Speech of Mr. Bandula Egodage, the Chairman & Chief Executive of Sri Lanka Export Development Board, at the Exporters Association of Sri Lanka - AGM

Mr. Bandula Egodage, the Chairman & Chief Executive of Sri Lanka Export Development Board

I thank the Exporters' Association of Sri Lanka for inviting me to the AGM and giving me the opportunity to address this distinguished gathering of members.

The Exporters Association which represents about 80% of exporters in the country is the foremost body for exporters in Sri Lanka. We highly appreciate the contribution of Association towards the export development effort of the country.

The Government's vision as envisaged in the 'Mahinda Chintana' is to transform Sri Lanka into a strategically important economic centre of the world. This would then lead to socio economic development of the country. The export sector which contributes 17% to the GDP of the country, clearly plays an important role in achieving this objective.

The EDB is the premier state organization entrusted with the task of developing and promoting exports from Sri Lanka. The EDB is geared towards promoting products and services of the country with the objective of making Sri Lanka the most sought after destination for global sourcing in identified product sectors.

We strongly believe that the private/public partnership is very essential for the growth and the development of the sector. Private public partnership is not only essential for formulating successful export development strategies but also in implementing the same.

Our approach is based on the principle that the public sector plays the facilitator role in developing the export sector while the exporters drive the sector.

The public private partnership is also enshrined in the EDB Act. The enactment has provisions for establishment of Advisory Committees that are oriented towards the development and promotion of specific products as well as functional aspects of export trade.

In July this year we have established 26 new Advisory Committees comprising 400 members. These members represent both the private and public sector. This will enable us to work together to identify the problems confronted by the export sector and find suitable solutions to such problems. We have already scheduled the inaugural meetings of these committees and we expect the full participation of all members.

The export sector of Sri Lanka after showing strong growth in 2010 and 2011 experienced a set back in 2012 which continues to prevail even in this year. The set back is mainly due to the aggravated economic conditions in our key markets. The turmoil in these markets has lead to a drop in demand not only for our exports but also for exports of other developing &, emerging economies. Also there are supply side constraints in the domestic front.

The anticipated economic recovery in EU and USA which absorb nearly 50% of our products have not taken place. According to international agencies such as the IMF it will take some time for growth to pick up in these regions. The unsettled conditions in the Middle East has further aggravated the situation.

Despite these challenges I am happy to state that according to provisional Customs data, our export earnings have recorded a commendable increase in the Month of June this year. Export to our key markets USA and EU, specially to USA, have also shown a satisfactory increase in June 2013.

The problems in our key markets suggests that we should focus on diversifying our markets to other regions. The Asian region comprising China and India have registered substantial economic growth. Accordingly, we are concentrating on diversifying our markets to these regions and other member countries in the BRICS group where the potential is high. This will be done while sustaining our market share in our key existing markets.

We have already carried out promotional programmes in India and China and some more programmes are planned in the future to be carried out in these regions. We have also carried out market studies on Brazil and South Africa to ascertain the opportunities and barriers. The objective is to formulate suitable strategies to penetrate into these markets.

I am confident that the Exporters Association could make a very positive contribution to these efforts using their close relationship with relevant stakeholders nationally and internationally. Utilizing these strong links the Exporters Association could facilitate to create healthy business relationships to enhance our exports.

Sri Lanka has today become an ideal location for international buyers, to source a wide range of highly quality products and services. But our competitive advantage has been deteriorating over the years due to a number of factors.

The government has maintained inflation rate at a single digit level which is a positive factor. The energy cost is a major component in the cost structure . The Government has offered tax concessions for industries adopting alternative energy sources. It is very important that we improve our productivity to regain and sustain our competitive advantage. The government has also offered tax incentives for upgrading technology and acquisition of new technology.

Improvement in technology is very essential to produce innovative products and reduce cost of production. This would lead to improved productivity and competitiveness.

The EDB is also focusing on branding as a strategy to increase popularity of our products and enhance export earnings.

The strategic plan prepared by the EDB in consultation with the Advisory Committees have been updated to cover the period 2012 – 2016. It contains several programmes aimed at developing and adopting products and services to meet international market requirements, assisting exporters to identify new markets, facilitate supply chain efficiencies and promoting export oriented SMEs etc. We intend to implement these programs for the benefit of the export sector.

I would request you to have a close rapport with the EDB to discuss any issues or constraints which require our attention.

Finally, I wish to extend my best wishes for the successful conduct of the AGM of the Exporters Association.

Thank you.

SL’s fruit and vegetable exports tops US$ 32.5 m

Daily News - 20/09/2013
By - Fizel Jabir

Processors and exporters in combination have achieved as at today a 20 % increase in export revenue compared to last year, said Bandula Egodage, Chairman Export Development Board addressing the Lanka Fruit and vegetable Producers, Processors and Exporters Association's 32nd AGM on Wednesday.

He said the industry has earned US$ 32.5 million export earnings in 2012 which was very significant because members of the association were engaged in agriculture. He said the members of the association were playing a vital role in terms of rural development in Sri Lanka and was engaged in a huge CSR campaign which was more vital than figures. He said value addition was vital to overcome rising input costs.

Lanka Fruit and vegetable Producers, Processors and Exporters Association's 32nd AGM was held on Wednesday at Hilton Colombo Residence. The Chief Guest of the occasion was Anura Siriwardena. Bandula Egodage, Chairman Sri Lanka Export Development Board was the Guest of Honour.

Speaking at the occasion , Annes Junaid, Chairman Lanka Fruit and vegetable Producers, Processors and Exporters Association said that during the 32 years, the association has contributed immensely to the rural economy.

He said although the quantity was small the impact the association has on the rural economy of Sri Lanka was immense and great. Junaid said their main products were fruits and vegetables and this were all coming from the rural economy of Sri Lanka.

He said they sourced fruits and vegetables from all parts of the country.

“While catering, to uplift of the rural economy we also earn valuable foreign exchange for which the local value addition was very high. In terms of value addition our industry could not be compared to other industries because our products are from the rural economy”, he said. In terms of export increase, he said they have a target for 2015 and 2020 and they were working hard toward achieving it.

He said however there were some impending issues which needed to be addressed by all concerned to drive the industry forward. Junaid said for this production should be increased and state intervention was required.

In this regard he said they recognize and respect the Divineguma Programme because it has brought about some sort of support to their members and the industry by stabilizing prices by supplying what is required for the local market.

He said if Thailand and Malaysia could export their fruits and vegetables to Europe and the USA, there was no reason why Sri Lanka could not do it.

Partnering Lanka shines bright at Turkey’s Izmir, snaps-up immediate orders

Asian Tribune - 18/09/2013

Sri Lanka, honoured as the first ever Asian Partner country at the Izmir Int’l Fair series in Turkey, has successfully clinched several trade and business deals at this global event, while also pushing its historic trade ties with the easternmost NATO power to new levels.

“We consider Turkey as one of the most important Trade Partners with high potentials for trade growth, and the present bilateral trade at $ 190 Mn is a credible starting point towards bigger trade, which in turn, has shown an increasing trend over last five years” said Rishad Bathiudeen (Minister of Industry and Commerce of Sri Lanka) addressing the huge audience at the inaugural session of 2013 Izmir International Fair (the 82nd international multi-product exhibition series) on 29 August in Izmir, Turkey.

Sri Lanka was the partner country at the 82nd show -and also to be honoured as the first ever Partner Country from Asia at this series- held in Izmir, which in turn, is a candidate city for the global EXPO 2020 event.

Turkey has honoured Sri Lanka by making it a partner country at the 82nd Izmir Int’l show held from 29 August to 02 September in Izmir. Izmir series is one of the largest-and wide ranging- industry fairs in the northern hemisphere encompassing many macro industries and their sub-sectors, which included, among others, food products & technology, automotives, furniture, decoration, household, appliances, white goods, passenger cars, trade vehicles, bicycle, motorcycles, construction and building materials, construction machinery, agricultural machinery, farming tools, hvac and sub-industries, electric, electronics, computer, it, telecommunication, general machineries, chemical and petrochemical products and related technologies.

No less than 14 Lankan exporters and 7 stakeholder institutions were travelling with Minister Bathiudeen to Izmir Int’l Fair as part of the 45 strong Lankan delegation. A minimum of 130 buyer leads were generated for Sri Lanka, according to the EDB. Immediate negotiations for Pure Ceylon Tea orders exceeding $65000 totals, materialised during the Izmir fair, along with other shipment-orders for coconut products, gem and jewellery, herbal teas, and ceramics. Among investment inquiries received were, spare parts, bicycle tyres, motor cycle assembly and infrastructure development projects. 46 B2B meetings, facilitated by EDB, were successfully concluded. Sri Lankan delegation, also facilitated by the EDB, concluded successful biz-meets with the official delegations of Indonesia, Namibia, Lybia, Izmir Chamber of Commerce and Agean Chamber of Industry and Turkey’s Small and Medium Industry Development Organization, KOSGEB.

“On behalf of HE the President of Sri Lanka Mahinda Rajapaksa and the people of Sri Lanka, I extend my sincere thanks to the Government of Turkey in giving this opportunity to Sri Lanka to act as the Partner   Country in this international event, which is a great honour for us” said Minister Bathiudeen and added: “Sri Lanka’s major exports to Turkey represent Ceylon Tea which is world renowned for its colour, flavor and aroma, and also Garments, Rubber products, Coir Based products including activated carbon. We import Woven Fabric, machinery and other equipments from Turkey. Sri Lanka can offer many other products to the world as well, with her rich natural resources. To name a few, natural gems including world’s best Blue Sapphires, Spices with inherent qualities including world famous Ceylon Cinnamon and mineral resources.

There are ample opportunities to set up value added industries in various sectors, targeting local & international trade. For Sri Lanka, Turkey could be considered as one of the gateways to the EU region and the same way, Turkey could consider Sri Lanka as one of the gateways to the Asia, as Sri Lanka’s strategic location which is geo-politically important, and the opportunities made available under the two Free Trade Agreements with India and Pakistan and many more bilateral arrangements that are under negotiation. Against this background, I consider that Sri Lanka’s participation at the Izmir fair is very timely and definitely plays an important role to enhance trade acting as a catalyst for the bilateral initiatives to proceed with the joint economic partnership efforts on accelerated mode and thereby achieve sustainable economic development for both economies. I have been given to understand that this international fair provides a platform to have interaction among the exhibitors who have come from almost 35 destinations which will create business interactions to promote international trade under one roof” Minister Bathiudeen said.

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.