Diplomats negotiate markets while industries waltz to other regions
Many Sri Lankan companies are gearing to set up bases in Africa and other regions while the Export Development Board (EDB) with the Commerce Department has advised
Sri Lankan ambassadors to negotiate markets and look at Free Trade Agreements (FTAs) with the African Region on the back of crippling US tariffs, top officials said.
The EDB had met with several ambassadors organised by Ministry of Foreign Affairs early this month on identifying products and finding new markets for local industries. “We also discussed and requested the Ministry of Foreign Affairs and other agencies to strike preferential trade agreements and FTAs with the African region,” a senior EDB official told The Sunday Times Business on Friday.
US President Donald Trump announced tariffs on imports from around 90 countries, including a 10 per cent across-the-board tax on all imports into the US aiming to reduce the US trade deficit with countries like China and the European Union.
Sri Lankan companies in mechanical, electrical and plumbing, hydropower, apparel, rubber manufacturing, construction, renewable energy etc. are shifting bases to the East African region and, the larger Indian Ocean region, top officials said. The popular countries are Kenya, India, Nepal and also the Maldives. “To diversify into other destination is the smart thing to do,” Economics Prof. Sirimal Abeyratne said that Sri Lanka is fast losing export competitiveness to other countries and that it is better to move to those particular countries and trade there. Some firms in the services sector are moving to Singapore and Dubai to open virtual offices, ICT industry officials said.
A top businessman noted that West Asia offers better deals for manufacturing companies which aren’t very labour intensive.
Those firms who have already ventured out to other countries are looking at expanding bases there to tackle the tariffs. Listed firms in manufacturing and electronics are expanding bases in Bangladesh as well as Israel, officials said. “We are increasingly seeing many companies working on projects elsewhere and trying to do mergers and acquisitions. Also, companies who have been negotiating to merge or acquire companies in other countries are trying to expedite these deals in the wake of Trump tariffs,” a stockbroker told The Sunday Times Business.
Industry analysts said that Trump will do a better deal with India and other countries than China and it is a smart move to shift to these countries.
“Companies must align their innovation roadmaps and go-to-market strategies with emerging consumption centres, not just Western markets. Local firms must recognise that US market entry is no longer the singular path to global relevance and focus on non-aligned markets, such as Latin America, Africa, and parts of Southeast Asia, where demand is growing and geopolitical friction is manageable,” a businessman pointed out.
However, the challenge remains where Sri Lanka may not find the right management talent to steer the companies overseas, analysts said.
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