Sri lanka promotes export diversification
Sri Lanka's export growth rate of 11.33 percent in real terms in the last decade -- 13 percent in SDR terms from 1996 over 1995 -- should be considered satisfactory as recession affects both developed and developing nations.
Sri Lanka had a vibrant plantation economy -- concentrated in tea, rubber and coconut -- at the time of independence in 1948. But this sector was at the mercy of the vagaries of weather and severe competition from other supplying countries.
Successive governments have focused on structural changes of the economy through export diversification. The strategies culminated in 1979 with the setting up of the premier state organization, the Sri Lanka Export Development Board (EDB).
Several other institutions, mainly trade chambers, are also playing an important role in fostering export development.
Tea, rubber and coconut remain important in the Sri Lankan economy, and great strides have been made in marketing sophisticated, nontraditional exports of these products, such as the renowned "Ceylon" tea.
But export diversification has brought stability to the economy. In 1996, nontraditional exports contributed 80 percent to total exports, up from 43.2 percent in 1980.
Apparel has taken over the number one spot once held by tea in exports, with 46 percent of total exports in 1996. Garments are marketed under world-renowned brand names.
Rubber, once exported as sheet and crepe, is now in manufactured products of gloves, tires, tubes, thread, unhardened rubber and articles of unhardened rubber, hoses, belts and footwear.
Average growth has been 28 percent in the last decade, which makes it a worthwhile investment opportunity. Sri Lanka is the world's eighth largest producer of natural rubber and the fourth largest exporter, but a large quantity of the production is used locally. EDB's efforts are toward increasing the production of rubber-based items for export.
Sectors which have also recorded promising growth are leather and leather products (22.49 percent growth), fisheries (15 percent), wood and wood products (19 percent), paper and paper products (37 percent), ceramic and porcelain (16.02 percent), nonmetallic mineral products (7.92 percent), food, beverages and tobacco (6.79 percent), and gems and jewelry (10.31 percent).
Other major products are fresh and processed fruit and vegetables, cut flowers and foliage, spices, cashew nuts, carpets, mats and brushes, coconut shell charcoal, activated carbon, confectionery and bakery products, toys, electronic products and professional services. Organic cultivation of tea, fruit and vegetables is another recent phenomenon.
Sri Lanka is famous for beautiful, high-quality gemstones. With a ban on exports of rough gemstones, the lapidary industry has developed in the last two decades, assisted by training at the EDB's Lapidary Training Center and private-sector lapidaries.
The nation now supplies calibrated stones of different sizes and colors. Diamond-cutting is another recent growth sector.
Most exporters have matched tight competition from other global suppliers, and have obtained large orders for many items, particularly toys, jewelry and handicrafts.
Major export markets are the U.S., the UK, Germany, the Middle East, Japan, the CIS, Oceania and other countries in the South Asian Association for Regional Cooperation (SAARC).
EDB and other organizations help upgrade export product quality and quantity. Continuous assistance is provided in technical, design and seasonal requirements. EDB trade information is linked to major global data bases, and exporters and producers have access to the Internet and other sources.
Outreach is also being made to the provinces. Several major exports, such as fruit and vegetables and handicrafts, have their base in rural areas. Programs will harness these resources with a greater participation from the rural masses.
The country also aims at developing potential markets nearer home; 400 million of the 1.2 billion people in the SAARC region are said to have the purchasing power equal to the 370 million people in the European Union.