Government to Unlock Untapped Export Potential amidst Challenges and Opportunities
By: Staff Writer
October 14, Colombo (LNW): Sri Lanka’s new government is keen on exploring its substantial untapped export potential, which has been hindered by a variety of challenges.
These include production-related barriers, unforeseen climate changes, labor shortages, high production costs, and low productivity, according to the Export Development Board (EDB).
Following the directives from a recent World Bank report, the government aims to address these issues to boost export growth.
Current Export Landscape
As of August 2024, Sri Lanka’s export revenue reached $10.69 billion, marking a 5.82% increase compared to the same period in 2023. However, the country’s full export potential remains largely unrealized. Factors such as the lack of awareness among exporters, difficulty in meeting product-specific market requirements, and trade barriers have contributed to this situation. Previous policymakers’ lack of focus on these ground realities has also played a role in hindering export growth.
Untapped Sectors: Agriculture and Food Products
Agricultural products like tea and spices are among Sri Lanka’s highest potential exports. Despite a reported export value of $1,213.75 million for tea in 2021, a significant gap exists between actual and potential exports. For example, black tea exports to regions like South Asia and OECD countries have unrealized potentials of 91% and 82%, respectively. Similarly, spices like cinnamon, pepper, and cloves show a combined unrealized export value of $453 million.
Countries like the USA, UK, and India offer significant opportunities for Sri Lankan tea and spice exports. The untapped tea export potential to the USA and UK alone stands at $103.5 million and $87.8 million, respectively, indicating that there is a massive opportunity for growth in these markets.
World Bank Insights: A $10 Billion Opportunity
According to the World Bank’s bi-annual Sri Lanka Development Update, the country has an estimated $10 billion in untapped export potential annually
By leveraging this potential, Sri Lanka could generate about 142,500 new jobs and significantly boost its economy. This marks an increase from the $7.4 billion estimated in 2020 by the World Trade Organization.
Despite the potential, Sri Lanka lags behind its East and South Asian counterparts in several manufacturing sectors, except for clothing and rubber products. The World Bank has identified these missed opportunities as “missing” exports, urging the country to address its export-related challenges to capitalize on sectors like tourism and agriculture.
Strategic Reforms and Recommendations
To overcome these obstacles, Sri Lanka must implement strategic reforms to eliminate its “anti-export bias.” The World Bank recommends several key measures, including:National Single Window (NSW): Streamlining international trade processes through the implementation of an NSW to simplify and expedite export procedures.
Economic Transformation Act (ETA): Revamping the Foreign Direct Investment (FDI) regime through the ETA to attract more investments.
Diversified Trade Agreements: Signing comprehensive trade agreements to broaden market access and improve export conditions. Sectoral Reforms: Investing in value-added sectors like tourism and promoting product diversification, especially in high-growth areas like machinery.
