Sri Lanka’s key exports are discretionary items, thus vulnerable to recessionary conditions and the way out is some hard decisions by the government, a top industrialist said. “These discretionary items are things like diamonds, gems, apparel, auto inputs such as solid rubber tyres and fibre, rubber gloves.
The reduced demand for these affect production facilities across the globe including Sri Lanka,” N.G. Wickremeratne, Chairman Hayleys PLC said at a seminar on the impact of the global financial meltdown for the Sri Lankan economy organised by the Institute of Chartered Accountants of Sri Lanka (ICASL) on Tuesday. He said that Hayleys contributes 2.6% of Sri Lanka’s export revenue and the company exports 24% to the US, 44% to Europe, five percent to Australia , 15 % to Asia, two percent to Africa and 10% to other nations (taken as a whole of the company’s turnover). He also noted that Hayleys’ industrial rubber gloves exports are exposed to industrial sector slowdown, while medical gloves are recession proof. “Fibre is exposed to decline in auto industry, but tea which declined in December has improved since,” he noted.
He said the high volatility and inability to forecast the short term has affected export firms such as Hayleys. “Payment delays (due to a liquidity crunch) are causing reliable customers to be blacklisted by the Sri Lanka Export Credit Insurance,” he noted, adding that pre-crisis scenario when the country's high inflation was coupled with low depreciation of the exchange rate have been inimical to value added exports.
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