Status of Sri Lankan NR-based industry

Daily Mirror - 18/09/2013
by Dr. N.Yogarathnam

The Sri Lankan rubber products manufacturing industry is composed of about 4,530 manufacturing organizations of small, medium and large-scale entities.
Nearly 70-80 percent of the local rubber production is used by these domestic industries. Sabaragamuwa and Western provinces record 87 percent of the total number of rubber industries in the country.

All large and small-scale industries and 80 percent of medium-scale rubber industries can provide employment for trained personnel in rubber technology. Within a relatively short period, this industry has become a reputable major world supplier of quality rubber products.

The total rubber production (raw rubber and value-added) generated over 1.1 billion US dollars in terms of revenue and value-added rubber accounted for 80 percent of total rubber exports.

Finished products
This sector is classified broadly into two sub sectors; viz. latex-based products and dry rubber- based products.  Latex products include rubber gloves, hygienic or pharmaceutical articles (catheters), latex thread and articles of apparel and clothing products. Solid rubber products mainly consist of two categories, namely tyre and non-tyre.  Tyre sector includes pneumatic tyres, solid tyres and tread materials.

Dry rubber-based products have an export value share of 78 percent while latex based rubber products have a share of 22 percent.  Out of the latex-based rubber products, hygienic or pharmaceutical articles have a very minimal share.  In the dry rubber sector, tyre category dominates the non-tyre sector with a share of 85 percent of the export value share of the dry rubber based products.


Exports
Our external trade in rubber and rubber products has been dominated by the value-added rubber products consisting of 11 product groups from HS codes 4007 to 4017.  It highlights the following points: (i) despite market recession in year 2009, the country has been maintaining a favourable balance of trade throughout the 6-year period; (ii) the average share of the value of finished products exports was 81 percent from total exports in year 2007 changed to 83 percent in 2012; (iii) year on year average growth rate of the total value of rubber finished products exports was 36 percent from year 2007 to 2008 decreased to -10 percent from year 2011 to 2012.


Tyre sector  
In the tyre manufacturing sector, we produce pneumatic and semi pneumatic tyres, tubes, solid tyres, and re-treading materials. Despite the reduction of tyre exports to about 56 percent in 2009, tyre sector accounted for more than 60 percent share in the total value of exports in the rest of the period. The share of export earnings in 2012 accounted for 66 percent of the earnings from the tyre sector. Solid tyre sector earned US $ million 331 in 2012. It was the largest contributor in tyre sector in the last 6-years period .

The Asia/Pacific region was by far the largest market for tyres, accounting for over half of global tyre sales in 2010. This region is expected to register the strongest growth in tyre demand through 2015.  Revenue from new pneumatic tyre exports was US $ million 215.4 in 2011, although and a small drop was observed in 2012.
Both new pneumatic tyres and solid tyres were the major contributors to export earnings, 38 percent and 61 percent respectively. On the export value of the tyre sector, solid tyres being still the major contributor to Sri Lanka’s export value.


 Pneumatic tyres
 Tyres produced under this type consist of tyres used for motor cars including racing cars, busses, lorries, motor bicycles, bicycles and industrial machinery. Tyres for motor vehicles, which accounted for over 60 percent of all tyre demand in 2010, are expected to remain the largest segment of the tyre market by 2015. New pneumatic tyres of rubber are used for motor cars, wagons, racing cars, buses and lorries and always had the highest demand in pneumatic tyre sector. This sector earned US $ million 19.9 in 2011 and US $ million 27.7 in 2012. Total export quantity of new pneumatic tyres was 10,066,243 units in year 2012. It was only 9,632,000 units in the previous year. According to the world market news, demand for these kinds of tyres grows at a rate of 5 percent per annum. Sri Lankan new pneumatic tyre sector accounts for approximately 38 percent of total tyre sector earnings in year 2012.

Motorcycle tyres are categorized into two types; viz. road tyres and off road tyres. Road tyres are designed for more miles, better handling, grip and safety by positioning hard and soft rubber where needed. Off road tyres are designed for extreme conditions requiring cut resistance in addition to other normal requirements expected from a motor cycle tyre.

The global bicycle tyre industry is worth several Billions of dollars. Europe is said to consume 30 Million bicycles annually and is growing at a rapid rate due to interest in cycling to work and pleasure. Additionally, bicycle tyres need to be replaced at least twice a year. Total export of bicycle tyres was 7.56 million units in year 2012 from about 9 percent against the previous year. Tanzania, Italy and Egypt are the major bicycle tyre importers from Sri Lanka. Sri Lanka exported 29,58,419 of bicycle tyres to Tanzania and earned US$ Million 8.4 year 2012 which was about 50 percent of total exports.

Sri Lankan industrial export data shows lowest amount of pneumatic tyre exports in year 2009. Asian countries were the largest market for Sri Lankan   tyre sector. United States was the major importer of Sri Lankan pneumatic tyres.

Solid or cushion tyres
Vietnam and Sri Lanka in Southeast Asia which enjoy a large rubber output developed rapidly in solid tyre manufacturing field in recent years by virtue of their advantages in resources

USA is the largest importer of solid tyre from Sri Lanka. Belgium, Germany, Italy are the other major importers of solid tyre products. Solid industrial tyres are primarily used in material handling vehicles in areas such as airports, ports and transporting goods for storage. Sri Lanka has developed into a centre for the production of solid industrial tyres. Sri Lankan solid tyre sector earned US $ million 352 in year 2011 and US $ million 331 in year 2012. However the quantity of solid tyre exports had come down by 15% in year 2012.

In 2009 like the other industries, Sri Lankan solid tyre processing industry suffered from global financial crisis. This industry recorded a reduction of 41 in percent average annual growth again. Solid tyre sector performed well in the years 2010 to 2011 achieving higher growth rates of 73 to 84 percent respectively.


Non-tyre sector export performance
Non-tyre sector comprises of consumer rubber products, general rubber products and industrial rubber products. There is considerable amount of interest and activity in rubber bands, hot water bottles, and jar ring manufacture in Sri Lanka.

Availability of good quality NR in the form of latex crepe is one of the reasons for the interest in these products. In the footwear industry, Sri Lanka was one of the pioneers of supplying footwear in the world. Carpets and Floorings are another. The emphasis has been on the low cost low technology oriented products


Surgical gloves
Latex is perhaps the best raw material to manufacture certain products such as surgical gloves, thin walled products like condoms and extremely flexible horses. World Health Organization (WHO) defines medical gloves as disposable gloves used during medical procedures. They include, examination gloves (non-sterile or sterile) and surgical gloves that have specific characteristics of thickness, elasticity and strength and are sterile.

Global demand for medical gloves is growing at 8 – 10 percent per annum. Malaysia is the largest contributor supplying 63 percent of global demand while 29 percent and 9 percent is supplied by Thailand and Indonesia respectively.

Glove manufacturing & exporting industry of Sri Lanka is placed as one of the top manufactures of the world which also contributes more than 5 percent of global demand. This Sector has performed well during the year 2011 by increasing it’s growth to 22 percent .Total export value earnings from surgical gloves was US $ million 43 in year 2012 which accounted for 25 percent  of total latex-based products. Earnings from surgical gloves were US$ 45 million in year 2012. Exports accounted for 40 percent of total surgical gloves earnings of Sri Lanka.


Household gloves
Household glove is the first dipped product manufactured in Sri Lanka for export. Though the gloves are termed household, they are widely used in the industry for variety of purposes. The unlined gloves are widely used in the food industry. US is the major export destination of Sri Lankan household gloves. The global demand for rubber gloves has increased due to recent regulations on occupational safety. The demand for rubber gloves is expected to grow by 10 percent per annum.


Cellular rubber floor coverings, mats and erasers

Carpets and Floorings are among the products of interest in Sri Lanka. It contributes to about 11% of dry rubber based non tyre products. This sector didn’t perform well during the year 2012 although it showed 39 percent growth in the year 2011. The growth of this sector decreased by 21 percent in year 2012. USA, France and Germany are the major export destinations of these types of products. USA contributes about 28 percent of total cellular rubber earnings of Sri Lanka. 

Sri Lanka, China to close free-trade deal

Gulf News - 17/09/2013

Sri Lanka and China will finalise a free-trade agreement ahead of a Commonwealth summit in Colombo in November, a government minister said on Tuesday.

The two sides have been hammering out details of the duty-free goods under the deal, Investment Promotion Minister Lakshman Yapa Abeywardena told reporters in Colombo.

China has been investing heavily in Sri Lanka, with loans and expertise instrumental in building ports, highways, railways and power plants in the Indian Ocean nation.

“We are discussing the agreement right now and we hope to be able to finalise it before the Commonwealth meeting,” Abeywardena said, adding that a Chinese delegation had been in the Sri Lankan capital recently to discuss the deal.

Sri Lanka will host the Commonwealth Heads of Government meeting from November 15 to 17.
Although China will not take part, Sri Lanka is keen to showcase its economic progress since the end of nearly four decades of ethnic war that ended in 2009, and will host a trade forum alongside the meet.
The minister gave no details of the pact with China, but said Sri Lanka’s $3.7 billion garment manufacturing industry would feature strongly.

Trade is currently heavily skewed in China’s favour, with the powerhouse exporting $2.66 billion worth of goods to Sri Lanka last year, and Sri Lanka’s exports to China totalling $113 million.
Abeywardena said he hoped the new agreement would further open up the vast Chinese market to Sri Lanka’s manufacturers.

The Chinese investment in Sri Lanka, which is under pressure from Western powers and India over its human rights record, has raised fears in New Delhi about Beijing’s influence in the neighbourhood.
Sri Lanka’s biggest container terminal, built and majority-owned by China, was launched last month aimed at making Colombo a strategic shipping hub along the world’s most lucrative trading route.


Sri Lanka entered into a controversial free-trade agreement with neighbouring India in December 1998 during Sri Lanka’s bloody separatist conflict, but both sides have been bickering since over non-tariff barriers.

Sri Lanka plans to export salt from Hambantota Port

Colombo Page - 17/09/2013

Sri Lanka, expecting a bigger salt harvest this year from the country's salterns, plans to export the excess salt.

The Chairman of Lanka Salts Ltd., Pradeep Wijesiriwardana has said that there will be excess salt when the salterns at Elephant Pass produce salts and the excess can then be exported.

Wijesiriwardana has said that the plans are already underway to export the excess production from the Hambantota port.

According to the Chairman, the year-end salt harvesting at Bundala and Palatupana salt fields is being carried out now. About 20,000 metric tons of salt has been harvested and possibly another 100,000 metric tons can be harvested by the year end.

The fully automated salt processing and iodization factory at Hambantota produces a salt harvest of about 75,000 to 85,000 metric tons of salt annually, according to the Chairman.

Sri Lanka's annual requirement of salt is estimated to be around 150,000 metric tons.

Salt is produced in Sri Lanka relatively at a low cost but the transportation of the product incurs heavy expenses.

Increase in tea export earnings

Daily News - 13/09/2013
by Indunil Hewage

Sri Lanka's total quantity of tea exported including re-exports with imported tea for July reached to 29.88 million /kg, indicating a gain of 3.34 million/kg compared to the corresponding period in 2012.

The cumulative tea export earnings rose to Rs 17.76 billion, showing a slight gain of Rs 2.77 billion as against the same period last year with the increase in FOB (Free on Board) price per kg from Rs 564.92 to Rs.594.50, according to a tea market report.

Cumulative exports including re-exports with imported Tea for the period January to July 2013 recorded 174.25 million /kg, a decline of 7.82 million /kg in comparison to same period last year.

However, cumulative ex- port earnings amounted to Rs 104.48 billion, showing a slight gain of Rs 4.43 billion as against the same period last year with the increase in FOB price per kg from Rs 549.50 to Rs 599.58.

CIS countries including Russia are the main tea export destinations from Sri Lanka while Iran and Turkey continue to buy a major proportion of Ceylon tea. However, total tea exports from Sri Lanka to Libya has dropped by 7.65 million /kg as against the corresponding period last year.

Meanwhile, a total quantity of 5.9 mkgs was offered at this week's auction. Ex-estate offerings totalled 0.6 m kgs. Ex Estates met with good demand. Few select best western BOPs gained Rs.20 per kg and more for special enquiry. Others together with teas in the below best and plainer categories were irregular and Rs.30 per kg lower. Nuwara Eliyas gained Rs.30 to 40 per kg. Udapussellawas declined Rs.20 per kg. Select best Uva seasonal teas appreciated. Best western BOPFs gained Rs.10-20 per kg. Teas in the below best gained Rs.5-10 per kg. Nuwara Eliyas together with Udapussellawas declined Rs.30 per kg. Select best Uva seasonal teas gained sharply following airmail enquiry.

There was good demand coming in from Iran, Turkey and CIS. Last week. Crop intake for Western region showed a marginal increase whilst other regions maintained.

First Indo-Lanka textile agreement inked in Colombo

As the first ever textile agreement between India and Sri Lanka became a reality, both neighbours mulled joining to enter a coveted global textile foothold-China, the world’s largest textile market. “China’s textiles are gradually moving from production to consumption. Using our strengths together-Sri Lanka’s first class garment manufacturing infrastructure and India’s quality fabric outputs-let us jointly compete for China’s textile market” said a determined Ms Zohra Chaterji (Secretary of Indian Ministry of Textiles) on 09 September in Colombo.

 Ms Chaterji was addressing Anura Siriwardena (Secretary, Ministry of Industry and Commerce of Sri Lanka) on 09 September at Cinnamon Grand during her delegation’s official meeting with Sri Lanka’s delegation after the signing the first ever MoU between India and Sri Lanka on the same day at Galadari Hotel, Colombo earlier. During the successful Cinnamon Grand meeting, officials from both sides discussed in depth, of the modalities of the morning MoU and how to move forward and implement it in the coming months and agreed on the immediate next steps.

 The morning MoU signing event at Galadari was attended by, among others, Basil Rajapaksa (Economic Development Minister), High Commissioner of India in Sri Lanka (HE) Y.K.Sinha, Ashroff Omar (Chief Executive Officer of Brandix Lanka), M. Fowzie (Senior Minister) Ms Zohra Chaterji, PS Raghavan (Secretary, Ministry of External Affairs, India), Visvanath Agarwal (Chairman- Powerloom Development & Export Promotion Council of India-PDEXCIL), Anura Siriwardena (Secretary, Ministry of Industry and Commerce) and relevant officials and private sector reps from both countries. The Memorandum of Understanding on new textile cooperation effort is the latest development in the aftermath of Indian announcement in September 2012 that Sri Lanka can export eight million apparel pieces at zero duty to India.

A 2011 survey by “China National Garment Association (CNGA)” showed the cost of Chinese textile and garment companies on labor, raw material, energy and financing were “in the uptrend” and as such Chinese textile market shows promise for foreign imports. In its 2012 report, China Research and Intelligence Ltd estimated the Chinese textile market to be around $ 540 Bn while the combined annual exports of Chinese textiles and garments at $ 248 Mn. 40% of China’s annual industrial output comes from textiles.

 “The objective of this historic MoU being the expansion of the business and co-operation in the development of SME in Handloom, Power-loom and Textile sectors. The period of Memorandum of Understanding will remain in force for five years from the date of signing the MOU and it can be renewed thereafter.  The key persons in the resulting Joint Working Group (JWC) are the co-chairs –the Additional Secretary of the Ministry of Industry and Commerce of Sri Lanka and the Joint Secretary of the Ministry of Textiles of the Republic of India–as well as members who will collaborate on this MOU. We strongly believe in the involvement of the private sectors of both countries in taking this process forward” said Secretary Siriwardene, addressing the morning MoU signing event at Galadari Hotel. “We also observe that there appears to be much more unrealized potential for Sri Lankan textiles to serve the Indian textile markets and we are confident that this delegation will understand and support us to further enhance this direction. I would like to stress our strong appreciation towards Hon Anand Sharma, Indian Minister of Commerce and Industry who, during his visit to Sri Lanka in 2012 for his pioneering steps towards this bilateral textile MoU as well as for his extension of our textile export quota to India from three million to eight million pieces as a result of the  successful Discussions he had with HE the President Mahinda Rajapaksa, Ministers Basil Rajapaksa and Rishad Bathiudeen. We thank especially the Treasury Secretary Dr PB Jayasundara for his untiring efforts in making this MoU a reality” Secretary Siriwardena added.  

 According to the Department of Commerce, total Indo-Lanka trade in 2012 stood at $ 4.086 Bn. During January – June of 2013, exports from Sri Lanka to India stood at $ 279.17 Mn while imports from India at $ 1465.65 Mn, showing a declining trend in imports from India. India’s appetite for Sri Lanka apparels and textiles too has grown steadily. Last year, India was the 8th buyer country of Sri Lanka textiles and garments with $ 64 Million which was a three-fold increase from 2008. Also last year India became the 10th buyer country of world famous Sri Lanka apparels purchasing $ 39 Million of apparels, which was a strong 44% increase from 2011. I am sure that you may already be aware that Sri Lanka Apparel has become one of the world’s leading proponents of ‘Ethical Business and Manufacturing Practices’ for the Global Fashion and Apparel Sourcing Business. In 2012 India also ranked the second largest buyer of Sri Lanka’s woven fabrics category with $ 20 million purchases which was a 42% growth from 2008.

 Ms Zohra, addressing the MoU signing event at Galadari Hotel, said: “Textiles is an area which has immense promise for the mutual benefit of both our countries. Sri Lanka is India’s largest trade partner in South Asia. India is Sri Lanka’s biggest trade partner. Seeing that 45% of Sri Lanka’s exports account for garments, it is opportune for both countries to join hands to capture a larger global market share. The market opportunity is here and now it is for us to respond fast. This would be going. Sri Lanka offers fast delivery, faster transit times, low transit costs, we are able to supply flexible quantities of your yarn requirements. There are opportunities for joint investments both ways. The current MoU approved by Sri Lankan side is limited to SMEs of handloom, power-loom and textiles only but the Indian government is willing for a larger engagement -all sectors of Sri Lanka’s value chain in the next stages-including handicrafts. For now we are happy to go along with your strategy of incremental approach in textile cooperation process, we keep the doors open for expanding this textile cooperation further.”

Sri Lanka excels at 82nd Izmir International Fair in Turkey……

 

Sri Lanka, the first ever country in Asia has been offered the “Partner Country” status at the 82nd Izmir International Fair, the oldest Trade Exhibition in Turkey.  Sri Lanka’s participation promoted Sri Lanka as a reliable destination for trade investment & tourism and showcased the best that the island paradise has to offer,   under the theme “Sri Lanka -Wonder of Asia”.  This theme is in line with the Mahinda Chinthanaya,  vision of the President of Sri Lanka who has given the leadership to initiate a grand scheme of progress and development in the country.

Sri Lanka’s Partner Country participation organized by the Sri Lanka Export Development Board (EDB), which aims to drive the national economy through export growth. The main objectives of the event were to promote and re-position Sri Lanka’s trade, investment and tourism and instill confidence in the country’s high-quality products and services among international buyers.

Sri Lanka’s participation showcased a unique combination of an exhibition, B2B meetings and corporate events. Every endeavor was made to make it a valuable business experience for all stakeholders.
The Sri Lanka Export Development Board acts as a catalyst to achieve Sri Lanka’s export target of US Dollars 15 billion by 2015.  It is expected that Sri Lanka’s exports will receive a boost with the Sri Lanka’s participation at the event.

Parallel to the exhibition, there were meetings with the ambassador to Gambia, ministerial delegation of Libya, trade delegation of Indonesia, Governors of Izmir & Sinop City of Turkey and B2B meetings with eminent business leaders in Turkey from trade, investment & tourism to network with the trade delegation of Sri Lanka.

Sri Lanka’s participation showcased a wide array of high-quality export products.  It is expected to follow up with the inquiries received and negotiate for export orders with the buyers from strategic markets around the world, who had networking with the Sri Lanka trade delegation.

Sri Lankan cultural performances and the stall which projected Sri Lanka’s culture and the Art at the event attracted many visitors to the Sri Lanka Partner Country Pavilion, inquiring to facilitate travel to Sri Lanka.
Hon. Rishad Bathuideen, Minister of Industry & Commerce, made a speech at the ceremonial opening held on 29th August 2013 and Hon. Fizar Mustaffa, Deputy Minister of Tourism Development also accompanied Hon. Minister of Industry & Commerce. The reception hosted by the Sri Lanka Embassy in Turkey was attended by many ambassadors to the countries and other eminent representatives from trade and investment of participating countries.

Sri Lanka’s Partner Country participation was a very successful one.  It will be a window of opportunity for foreign buyers hoping to benefit from the Sri Lanka’s lucrative and rapidly growing export market.
The Sri Lanka Export Development Board is dedicated to creating export growth and competitiveness through global awareness of what Sri Lanka has to offer promoting Sri Lanka – Wonder of Asia at international trade events.

Radical new boat ‘will significantly boost Sri Lanka’s tuna exports’

Sunday Times - 08/09/2013

By Nick Hart

Pic shows a ‘test-bed’ vessel on which the tuna boat is based under construction at the Viksund yard

Negombo – A radical new, locally built high-speed catamaran fishing boat is poised to significantly boost the number of top-price tuna available for export from Sri Lanka to markets in Japan, China and the Middle East.

It will also help ensure tuna sustainability in Sri Lankan waters by reducing by up 70 per cent the number of fish needed to be caught in order to ensure maximum profitability.

Sri Lanka’s Ministry of Fisheries and Aquatic Resources Development has expressed keen interest in the new vessel, which will help put the country at the forefront of next-generation fishing-boat development.

It is hoped that a prototype, currently on the drawing-board at the Viksund boatyard on the Negombo lagoon, will be ready for sea trials later this year.

The new boat combines a hull design based on G3 offshore racing powerboats with high-tech refrigerated fish holds that eliminate spoilage and get fresh tuna back to port at speeds of up to 40 knots.

The ministry has said it will allow the new venture to be based at the recently completed state-of-the-art fishing harbour between Negombo lagoon and Colombo, where land will be made available for a factory to build the new boat.

It has also brokered agreement from the Sri Lanka Navy for Viksund, a Norway headquartered company, to use powerful 200-plus horsepower outboard engines, which are currently banned for use on civilian vessels.

Deputy Fisheries Minister Sarath Kumara Gunaratne has pledged to attend the launch of the prototype, which he hopes will spearhead the kind of entrepreneurial innovation that is essential to the long-term survival of Sri Lanka’s fishing industry.He says: “Fish and seafood represent a significant proportion of our GDP and export markets, and we welcome any development that will help our fishing industry stay ahead of the game.” At present, as much as 80 per cent of tuna landed in Sri Lanka is ‘spoiled’ because current vessels lack adequate refrigeration and handling technology to maintain the fish in Grade 1 condition for the long periods the boats are forced to remain at sea.

Grade 1 sushi bluefin tuna currently fetches up to US$1,000 per kilo wholesale in Tokyo. Prices for yellowfin tuna, which is more commonly found in Sri Lankan waters, range from $500 to $700.

Prices are dramatically lower for Grades 2 and 3 tuna, which are considered spoiled and thus not fit for sushi – and with the latter often contemptuously dismissed as ‘pet-food’ by tuna marketers.

Boatyard owner Yostein Viksund says he is looking forward to helping Sri Lanka develop its fishing fleet to meet the challenges it must overcome if it is to thrive over the next three to five years.

He says: “Stocks of tuna and other staple species are being depleted at alarming rates across the Indian Ocean. Our new boat will mean higher profits from fewer fish, which will greatly benefit tuna-stock sustainability as well as the Sri Lankan economy.”

Remenzie Fernando, who has extensive experience providing top-quality sushi tuna to Japanese markets and is now a livestock and fisheries consultant, is optimistic that with the right planning and logistical support the new boat will more than prove its worth in its first season of operation.

He says: “We have a state-of-the-art fishing port on one side of Negombo lagoon and an international airport with daily direct flights to Tokyo and the Middle East on the other. All we need are the right fish in the right condition at the right time, and that’s what this new boat will give us. It will be a classic win-win situation all round.”

(Nick Hart is a British travel and business writer based

in Negombo)