ECONOMYNEXT – Sri Lanka will push for free trade agreements with Southeast Asian countries and introduce a trade adjustment scheme to help domestic industries transition to competitive enterprises Prime Minister Ranil Wickremasinghe said, as authorities introduced a National Export Strategy (NES) to win global markets.
NES 2018-2022 will focus on developing the export sector by improving quality infrastructure, trade information and promotion, logistics and innovation.
Sri Lanka hopes to nearly double exports to 28 billion US dollars by 2022.
"The key objective of NES is to increase capacity of Sri Lanka’s export industries, improve trade performance and ensure different sectors of the economy become more competitive to get a share of the global market," Wickremasinghe said Thursday.
"This is not only a strategy for national exports, but also to create better jobs and improve incomes of the people of this county," he said.
The premier said authorities would meet with export industry representatives every six months to monitor and drive implementation of NES.
Sri Lanka was among the first countries to adopt open market economic policies in 1977.
"South Korea and Singapore which were among the early starters have surpassed us today," Wickremasinghe said.
"All developed economies of Asia are export economies, but we neglected this sector. Even China started after us, so did Vietnam. Bangladesh was a late starter, but now they are ahead of us."
The government has pledged to develop the exports sector and adopt more open market economic policies, the Prime Minister said.
"We got back GSP Plus and we concluded a free trade agreement with Singapore with both countries agreeing will not apply to movement of people despite what some shout about.
"We’re talking about an FTA with China, followed by Thailand, Malaysia and Indonesia. We want to deepen trade with India. We’re covering the whole Bay of Bengal which is going to be new markets for our exports," Wickremasinghe said.
However, there are natural fears about opening the economy.
"None of us want any domestic enterprise to be adversely affected. For the first time a trade adjustment policy will be introduced with tax incentive available for domestic industries to become more competitive," the Premier noted
"We’re not opening up tomorrow to destroy them. They create as many jobs as export industries and are an essential part of the economy and they should be assisted to adjust to the new trading environment," he said.
The government has launched Enterprise Sri Lanka to assist local entrepreneurs and is also setting up new export processing zones to attract FDI to export industries.
"We will set up a development bank to finance local enterprises but before we do that, we will ensure 10 billion rupees is available for local industries. These are some of the efforts we are taking," Wickremasinghe said.
Authorities are planning to introduce legislation to cover single window facilitation for investors and improve the ease of doing business.
"Bangladesh, Kenya and South Africa have these laws and it’s high time we had them too," Wickremasinghe said.
"These are the policies we are following to ensure that the people in this country have better jobs, better incomes, better housing, better education, and better healthcare. Improving trade is the only way to achieve all this," he said.
-A long way to go-
Speaking at the launch of NES, Minister of Development Strategies and International Trade Malik Samarawickrama said the government was committed to rebalancing Sri Lanka’s economy.
"The focus has been to rebalance Sri Lanka’s economic model from one over-reliant on government investment and public infrastructure to a model that is more outward oriented, private sector-led and knowledge intensive.
"This is necessary attract transformative FDI that produces goods higher up the global value chain," he said.
Samarawickrama says the transition will be challenging.
"But is the only option for Sri Lanka if we are to create better jobs for our young people and make a sustainable transition into a higher income economy."
"Inward-looking, protectionist trade policies have not brought the results that we seek," he said.
In 2017, Sri Lanka recorded its highest annual export earnings of 15.5 billion US dollars and is expected to record 17.2 billion US dollars this year.
FDI was 1.9 billion US dollars in 2017, and is forecast to reach 2.5 billion US dollars this year.
"These numbers suggest that we are a long way off from where we want to be as a country," Samarawickrama said.
Annual export earnings of Singapore is around 480 billion US dollars, Taiwan’s is 340 billion US dollars and Malaysia’s is 250 US dollars.
"Even Bangladesh a much later entrant is at 41 billion US dollars," Samarawickrama said.
In terms of FDI, Singapore attracts about 77 billion US dollars a year, Vietnam 12 billion US dollars and Taiwan 9 billion US dollars.
"If we only concentrate on a domestic market of 21 million people, we will never be able to achieve the rapid economic growth we aspire to," Samarawickrama said.
"Our only choice is to integrate with global markets," he said.
Rapid changes in technologies and protectionist trade policies elsewhere makes it imperative for Sri Lanka to act fast to drive exports growth.
"Technological advancement has made physical goods more virtual and e-commerce platforms are empowering SMEs to take their products to global markets.
"This paradigm demands that we adopt new approaches for competitiveness, or we risk being left behind. This is why I believe that the NES is so timely and ushers in a very import era for all Sri Lanka," Samarawickrama said. (COLOMBO, 19 July 2018)