Oct 26, Colombo: Sri Lanka says it will not remain passive in the face of global downturn and is actively taking measures to safeguard its exports and looking to expand into the Asian markets to boost its declining export earnings to support the economic growth.
As Sri Lanka's exports to European and US markets continue to decline with the slowdown of their economies, the Sri Lankan government is taking efforts to further open both Indian and Chinese markets for its products, Sri Lanka's Minister of Industry and Commerce Rishad Bathiyutheen said recently.
"We are not going to remain passive at a time when our export markets around the world turn more challenging due to the decline in leading segments and the downward revision of GDP projections for India and China. We are under no illusions that our exports will continue to be easy as the markets become increasingly difficult. In fact, we are taking active steps to safeguard our exports," the Minister said recently at an even to promote Sri Lanka's cinnamon exports.
Explaining the immediate steps taken to safeguard Sri Lanka's exports The Minister said that he had been personally meeting and consulting many top Chamber members in the country with regard to Sri Lanka's future exports strategies.
As a result of the consultations during the last few months, Sri Lanka has taken a new initiative to set up a Consultative Committee on Market Diversification representing the interests of a wider cross section of the economy, Minister Bathiyutheen said.
"Also for the first time we held direct consultations with our leading exporters last September to find solutions to their issues and received very good responses. We also revived our exportersí forum and the third forum in the series was successfully concluded in July. But more importantly, as part of moving from simple exports to more complex products, we are looking at actively joining Regional Production Networks so that our exports become more market driven," the Minister further described the government's measures.
He said the government's efforts to further open both Indian and Chinese markets, which are seen as difficult segments, have become successful.
European Union and the United States are Sri Lanka's largest export partners accounting for 60 percent of Sri Lanka's exports. With the economic crisis in those regions, Sri Lanka's export earnings have declined 5.7 percent in the first eight months of this year compared to the same period last year, according to the Central Bank's most recent review.
For the month of August exports earnings declined by 13 percent and the income from food sector declined 45 percent.
The International Monetary Fund recently urged Sri Lanka to woo Asian markets to boost its declining export earnings to support the economic growth.
Koshy Mathai, the IMF resident representative for Sri Lanka and Maldives has advised Sri Lanka to focus on enhancing trade with India and China to take advantage of those growing Asian economies and to diversify against shocks coming from economic slowdowns in other parts of the world.
Despite having a successful free trade agreement with India since 1998 Sri Lanka's total exports in 2011 to India accounted for just 4.9 percent while exports to China accounted for only around 1 percent.
"Failing to take advantage of the opportunities provided by the economic growth by those areas (in China and India) today would be ashamed, would definitely be giving up an opportunity for Sri Lanka to go forward," the IMF official pointed out in August.
The IMF lowered the economic growth forecast for Sri Lanka to a 6.75 percent this year, slower than the 7.2 percent projected by the country's Central Bank.