Sri Lankan exports declined in 2009 by 12.7% to US$ 7 billion. However, in the first four months of this year, exports were US$2.7 billion; with sectors such as tea, rubber, gems and jewelry and spices picking up, while garments dropped 10% over the same period last year, according to the country's Minister of Industry and Commerce, Rishad Bathiudeen.
Mr. Bathiudeen also opined that, if the country could produce reasonably priced goods, it could grow its share in its existing markets as well as even making in-roads into new markets. However, he also added that issues with power and delays in refunding Value Added Tax (VAT) to exporters were affecting efficiencies. In playing his part, he suggested that his ministry would attempt to rectify the situation with VAT delays but was unable to do anything presently about the power issues. Additionally, he further noted that the government believed in the liberalisation of markets and, as such, increasing market access brought upon by the Doha round of the World Trade Organisation.
Mr. Bathiudeen's comments were made at the 13th Annual General Meeting of the Exporters Association of Sri Lanka, where he, along with Deputy Minister of Finance, Dr. Sarath Amunugama, was a chief guest. He also noted that this 1,000 member strong apex body represented 80% of all Sri Lankan exports.
Meanwhile, Dr. Amunugama highlighted tea and agriculture, and especially paddy production and agriculture in the North and East, and garments as the key components for the government's planned double-digit growth efforts. He also mentioned that, while in the past the value of the Sri Lankan rupee had to be propped up against devaluation, now the rupee had to be carefully controlled to stave off overvaluation. Additionally, Sri Lanka's emphasis on the power sector meant that the country would never again face power shedding (cuts).
Dr. Amunugama also revealed that, even though import duties on certain products had been reduced recently, overall revenues had increased.
Additionally, local banks were also benefitting from unprecedented credit ratios. He further indicated that these banks must be pressured into putting this liquidity to good use by facilitating better credit to the private sector. Noting that the country's tourism (currently at US$500 million approximately), gem and jewelry (US$ 500 million) and IT (US$ 600 million) sectors all had the potential to easily double, he also suggested that the country had to expand stock market operations.
In the mean time, re-elected EASL Chairperson Nirmali Samaratunga noted the largest contraction in exports was 14% in the industrial sector. She also indicated that the exporters were still being impacted by the economic downturn of 2008 and 2009. As such, she requested that the country's Central Bank continue its intervention to keep the value of the rupee stable. She further also suggested that more options be provided rather than just the major source of funding being bank loans, while at the same time noting that small and medium enterprises were finding a lack of access to finance to be a serious concern.
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