ECONOMYNEXT – Sri Lanka’s exporters should play a greater role asking to remove import protection, relax immigration rules to fill a shortfall of skilled professionals and encourage private investments in education and healthcare to attract the Diaspora back in the country, a business leader has said.
"We need to stop asking for protection from a depreciating currency," Rajendra Theagarajah, the head of the Ceylon Chamber of Commerce told the annual general meeting of the Exporters Association of Sri Lanka which is part of chamber this week.
A depreciating currency is wrongly blamed on imports, whereas balance of payments crises are caused by money-printing central banks that help governments finance often reckless and misguided spending, or to manipulate rates down as credit picks up.
"We need to look at ourselves as an island nation realise that one cannot do business and grow without international trade," Theagarajah said.
"It’s not just about growing exports. To improve connectivity and competitiveness of our exports we need imports.
"There is a need for the elimination of para tariffs and barriers to trade in this country," he said.
"The Exporters Association of Sri Lanka needs to put pressure on the government to remove para-tariffs and remove barriers to trade in order to uplift our export competitiveness," he said.
While many people express reservations – and a few are fear mongering – about free trade agreements with India, Singapore and one proposed with China, exporters should be looking for opportunities instead.
"A recent survey by ACCA Sri Lanka showed that less than one-in-five business executives knew about China’s Belt and Road Initiative. This is a 4 trillion US dollar trade initiative that embraces Sri Lanka as well," Theagarajah said.
"Are exporters geared to seize the opportunities, or are we fighting shy saying China is going to swallow us all," he asked.
-Talent crunch-
Sri Lanka needs more innovation to be able to move up the global value chain to achieve sustainable export growth, however, there is a serious talent crunch that’s preventing this.
"We scrapping the bottom of the barrel when it comes to the professional skills we require to foster innovation and propel economic growth," Theagarajah said.
"There is a critical co-relation between a nation which has successfully gone up the global value chain with innovation and relaxed immigration policy. These are intrinsically connected and cannot be disassociated. This is not just hearsay, but there are many examples out there," he said.
While Singapore is often held up as an example for Sri Lanka to follow, the Chamber chief highlighted the example of another small nation.
"Malta literally has no other natural resources apart from a port, but exports account for 60 percent of its GDP. This is possible because Malta has an immigration policy which encourages people to come in, add value to the country and then leave," Theagarajah said.
"We always talk about establishing ourselves as the gateway to South Asia but are we doing enough to encourage people to come here and add value? We need to do some soul searching," he urged.
While Sri Lanka experienced a brain-drain during the three-decades long conflict, nearly ten years of peace hasn’t attracted the Diaspora, and their investments, in droves either.
"Two of the biggest challenges for returnees to Sri Lanka are the cost of quality education and healthcare. In the absence of those ingredients you are not going to get a reverse brain drain into the country," Theagarajah said.
"So what needs to be done to bridge the euphoria and expectation with reality? We’ve got to open up the market for at least a short time so Sri Lanka can at least fill its own demand," Theagarajah urged.
"We need the courage to open markets, at least so that we can prop-up our own talent," he said.
-Innovation-
Sri Lanka’s export industry is awaiting the government’s National Export Strategy (NES) which will be rolled-out on 19 July, and innovation is a key area everyone will be watching.
However, Theagarajah said exporters should develop and implement their own innovation-led export strategies.
"We should leave the government to formulate policy, but beyond that export development should be private sector driven," he said.
"If you are waiting for the government to come up with a magic answer for innovation, it’s not going to happen," Theagarajah said.
While the rest of the world is deploying blockchain technology for finance and logistics, Sri Lanka’s regulators are still deliberating on it, leaving Sri Lanka behind as technologies advance elsewhere in the world, he said.
"Exporters need to do some soul searching. Ask yourselves, are you engaging with startups and investing in the future? Do you plough back at least half a percentage to invest in innovation?
"Are you investing and collaborating with universities to develop new products and solutions? Or are you waiting for someone else like the government to do that for you?" Theagarajah asked. (COLOMBO, 14 July 2018)