Country should focus on increasing exports say experts | Sunday Observer

Country should focus on increasing exports say experts

The drop in worker remittances in August is not only an indication that all is not rosy in the Middle East, but also an eye opener that the country cannot forever bask on the sweat of expatriate workers and that it needs to focus on driving exports and creating professional services, industry experts believe.

University of Colombo Professor in Economics, Sirimal Abeyratne said although it seems to be a short-term setback, the recorded fall of workers’ foreign remittances in August this year, is another signal to open the eyes. As Sri Lanka desperately needs foreign exchange so it is not unusual that we scratch the bottom every month.

For many years we used to say that the plummeting trade deficit is cushioned by fast-growing workers’ remittances. Yet, the same statement is an accurate measure of the deep-rooted policy issue of the country.

It is not a wise comprehension to say that Sri Lanka’s worker remittances have been growing faster than its exports over the years because it shows not a sign of prosperity, but that of economic misery and inability.

Foreign remittances continued to rise fast because the economy does not have the capacity to absorb human resources into its production process and the inability of the country to reward the labour.

 In fact, the worst is that the share of ‘skilled labour’ migration has grown over the years with a decline in the share of ‘unskilled labour’ category. The flip side of the same story is the falling export share, resulting in growing trade deficits.

Remittances need to be replaced by exports of goods and services in the current account of the balance of payments, and borrowings need to be replaced by investment in the capital and financial account of it.

Export Development Board Former Chairman Dr Rohantha Athukorala said the country must relook at the business model on worker remittances. Let’s call it export of services. Rather than quality we must drive professional services to be marketed to the world so that rather than the bottom end of the pyramid we market the top end recruitment and that attracts higher value to the country.

Employers’ Federation of Ceylon Deputy Director General Kanishka Weerasinghe said by upgrading skill the skills mobility of workers will be higher and their ability to earn will enhance.

The Employers” Federation supports the ’10 plus’ initiative of the Ministry of Skills Development to certify skills of all workers in relation to the national vocational qualification (NVQ) standard.

Expatriate worker remittances, a key foreign exchange earner dipped in August by 10 percent to US $ 556.6 million from the corresponding month last year.

Experts note that although it’s a short term slump it could be a blow to the economy if the trend continues leaving the economy to have a wider trade deficit.

Worker remittances during the first eight months dropped by 6.3 percent year on year US $ 4.5 billion due to the geo political tensions in the Middle East.

Foreign remittances have averaged around US4 6 to 7 billion in the recent years.