Domestic barriers block Sri Lanka’s agri-export growth

ECONOMYNEXT – Domestic non-tariff barriers are hindering the growth of Sri Lanka’s agricultural exports more than tariffs in overseas markets, a new study has found.

Agricultural exports, especially perishables, suffer the greatest difficulty within the country, not outside, according to the study by Verité Research, a think-tank, together with the Lanka Fruit and Vegetables Producers, Processors and Exporters Association.

Zuraish Hashim, chairman of the association, said agricultural exporters can make a significant contribution to economic growth given that the sector accounts for 13 percent of gross domestic product and employs 30 percent of the population.
 
“So when going for so many FTAs (free trade agreements), we should look inwards and see how we can improve our competitiveness,” he told a news conference.

The government needs to act fast to remove domestic non-tariff barriers, known as NTBs, which hinder exports to make exporters more competitive in the face of growing competition from other countries, he said.

The government has said that removing barriers to trade that undermine export competitiveness is a key priority to revive the ailing export sector.

Nishan de Mel, executive director of Verité Research, said the contribution to the economy from Sri Lanka’s exports had slumped to 12.7 percent of GDP now from 33 percent in 2000 largely because of domestic NTBs.

“It is so difficult at Sri Lanka’s own border,” he said. 

“While the government talks about signing FTAs and getting rid of barriers that exist for exporters in borders of other countries, we are pointing out that some of the critical problems that exist for exporters are not at the borders of other countries but the borders of our own country,” de Mel said.

“If the exporters’ problem is that we can’t access the borders of other countries, then FTAs are the solution. But if the main problem is at the border of our own country, then we have to find different solutions.”

Subhashini Abeysinghe, head of economic research at Verité Research, said Sri Lanka is falling behind because of domestic barriers, noting that competing countries have made it easier for their exporters to ship their goods.

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The study identifies three types of domestic barriers that exporters face when dealing with border agencies in Sri Lanka; regulatory barriers, administrative barriers and information barriers.

“Very little effort has been made to remove domestic barriers,” Verité Research said. “This is despite the fact that addressing domestic barriers is far easier than trying to persuade foreign governments to reduce the barriers they impose on Sri Lankan products through trade agreements.”

These domestic barriers include cumbersome border procedures that cause unnecessary delays and add to the cost of trading and removing them is critical to revive exports, it said. (COLOMBO, Jan 19, 2016)

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