Financial Times

Cheap Chinese goods hurt Lankan exporters
By Ruwanthi de Silva
The unexpected fluctuation of the rupee and the depreciation of the Chinese yuan has led to Sri Lankan exports being uncompetitive in the global market, the head of the Exporters Association of Sri Lanka said.

"The Chinese yuan was devalued by 40 percent, and the Chinese exporters are given a 17 percent incentive by the government. This makes their exports cheap, specially items such as luggage. For us, the cost of the fabric is more than the price of the Chinese end product," lamented Graetian Gunawardhana.

He said that while exporters were not asking for the rupee to be devalued, they want a proper study to be done, which would assist in increasing the competitiveness of Sri Lankan exports.

Exporters have approached the Export Development Board (EDB) and discussed their problems with the Minister of Enterprise Development, Industrial Policy, and Investment Promotion and Constitutional Affairs, Prof. G.L Peiris as well. "We need an export development support scheme. At a meeting with Treasury Secretary Charitha Ratwatte we told him about our exports not being competitive. Isn't the government concerned about this? How can we give jobs if our pleas are not answered?" Gunawardhana asked.

"My workers are asking for salary increases, but we don't have enough rupees to pay our workers. The workers don't understand that we receive less money than before. For every dollar I have lost Rs 4. We have lost competitiveness. I think there should be an additional amount paid for every dollar earned which should be given only to the exporter. When we are competitive the whole world will come to Sri Lanka to invest.

Then there will be employment and this will help cushion the additional support given to the exporter. It is important for the government to meet us half way so we can remain competitive," he said. Gunawardhana also said that in the luggage industry, manufacturers who came to Sri Lanka have shifted to China. "Now it is cheaper for us to buy from China," he said.

Gunawardhana also stressed the importance of having good labour laws, and said Indian labour laws should be taken as an example in creating labour laws for Sri Lanka.

Explaining the reasons for the high price of the end product, Gunawardhana said, "We have so many additional costs, the price of electricity is too high, there are terminal costs, the infrastructure is not up to standard, especially the train services. This delays production and transportation of goods.

There is also a cost in having too many public holidays." According to Gunawardhana one solution is to have bilateral free trade agreements with Europe and United States, as most exports are sent to these countries.

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