entry.