On a global scale, Sri Lanka is falling behind many countries in competitiveness, due to a large number of domestic trade barriers that have impeded export growth for the past two decades, economic researchers said.
Research reveals that a noteworthy number of exporters are moving out from the export industry and diversifying into others areas of business due to trade barriers within the country that have made their products less competitive in the global market.
The Enabling Trade Index which ranked Sri Lanka 103 among 133 countries in the last survey and being ranked 90 out of 130 countries in Trade Across Borders are clear indications that the country is fast slipping in its competitiveness in global trade arena, research reveals.
Head of Economic Research, Verite Research, Subhashini Abeysinghe said trade barriers are not only abroad. “They are within our borders and we should address them before going for Free Trade Agreements (FTAs) and discussing border issues in other countries.”
Speaking at a forum on ‘Agri Exports: What’s Holding Back’ by Verite Research, Abeysinghe said poor infrastructure, bureaucratic red tape, taxes and policies are some of the major trade barriers that have stifled competitiveness and export growth and added that these barriers are bigger than global trade barriers .
Agricultural exports which are adversely affected by domestic trade barriers account for around 10 percent of the GDP, 23 percent of the total exports and 30 percent of the workforce in the country.
Research conducted jointly by the Sri Lanka Fruit and Vegetable Producers, Processors and Exporters Association and Verite Research reveal that unhealthy regulations, administrative procedures and poor dissemination of information have made export products uncompetitive.
Verite Research Director Dr. Nishan de Mel said that regulations are extremely vital but they need to be like good medication that heals the patient. “We do not need bad medicine that aggravates the condition of the patient.”
“Although there are plenty of regulations, they are not effective,” Dr. de Mel said.
He said every country needs regulations to protect its plants from invasive species and diseases. Safety is an issue in countries that do not have regulations. The USA and Europe have imposed a large number of regulations for safety.
Gazette No. 151 of 1981 on plant protection is based on a law passed in 1924. The Plant Protection Act was updated in 1999. However, bureaucratic barriers obstructed its implementation, according to Verite Research.
“Regulations for plant protection not being passed for 17 years is definitely bad administration. The Seed Council which was to be set up under the Seed Act of 2003 to ensure quality of imported seeds, failed to see the light of day,” Verite Research stated.
Administrative procedures on checking perishable goods are not beneficial for exports. Perishable goods go through four types of checks before they are exported. The boxes are checked at different locations and in open air which is not healthy for ornamental fish which needs the correct temperature.
Veriate Research noted that the checks up are carried out by incompetent staff and that there is no necessity for checking by the Air Force since there is no war in the country.
Research reveals that exports take a lead time of around six hours which makes them uncompetitive compared to Thailand, a major agri product exporter which takes only around one and half hours for cargo loading.
Poor dissemination of information in State institutions is also a hindrance to boost export competitiveness, Verite Research said. It stated that the time-frame taken to process exports is not found in certain agencies while only a few tell the procedures involved.
It further states that it is hard to find information and is costly and unreliable. The information on exports of fish was last updated in 2009. Perishable exports have to adhere to regulations imposed by importing countries.
The national trade portal of Bangladesh comprises processes and procedures for trade. The risk assessment technique in Turkey has helped it improve it competitiveness. Turkey reduced its lead time from 76 hours to six hours.
Sri Lanka lost 19 places in two years in the enabling trade index and is falling behind its South Asian counterparts at a rapid pace. The export to GDP ratio declined from 33.3 percent in 2000 to 12.7 percent in 2009.
However, exporters said there is a demand for Sri Lankan products in the global market. Trade barriers in the country are affecting quality and timely exports.
Fruit and Vegetable Producers, Processers and Exporters Association President Suresh Ellawala said there is a big demand for Sri Lankan products in the global market. However, due to bureaucratic red tapes and other trade barriers such as unhealthy regulations and tariffs have made our products less competitive. “Our aim is to boost exports by clearing hurdles and not to point figures at others,” he said.