Despite a slowdown in export revenues during the last two years, the country’s export sector is now on a positive growth momentum, having overcome the challenges.
The exports sector continues to be one of the largest contributors of foreign exchange to the country alongside worker remittances and tourism. During the pandemic Sri Lanka export revenue drop in 2020 impacting the island USD dollar crises and national revenue. However, the sector has picked up in the latter quarters of the 2021. Exports have reported USD 1 billion monthly revenue in multiple months since July 2021.
The NCE represents over 412 industry leaders in multiple sectors from agriculture, garments, IT and includes export support services such as banking, shipping, airlines, freight forwarding, courier, telecommunication and travel trade.
The Daily News Business spoke to the Immediate Past President of NCE, Ramya Weerakoon on Sri Lanka’s Export Sector and its prospects in the new year.
Weerakoon is no stranger to the export fraternity. During the last four decades, she has transformed a start-up company into an empire of successful businesses in apparel, horticulture, leisure and ventured into retail fashion as well. A well respected personality in the export sector, Weerakoon currently serves as the Chairman of Ramya Holdings, the parent company of Trendywear, Ramya Horticulture, Ecorich, Aditi Infinity and Amari plants.
Q: How is the export sector performing at the moment?
A: The unexpected disruption to the global economy and trade due to Covid-19, Sri Lanka’s Export Development Board revised its 2020 export forecast from USD 18.5 billion to USD 10.75 billion.
Due to the pandemic situation, though the export decline in 2020 there is a remarkable increase in exports since July 2021. Out of total exports in Sri Lanka 40% is textile and garments, 17% is tea and the rest is other commodities which includes spices, gems, coconut products, rubber and fish.
When considering the Apparel exporters in Sri Lanka they have to compete with other countries in the region who have low product cost and government concession. Many Sri Lankan Exporters in the Apparel industry have invested in those countries to get benefit of the low-cost production facilities and to enjoy less stringent country of origin rules.
Tea is one of the major export products which contribute foreign exchange to the country. Due to the ban on importation of chemical fertilizer the crop has decreased and quality and quantity of the product is declining.
Q: What contributed to revenue pick up since July 2021?
A: Due to the Covid situation, especially in 2020 when the demand dropped that the forecast was lowered.
Globally, the situation was the same and stores closed so there was a big market drop worldwide, especially in our key export markets.
However, in mid-2021, when the time the global markets developed by adjusting to the Covid conditions, Sri Lankan exporters were also ready to supply and regain to normal situations.
Thus, we were able to cater to the increasing demand as foreign buyers sourced from our manufactures due to the rapid spread of the virus in the region.
Therefore, the credit goes to the government, health authorities and also our employees who enable us to grasp this competitive advantage. Also a notable development is seen in our IT sector as it competed with the world and substantially increased their revenue as the world adjusted to the new technology.
Q: What support didexporters receive from the state to manage the challenges?
A: During the First wave of the Pandemic the government granted concessions including a moratorium on debt capital along with interest and also granted working capital loans at an interest rate of 4%.
We appreciate the Government for the significant effort taken on the part of the government to fully vaccinate all the employees along with the booster dose to ensure smooth and uninterrupted production.
Further the government has considered to setup a new textile producing park in Eravur to increase backward integration on apparel sector.
Also the government has intervention to ensure that we can work with relevant departments using information technology with a review of present procedures of exports.
Q: How has the subsequent effects of the foreign exchange crisis impacted the sector?
A: The most challenging is the shortage of foreign currency in the Forex market and this has affected of paying the import bills for machines importing for purpose of expanding the businesses.
Though the production cost has increased due to high cost of living, the exporters are unable to increase prices to the customer. Therefore, it is needed for the exchange rate of US Dollar to fluctuate. This will prevent the black market being created.
Q: How do you see the current business environment and how attractive is it for foreign investors?
A: The inconsistency and unpredictable policies such as taxations, customs procedure and regulatory approval processes imposed by the government are not supportive for the growth of the exporters or investors. The regulation which exporters to convert the residual which is the remaining balance of such export proceeds received in to Sri Lankan rupees will have a detrimental effect on future foreign investments and this will discourage new investors. Even the existing investors will look for other options for investment.
Q: As the Chamber is the representative body of the export sector, what are NCE’s suggestions to help improve the situation?
A: There have been suggestion made by the Chamber, which proposed the reduction of number of holidays and to change the Shop and Office Act to suit the current environment.
Also the chamber proposed to increase the over time for women from 60 hours to 75 hours a week, which would benefit the worker earn extra income and help solve the labour shortage in factories.
NCE also proposed to introduce a digital platform and mechanism where Sri Lankan foreign missions could update relevant market information and access on monthly basis.
As the Chamber we also believe that it is important to explore new markets or trade. We have made some requests for a conscious effort to be made in international trade policies through law that can be implemented by the government with friendly countries.
Q: How do you see 2022 turning out for exporters?
A: The resilience of the exporters during the pandemic is on display, also in the export statistics. There are many sectors recorded their highest export revenue than during 2021. Mostly the demand was there for tea and spices during the pandemic. Going forward, exports would definitely improve with return of global market demand, we could achieve better performance.Overall, we are very keen that the government become more vigilant in spending at this time. We consider our staff as an asset and provide them better remuneration and welfare facilities while succeeding the business. The private sector always consider the efficiency and the cost effective process which I suppose the public sector should follow. (WW)