Value added exports to boost SL’s economy post COVID-19
By Shannon Jayawardena
The Government of Sri Lanka has recently recognised the significant role played by value added exports in order to build up the country’s economy post COVID-19.
Hence, companies with a global presence have been acknowledged as a key tool in reviving Sri Lanka’s economy through value-added exports.
Alongside these measures, President Gotabaya Rajapaksa appointed a task force on economic revival and poverty eradication to revive the economy blighted by the global pandemic which has caused a hiatus in the economic activities of the country.
President Rajapaksa recently appointed Prabhash Subasinghe, Managing Director, GRI, to the Presidential Task Force for Economic Revival and Poverty Alleviation to work alongside Chairman of the Task Force, Basil Rajapaksa.
A recent statement from the President’s office read, “The Task Force is responsible for reviving the economy and eradication of poverty while paying special attention to the challenges posed and opportunities that have emerged in the wake of COVID-19.”
“I accepted the role of Chairman, Export Development Board of Sri Lanka in January to drive our country’s export industry to the next level. It is with the same purpose that I accept my appointment to this Presidential Task Force,” said Subasinghe speaking to the Media.
It is the opinion of this task force that global companies with a local footprint need to fast track their value-added export initiatives in order to align with the Government’s initiatives. As a result, several multinational companies have complied with this requirement.
During the past, SL has imported goods that could potentially be produced locally; hence this period could be seen as a good opportunity for the country to be both self-sufficient and economically stable.
Policy framework on export expansion:
Under the guidelines of the policy framework on export expansion, the Government has seen to the granting of low interest loans for small and medium-scale businesses while the bank lending rates have been brought down to single digits, which has enabled local entrepreneurs to expand their exports.
The National Policy Framework has also given first priority to ensuring the growth of the country’s economy, where exports can thrive if given the right impetus. Therefore, it is imperative for the Government to ensure the ownership of strategic assets and economically important natural resources.
In doing so, it is of vital importance to develop strong trade relationship with Asian countries and work closely with SAARC and BIMSTEC nations to ensure regional export connectivity, acknowledge the standings of developed countries in international trade, develop trade relations with the Middle East and South East Asian countries and prevent any agreements that could potentially be harmful to our economy.
The overall objective under the National Policy Framework is to develop an economic policy that will benefit the present and future generations whereby, people’s ownership of the country’s economic resources is ensured, local enterprises are strengthened and the insurance of national assets secured.
Further according to the ‘National Policy Framework ‘Vistas of Prosperity and Splendour’, the macroeconomic targets 2020-2025 include the achievement of an economic growth of 6.5 per cent or higher, per capita income exceeding USD 6,500, the rate of unemployment being maintained at less than four per cent and the budget deficit at less than four per cent of GDP.
To achieve these targets it is of utmost importance to have both the public and private sector support the stabilising of the country’s expansion by means of value-added exports.
The macroeconomic policy framework must ensure that the Government sees to the eradication of the debt-trap; promoting domestic investments while reducing import expenditures and raising export incomes. Alongside these measures, it is salient to reduce the budget deficit; eliminate unnecessary Government expenditures while financing for essential expenditure and prioritise State investments.
Similarly, priority should be given to reducing the trade deficit; promoting domestic exports, import substitution and expanding the export economy via increasing value-added industries.
In order to ensure the revival of the country’s economy, it is imperative that the private sector contributes to the measures set forward by the Government as well. There are several multinational companies that have proven to be key players in the international markets and have the potential to contribute towards the local sector. Thereby, it is of vital importance for both the Government and private sector to work hand in hand to ensure the strengthening of the country’s economy via value-added exports.
President Rajapaksa had gone on to acknowledge that the agricultural sector must be modernised and infused with new technology, in order to align with the measures put forward by the Presidential Task Force. Likewise, he recognised that the farmer’s earning capacity should be raised while the youth should be encouraged to develop agriculture-based industries within the country.
As such, the Government, together with the private sector, can promote a pre-contracts system along value chains, set up a new strategic plan for product marketing facilitation and control importation of agricultural products to maintain stability in prices of relevant product categories.
It is therefore, important to make the country self-sufficient in the relevant products while introducing an internationally accepted organic product certification system and a programme of action combining the State and private sector institutions to minimise wastage of products while harvesting, transport and delivery of local products.
The special task force has been established with the aim of creating a new economic agenda for Sri Lanka, to promote exports in all sectors and uplift all local industries as global trends have shifted due to the current COVID-19 pandemic.
Among the many strategic thrusts of the task force, the need to identify economically favourable opportunities that have emerged due to new global economic trends and formulate mechanisms to promote value-added export products ranks as the most imperative focus areas for the country.