The third-year undergraduates of the Department of Business Economics have organised a Pre-budget forum focusing on export competitiveness on September 17 at 3 pm at the Lighthouse Auditorium of the Lakshman Kadirgamar Institute of International Relations and Strategic Studies. The keynote speech will be delivered by State Minister of Finance Eran Wickramaratne. The aim of organising the forum is to provide a platform for small and medium scale exporters (SMEs) to discuss the difficulties they face and present solutions and alternatives to enhance the competitiveness of exports.
In 2017, Sri Lanka’s trade deficit was US$ 9.6 billion, up from US$ 8.8 billion in the previous year. Sri Lanka’s exports were US$ 11.3 billion, up 10.2 percent from a year earlier and imports increased by 9.4 percent to US$ 20.9 billion. This shows that Sri Lanka has a trend of increasing trade deficit - the solution being to either reduce imports or increase exports. Reducing imports is easier said than done as nobody wants to enjoy a standard of living less than what was enjoyed earlier. Most imported items are essential as they cannot be produced locally. This leaves increasing exports as Sri Lanka’s only option.
Increasing exports is vital for Sri Lanka to address its severe trade deficit. Therefore, it is essential that Sri Lanka promotes export-oriented industries and enhance the competitiveness of the industry. The government often tries to promote exports and provide benefits to exporters. The National Export Strategy introduced by the Export Development Board is one such policy framework. However, such policies are not communicated to small and medium scale exporters unlike the large-scale players. Many small-scale exporters face difficulties and have no means of communicating the issues, difficulties and suggestions since there is no proper platform for the purpose. However, small and medium scale exporters also play a major role in Sri Lanka’s export earnings and have the potential to become larger players in the international market given a conducive environment and policy framework to operate. In certain countries, the value of exports by small scale players exceeds the value of exports of all the larger players. This alone shows that it is vital to give a keen ear and lend a helping hand to small scale players.
Policy adjustments conducive to the export industry should be introduced, such as rebates on taxes paid on imported raw materials for products that are exported. Such a policy would be extremely beneficial to local producers as most of them are involved in value addition of imported raw materials as in the textile and steel industry. Small scale exporters with a plan for expansion should be funded and advised as needed and a direct link with the policy makers is crucial at this juncture. Government institutions that have a stake in exports should be proactive and respond quickly in keeping with the needs of the industry. Policy consistency in terms of taxation and tariffs is also needed as sudden shocks may cause these small and medium scale exporters to go bankrupt and out of business.
The government at present shows a positive attitude and support for entrepreneurs while encouraging entrepreneurship which is indeed commendable. A similar positive attitude and support for exporters can play a major role in their performance which at the end of the day will boost Sri Lanka’s export earnings and government revenue. Another option is to cluster industries so that the waste of one industry can be used to produce goods that could be exported. With Sri Lanka’s move to higher income earnings and a qualified workforce, the country can look to export knowledge-based industries, mainly in the fields of Information Technology and Knowledge Process Outsourcing, which is the fifth largest foreign exchange earning industry at present. This has the potential to be a major revenue earner for the nation.
The Pre-Budget Forum will encourage exporters to hear what the policy makers have to say, acquaint themselves about the National Export Strategy and listen to the address by officials of the Inland Revenue Department and Ceylon Chamber of Commerce. This will be followed by an open discussion. This forum is the first of its kind and an ambitious project by the undergraduates who strongly believe that they can contribute to the national economy. The forum is open to the public free. The organizers would welcome suggestions from exporters and openings for partners and sponsors of the event are also available.
The writer is a third year undergraduate of the Department of Business Economics, Faculty of Management Studies and Commerce, University of Sri Jayewardenepura
The forum is open to the public free. Participants can contact Naveen Silva on 0777772977 to reserve a seat as a limited number of seats is available.