Billions lost in exports as Sri Lanka ‘brand’ drags its feet
 Alaborious process in facilitating trademark registration has resulted in fewer Sri Lankan brands and has cost billions of rupees to the export community.
And this is despite the government having given the green light and approved Rs.100 million in the last budget to help speed up entry to the foreign alliance which would help local companies push their own brands internationally.
“It is mind-boggling to think that we face a situation where it takes nearly five years to register a trademark in Sri Lanka,” pointed out Dr. Nishan de Mel, executive director of Verite Research, at a Colombo seminar on Tuesday which highlighted the losses to the country due to an encrusted bureaucracy.
The long delay in the local process, a ‘road-block’ towards joining an international club of 114 countries known as the Madrid Protocol – a centralised global mechanism set up in 1989 for registering trademarks outside one’s home country – was pinpointed as one of the main reasons why Sri Lanka had few famous international brands.
You can count them on the digits of one hand, the truly famous like Ceylon Tea and perhaps Sri Lanka Cricket, even though the current lot is misfiring.
Others like Ceylon Cinnamon revealed that they had to do it the hard way so as to sell itself overseas.
“Verite Research found that the National International Property Office (NIPO) of Sri Lanka takes around three to five years to process trademark applications. This widening gap between local trademark applications and registrations significantly limits the country’s ability to benefit from the Madrid Protocol,” Dr. De Mel said.
If Sri Lanka was part of this international club, businesses could easily register trademarks at a one-stop shop instead of going through the irksome and harder process of registering in each individual country where they want to sell their brand.
Fewer trade marks in SLÂ Â
A study by Verite showed that Sri Lanka fares poorly compared to other middle income countries like the Philippines, Vietnam and Turkey where the number of local trademarks registered as a percentage of applications was well over 50 per cent. In Sri Lanka it was 14 per cent. And the time it took to do this was the real downer.
“The requirement the Madrid Protocol imposes on Sri Lanka in return for its benefits is simple – demonstrate an ability to process foreign trademark applications within a short fixed period of one-and-a-half years. But the benefits we can gain from Madrid is severely undermined by the slow process of trademark registration in Colombo,” Dr. De Mel outlined.
He colourfully likened it to a traffic jam when travelling on the Colombo-Galle Highway during peak hours – taking one hour for the journey on the highway but needing a couple of hours to get on to the highway itself.
Top official from the Export Development Board, Indira Malwatte, agreed that the situation had become untenable for exporters drawing on her early experience to underline her argument for a quick resolution.
“I realised the importance of the Madrid Protocol almost 10 years ago when I myself was an exporter of a perishable product, strawberries. We were exporting to Europe for companies like Marks & Spencer but as it was like taking coal to Newcastle we wanted to differentiate ourselves,” related Ms.  Malwatte, EDB chairperson and CEO.
“We were very particular that it should be under our own brand and I was made aware of the Madrid Protocol then. We had to register in four or five different countries and there was so much cost involved, different languages and so on. It can be a nightmare for companies to go through this process.
“We are very proud that a number of companies have registered their brands like Damro in India. They have about 82 outlets. It couldn’t have been easy for Damro to do it in India, and they have to keep renewing their trademark rights every 10 years as Sri Lanka is not part of the Madrid Protocol,” she said.
Apparel brands
The EDB chief also paid tribute to the apparel sector for pushing their own brands pointing out that circumstances – the loss of GSP+, quotas being removed etc – had forced companies to be ‘different’.
“Sri Lanka has made a name in the garment industry. A few years ago we were supplying other brands but today we have our own brands. To encourage companies to brand themselves we have started a scheme where the legal fees and other costs are borne by the EDB,” she pointed out.
Ms. Malwatte continued: “We are also the owners of the Ceylon Cinnamon brand with almost 90 per cent of the world’s pure cinnamon produced locally. We have to differentiate it from other products so that people overseas know they are buying a quality product.
“We have registered this brand locally (and 12 companies trade under this brand). But local registration is the first registration, we have to move on and get it done internationally. EDB has met all costs on behalf of the producers, and we have registered it in the EU in the United States and Peru, and we are in the process of doing so in Australia and New Zealand.”
If Sri Lanka was part of the Madrid Protocol, it would have been easier than knocking on doors individually. But Ms. Malwatte remains hopeful that by the end of this year, the bureaucratic red tape will be unwound from a mummified process.
“The Cabinet has approved it and they are expecting it to be done by the end of 2017 so there is hope. The EDB will be closely following it with NIPO, and exporters are also pressuring in the context of the importance of branding. What we have to understand is that Sri Lanka is a small market – only 20 million – and maybe (some people) don’t appreciate the value of branding.
“When I was small, the only nail varnish we had was Cutex, it became so popular that people used to call nail varnish Cutex, similarly floor polish was referred to as Hoover. It shows how strong a brand could be and this is where we want our exporters to be.
“It is really important that we all get together with other relevant government departments and get this expedited. They (NIPO) have had issues like staffing and getting computerised, but we all have issues in our organisations and we must learn to overcome these road-blocks because branding is the next stage of development in Sri Lanka,” Ms. Malwatte stressed.
Sarada De Silva, past chairman of the Spice Council, concurred that Sri Lanka needed more value-added brands. “The Madrid Protocol is a very important cog in that wheel. The government has allocated Rs.100 million in the last budget to speed up accession but deciding to join is one thing, getting it is another.
“In the meantime we have lost billions that is the quantifiable loss. Then there is the unquantifiable loss for other countries have imitated our products and selling it under their own brands.”