Sri Lanka diversifies exports into fast-growing Commonwealth economies
Sri Lanka is set to diversify exports into fast-growing economies in the Commonwealth amidst dwindling demand in major export markets, Ministry of Industry and Commerce sources said.
There are 53 Commonwealth member states including the UK, with a combined population of 2.4 billion.
The Commonwealth Secretariat has identified 40 new products and 15 new markets with 116 product-market combinations for Sri Lankan exporters with a view of assisting the country diversify its products and markets for exports.
It has already offered technical assistance for Sri Lanka’s export diversification and trade negotiations for a potential market access of US$2 billion in the new areas that have been identified.
Export trends are changing from merchandise to service sectors, a senior official of the Commerce Ministry said adding that service sector exporters would overtake merchandise exporters within a couple of years.
Local exporters of BPO services, ICT and logistic sectors are expanding into fast growing economies, he pointed out.
Sri Lanka’s merchandise and service exports in 2018 are estimated to reach $17 billion, up 15 per cent from a year earlier and the target for this year will be $20 billion, Export Development Board statistics showed.
Around 27 per cent of Sri Lanka’s annual global trade in “goods” is with the Commonwealth while 40 per cent of the country’s global trade in “services” is confined to the Commonwealth.
The country’s share of intra-Commonwealth imports is around 3 per cent.
The Commerce Ministry official noted that commodities like tea, coffee, rubber, spices, metals, and minerals will continue to dominate intra-Commonwealth trade for the future.
Trade in traditional services like tourism, banking, and insurance will also be strengthened under this initiative.
He expressed the belief that these forms of trade will gradually expand after Brexit due to historic specialisation and demand conditions, a common legal framework of the common law, UK accounting practices and the widespread use of English as a common business language.
He pointed out that measures will be taken to promote trade in modern IT services, as the new front line in intra-Commonwealth trade.
Sri Lanka has the capability in providing new services such as electronic commerce, information technology services, professional services, creative industries, green services, and services linked to global value chains, he added.
The Commonwealth Secretariat has also identified 30 new markets for existing exports. These new market opportunities include non Commonwealth countries like Turkey, Mexico, Vietnam, Bermuda, Chile and Sweden.
The export potential of the island nation should be focused on new areas such as crabs to China, copper wire to India, perfumes and eau de toilettes to Singapore, knit fabrics to Thailand, track suits and swimwear, knitted or crocheted to Italy, Slovakia and Poland, the Secretariat has suggested.
Sri Lanka has obtained the membership of India-Commonwealth SME Association which will provide a sustainable platform to Sri Lankan firms to connect with Indian counterparts as well as other businesses in Commonwealth countries.
This will help Sri Lanka to diversify its exports and link into those involved in the production of goods and services – the global value chains – of countries like India and UK, Ministry of Industry and Commerce sources said.