The National Export Strategy (NES) is progressing in the right direction. It has six focused areas and is expected to provide the impetus for the export drive supporting economic growth, Chairperson of the Export Development Board (EDB), Indira Malwatte said.
Development and promotional programs carried out by the EDB, including programs implemented under the NES with stakeholders and the commitment of exporters, resulted in the highest ever export revenue from merchandise and services exports, she said in an interview with Business Observer.
Q. What progress has been made since the launch of the National Export Strategy?
A. The Ministry of Development Strategies and International Trade and the EDB spearheaded formulating the NES, which was launched in July last year, with the vision of ‘Sri Lanka - an Export Hub driven by Innovation and Investment’, and is now being implemented.
Progress of other NES sectors: The processed food and beverages sector is one of the largest industries and manufactures a wide range of food and drinks to cater to the growing needs of the global population. This sector is diversifying.
Sri Lankan products are of high quality and have the healthy characteristics of raw materials and the industry’s commitments to investments in manufacturing and in improving its market image. Leading firms established in the sector can serve as an inspiration for the sectors’ smaller companies.
Today, Sri Lanka’s F & B sector appears ready for the next growth surge.
A proposal was submitted for National Budget 2019, in collaboration with the Ministry of Health, to set up a Food Safety Standard Authority to upgrade food safety laws and to set up an efficient regulatory system. The sector is also working with the Sri Lanka Tourism Development Authority on branding ‘Sri Lankan Cuisine’, to promote Sri Lankan cuisine to the world. The Food Safety and Standard Authority in India (FSSAI) has recognised three local laboratories to conduct conformity assessment of local food and beverage products to Indian standards. This will be a big boost to food and beverage exports to India under the Sri Lanka-India Free Trade Agreement (SLIFTA).
Sri Lanka, the ‘Spice Island’, has been renowned for its spices and its extracts or concentrates. This sector plays a valuable role not only in boosting export earnings, but also in enhancing the rural economy and social development.
At present, Sri Lanka is the ninth most important exporter of spices (especially cinnamon, pepper, cloves, cardamom and nutmeg) in the world, with spice exports touching US$ 273 million in 2016. Sri Lanka is the largest producer and exporter of ‘True Cinnamon’ in the world.
The EDB initiated a brand promotion campaign for Ceylon Cinnamon and pepper to position Ceylon Spices in the international market. The branding and communication strategy has been drawn up and will be implemented this year.
Work is in progress to set up a National Quality Council with the support of the Ministry of Science, Technology and Research.
Q. Have you done any checks on the progress made so far? What is the response of the export sector?
A. Sri Lanka’s foreign exchange earnings from the export of merchandise and services have grown significantly since 2015 to-date. Export revenue increased from US$ 13.9 bn. in 2016 to US$ 15.2 bn. in 2017, a 9.4% growth. Exports recorded US$ 16.4 bn. (provisional data) last year which is a 94.3% achievement of the annual target of US$ 17.4 bn.
Development and promotional programs carried out by the EDB including programs implemented under the NES with stakeholders and the commitment of the exporters, resulted in the highest ever achievement of export revenue from merchandise and services exports.
Q. What are your plans for this year? Are you going to capitalise on the merchandise and service sectors in the future as well?
A. The Export Development Board as the premier State organisation to develop and promote the export of products and services will continue to promote the merchandise and service sector. All programs will be worked out in close collaboration with the private sector.
The EDB is focussed on promoting the export of services parallel to developing the agricultural, industrial and fisheries sectors. Under the NES, ‘ICT- BPM’ and ‘Wellness Tourism’ sectors have been identified as growing service sectors. ‘Logistics’ has been identified as a key trade support function. The EDB also promotes construction as an emerging sector.
Sri Lanka is a producer of many traditional and non–traditional products. However, recognising the changing paradigm in international trade and Asia becoming the growth centre in the world economy, it is important that the country diversifies its product basket with new and innovative products and services.
With increasing globalisation, the SME sector has become a driving force for growth and development of developing countries. Therefore, the Government has assigned high priority to develop and strengthen the SME sector to link with global value chains. The EDB is implementing ‘2000 New Exporter Development’ to create the next generation of local entrepreneurs. A ‘Women Entrepreneur Development’ program to transform them into exporters is also being implemented.
The EDB is also inviting buying missions from Japan, China, Russia parallel to the Min-Visithuru exhibition organised by the National Aquaculture Development Authority, inward buying delegation from Azerbaijan for the coconut sector, delegation from Kenya for light engineering products and organising outward delegations for trade conferences, market exposure and visits, such as International Federation of Essential Oils and Aroma Therapy Conference (IFEAT) – Bali, World Coconut Congress in Manila, Philippines, market exposure and B2B meetings for rubber-based products in Germany, exposure visit to IAA Cars, Frankfurt, Germany for the automobile sector, business delegation to Oman for multi products, high profile MICE event for logistics and B2B networking event in Ethiopia for quantity surveying, power and energy, architecture, construction and related services.
With the restoration of the EU GSP + concessions and FTAs, the EDB is implementing programs for the export sector to maximise benefits, such as organising Outward Missions to selected EU countries (Hungary and Poland) under the MoUs signed, organising Sri Lanka’s participation at the Apparel Sourcing Paris, Inward Buyer Delegation for the apparel sector from the EU, Expo Pakistan Exhibition in Karachi, Pakistan and India International Mega Trade Fair in Kolkata, India.
The EDB is implementing market development and promotion programs ‘Enhancing Market Access’, focusing on Asia, by organising participation at Foodex, Japan and Japan IT Week followed by networking meetings and side events to promote the ‘Island of Ingenuity’ (IoI) brand, market promotion program for the natural ingredients in the spices sector in Korea, Bangkok Gem and Jewellery Fair in Thailand, Tokyo International Mineral Fair in Japan, market promotion program for food and beverages in India, Outward Mission to Japan and Inward Delegation from Japan for the spices sector.
The EDB hopes to implement a number of programs covering mature sectors and promising sectors, such as Sri Lankan Pavilion at Expo 2020 Dubai, Road Shows/ Business Fors to promote Sri Lankan exports, ‘Sri Lankan Cuisine Brands’ to cater to high-end markets, Brand promotion of sustainably sourced seafood, Pure Ceylon Cinnamon Licences program, GI for Ceylon Cinnamon, Ceylon Spices’ brand promotion, develop market study, market and brand development initiative to develop a National Brand for SL Wellness Tourism, Initiate work to develop a branding strategy for the boat building industry, Promotion of fashion designing for the apparel and craft sector (Sri Lanka Design Festival), Promotional program for fashion designers, brands/labels, Develop promotional materials for logistics, education and agriculture products.
Solving exporters problems: The EDB conducts Exporters’ Fora to resolve trade obstacles faced by exporters. Regional Entrepreneurs/ Exporters’ Fora are also organised covering the provincial exporters/entrepreneurs.
The EDB promotes electronic trade via the e-marketplace and promoting Sri Lankan products online. The EDB is also facilitating online trade information and a trade promotion portal, enabling exporters and entrepreneurs to participate in digital trade which is essential to boost economic growth and deliver a more inclusive globalisation.
This year too, the Presidential Export Awards ceremony will be organised to reward exporters for their significant contribution to the export earnings of the country.
Q. What is the future of niche export products? What initiatives would you take to drive growth in the sector?
A. The EDB has identified niche products/services to be promoted under Export Services, Industrial, Agricultural and Fisheries sectors.
With regard to the services sector, the ICT/BPM sector is gearing for the next wave of the industrial revolution.
EMS (Electronic Manufacturing Services); Test development; Production design/improvements; IoT; IC design/PCB Design; Component manufacturing with natural resources (eg. battery with local graphite); Product repairing/servicing; Field service; ERP work; Drawings, data handling, will be future niche export products.
Wellness Tourism - Brand Development - The EDB has initiated a program to develop an international wellness tourism strategy and National Brand for Sri Lanka wellness tourism by obtaining the services of international wellness expert, Dr. Franz Linser of Linser Hospitality from Austria.
Natural flavours and fragrance: Spices and herbs are the most important and valuable agriculture products in Sri Lanka. The EDB is promoting the product sector in high-end markets such as the EU and the USA.
Herbal cosmetic products: The EDB is working with the Cosmetic Manufacturers’ Association to enter niche markets in the EU, African region and Asia Pacific.
Apparel sector: Sri Lanka has a young and talented pool of creative designers and promoting their abilities in the international market will create an exclusive niche market for the country.
Fashion Innovation is a new sector the EDB has focused on developing and promoting, to bring more foreign exchange to the country. Sri Lanka has gained a reputation for manufacturing excellence for apparel products internationally.
Organic latex: The EDB plans to encourage the plantation sector to produce organic rubber which could be marketed in the niche international market either as a raw material or as products.
Gem and jewellery: This sector caters mostly to the high end market and has created, to a certain extent, a niche market for Ceylon Sapphires. However, Sri Lanka has to create its own niche market for Ceylon Sapphire jewellery. One of the main factors hindering the progress of the industry is the lack of awareness on the benefits of using design as a differentiator in the international market. Although we have talented designers, most of them need to enhance their abilities to make innovative creations.
Q. How have you dealt with the issues faced by exporters under the Indo-Lanka FTA? (ISFTA) Eg; food and fruit exports
A. There is a laid down procedure to resolve issues faced by both countries under ISFTA. Since the Department of Commerce is the focal point in implementing the ISFTA, all issues are forwarded to the Department to be taken up at the G2G consultations under the ISFTA.
Exporters face Non-Tariff Barrier issues when exporting food products to India.
To address the issue, the EDB initiated discussions with the Food Safety and Standard Authority India (FSSAI) and a five-member delegation of the FSSAI visited Sri Lanka and inspected five Sri Lankan laboratories.
Three laboratories have been recognised to conduct conformity assessments of Indian Standards. The EDB plans to organise a market promotion program in India to identify new buyers and regain the lost Indian market for food and beverage items.
Q. Although exporters complain about the apparel quota system under the Indo-Lanka FTA, reports say that exporters have not even used the entire quota. What is your view?
A. Under the ISFTA, Sri Lanka was offered a quota of eight million pieces of garments for export at zero duty (despite garment items are being in the Negative List of India). According to the Department of Commerce, Sri Lanka’s apparel sector has used almost 100% of the quota at the end of 2017 and 2018.
Due to the non-availability of an apparel quota at the end of 2018, some Sri Lankan exporters had to export their products to the Indian market after paying the Customs duty in India in full or sharing it with the Indian buyers, to secure their orders.
As a result of the limited apparel quota (eight million pieces per annum), Sri Lankan exporters are unable to make future business plans for the Indian market in a meaningful manner.
According to exporters, there is a possibility of losing some of their Indian buyers due to lack of quotas. The Government is negotiating with India to lift the apparel quota as early as possible.
Q. Is there a possibility to combine exports with the tourism sector to increase exports? (Eg. Getting more tourists to buy export-quality products)
A. Ayurveda and the traditional medical system is a goldmine if properly used in the tourism sector. The Tourism promotion, carried out internationally, should include mini gem and jewellery shows.
The gem and jewellery sector should integrate with the tourism industry. Considering the high marine diversity and the influx of fairly high spending tourists, the country has a massive potential for nautical tourism. It will contribute to improve the local ship and boat building industry.
Sri Lanka’s inherited craftsmanship, cultural diversity and rich natural resources provide the base for a wide range of giftware that satisfy the quality conscious and discerning buyers. Giftware from Sri Lanka is now a combination of traditional skills and modern technology.
Q. What are the implications in the event of Britain leaving the EU?
A. Sri Lanka’s exports to the UK are governed by the Generalised Scheme of Preferences (GSP) Plus scheme of the EU, and this will change when Brexit is put into effect which is expected to take place this year. There could be a negative impact on Sri Lanka’s economy from Brexit since the UK and the EU are large trading partners of Sri Lanka.
Another point to be taken into consideration is the low utilisation rate of the GSP + facility by Sri Lanka which is the lowest among competitor countries, such as Pakistan and the Philippines. Sri Lanka’s utilisation rate of GSP+ concession is 55%. This could be noted from statistics where the regaining of EU GSP+ has not made a significant effect on exports to the UK market.
Q. In that case what plans do you have for the British market?
A. The best option for Sri Lanka would be to enter into a bilateral trade agreement with the UK to enjoy the facilities currently enjoyed under the EU GSP+ facility. Another strategy is to promote more services exports that do do not fall under GSP+ concessions. In this regard, the EDB plans to promote ICT/BPM and wellness tourism.Source at: Sunday Observer