Lanka closely monitoring EU's trade policy - Rishad

Asian Tribune - 08/05/2014

David Daly (Ambassador of the EU Delegation to Sri Lanka and Maldives-left) discusses with Rishad Bathiudeen (Minister of Industry and Commerce of Sri Lanka) at the second EU-Sri Lanka Trade Dialogue session on 07 May in Colombo.

As trade between Sri Lanka and its top global partner EU edged to $ 5 Bn mark, Sri Lanka for the first time revealed its levels of attention to the EU trade dynamics on 07 May. And Europe has commended Sri Lanka's exports value addition efforts as "remarkable."

“Sri Lanka closely monitors the developments in the EU trade policy as it could have significant impact on Sri Lanka’s exports, both directly and indirectly. For example, the recent cross cumulation facility provided for SAARC and ASEAN Regional Groups, would help Sri Lanka to source inputs of ASEAN countries, and be eligible for GSP concessions” said Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka on 07 May.

Minister Bathiudeen was addressing the second EU-Sri Lanka Trade Dialogue that commenced at Galadari Hotel, Colombo on 07 May. Organised by the European Chamber of Commerce Sri Lanka (ECCSL), the session, the second in its series since its commencement last year, aims at promoting EU-Sri Lanka bilateral trade further. In this latest session, Sri Lanka, through its Export Development Board, aims at promoting six specific product sectors towards world’s largest trader, the EU.

Reps from Czech Republic, Belgium, Italy, France, Germany, the Indo-German Chamber as well as Sri Lankan officials and exporters were present at 07 May session. Also in attendance was Faiszer Musthapha, the Deputy Minister of Investment Promotion.

“I believe it’s a timely initiative for two reasons” said Minister Batbhiudeen, addressing the event, and added: “Firstly, I am confident that, this initiative will help, to identify potential markets, in the EU for, selected products and services, such as IT-BPO, Agro Food and Beverages, Electronics, Gems and Jewelleries, and Rubber and Plastics, while establishing, business collaborations for, mutual benefits.

“Secondly, Sri Lanka has built an enabling environment for international businesses and you as private representatives, need to get this message across the world to promote Sri Lanka as the business hub in Asia under the vision of His Excellency Mahinda Rajapaksa, our President. The necessary infrastructure towards this objective is being established and is drawing the attention of the business communities from all around the world. EU has been not only a promising market for Sri Lanka, but also a development partner since the signing of the Commercial Cooperation Agreement in 1975, which was replaced with the Cooperation Agreement on Partnership and Development Agreement in 1995 and subsequent establishment of the EU-Sri Lanka Joint Commission. Various projects, including EU-Sri Lanka Development Project providing development assistance, post tsunami reconstruction, and rehabilitation, and humanitarian assistance were significant in this respect.

“As a market, the 28 countries in the EU has emerged as the number one export destination for products of Sri Lanka. In 2013, the total bilateral trade between Sri Lanka and EU, stood at $ 4.9 Bn. Sri Lanka’s total exports to the EU market have increased to $ 3.27 billion, in 2013 from US $ 2.7 Bn, in 2009. Even in the first quarter of this year alone exports to EU increased by 16.3% to $ 896 Mn. Among our imports from EU are machinery chemical and plastic products, woven fabric, and base metal. Sri Lanka continues to, enjoy a favourable, balance of trade with the EU. In 2013, 60% of our exports to EU were apparel. The relationship built on apparel trade has become a strategic partnership with major buyers in the EU.

“Today, Sri Lanka has become a value creator to its strategic partners. This significant development, in our exports to the EU is the growth in our apparel exports despite the loss of GSP plus facility in August, 2010. This certainly demonstrates, our commitments in adding value not only to our business partners but also to the consumers in the EU countries. Sri Lanka closely monitors the developments in the EU trade policy, as it could have significant impact on Sri Lanka’s exports both directly and indirectly. For example, the recent cross cumulating facility provided for SAARC and ASEAN Regional Groups would help Sri Lanka to source inputs of ASEAN countries and be eligible for GSP concessions. Sri Lanka continues to engage with the European Commission for further strengthening its trade and, economic relationship.

“After a period of four years the 18th session of the EU-Sri Lanka Joint Committee meeting was held in Brussels in December 2013. Similarly Sri Lanka closely, collaborated with the European Commission in implementing IUU regulations of fisheries by maintaining regular dialogue. I am confident that, the European Commission would be able to assist Sri Lanka for implementation of Trade Facilitation Agreement which came out as a result of the Bali package concluded at the WTO Ministerial Conference held in Bali Indonesia in December 2013. Sri Lanka is currently processing to obtain Geographical Indication (GI), protection for Ceylon Cinnamon in the EU.

“As you all are aware such GI protection will provide an exclusive identity that will enable Ceylon Cinnamon to fetch a higher position in the international market while supplying its consumers an authentic product. Prior to this initiative Sri Lanka has been able to secure an exclusive classification of Ceylon Cinnamon under a separate HS tariff heading, through the World Customs organisation. I was also informed that your Chamber in collaboration with business dignitaries in the EU has established EU-Sri Lanka Business Council, in February 2010. I would like to stress that my Ministry is ready to extend any possible assistance for such ECCSL initiatives, through our Trade Officers stationed abroad”.

Simon Bell (Director-ECCSL) addressing the event, said: “Sri Lanka’s export value addition has been remarkable and a great success. Often American and European officials are unaware of this. In fact, it’s a little known fact that Sri Lanka exports’ value addition successes in spices, rubber, tea, gems and jewellery are seen as role models by countries from Rwanda to Indonesia.”

Faiszer Musthapha, the Deputy Minister of Investment Promotion, addressing the event, said: “Sri Lanka has slowly set the phase to being recognised as a high value, niche products and service deliverer to the global market. Two key elements-the interest of industry sector to work with the government on a long term strategy, joint collaboration in tech, international trade etc with EU-have helped Sri Lanka to be placed in the global market map. To become a global leader, Sri Lanka needs to look beyond today, and tomorrow-and innovate.”

Sri Lanka: Trade deficit narrows, export earnings rise

The Times of Sri Lanka - 05/05/2014

The external sector further strengthened in February 2014 with the trade deficit continuing to narrow as a result of an increase in earnings from exports and a decline in expenditure on imports.

Inflows on account of workers' remittances and earnings from tourism recorded an increase during the month contributing to the substantial reduction in the current account deficit. These developments together with continued inflows to the financial account resulted in a surplus in the Balance of Payments (BOP) upto February 2014, the Central Bank said yesterday.

On a year-on-year basis, earnings from exports in February 2014 increased by 5.4 per cent to US dollars 841 million, while expenditure on imports declined by 6.2 per cent to US dollars 1,345 million. Accordingly, the trade deficit contracted by 20.7 per cent to US dollars 504 million.

The cumulative trade deficit for the first two months of 2014 contracted by 12.5 per cent, as the growth in export earnings of 13.9 per cent outpaced the 1.1 per cent increase in import expenditure.

Earnings from exports increased mainly led by improved performance in agricultural exports which grew by 15.3 per cent, year-on-year, in February 2014 to US dollars 201 million.

Healthy performance in tea and coconut product exports mainly contributed to the growth in agricultural exports. Export earnings from tea increased by 11.7 per cent to US dollars 116 million as a result of the increase in both the price and volume of tea exported.

The average export price of tea increased by 8.9 per cent, to US dollars 5.16 per kg in February 2014 from US dollars 4.74 per kg in February 2013, while export volumes increased by 2.6 per cent, year-on-year.
Earnings from coconut product exports increased by 60.3 per cent to US dollars 23 million, due to improved performance in both kernel and non-kernel coconut products in terms of both price and volume.
Export earnings from minor agricultural products and seafood also increased significantly by 124.9 per cent and 37.1 per cent, respectively, in February 2014.

However, earnings from export of spices declined by 23.6 per cent, mainly due to the decline in export of pepper and cloves, owing to unavailability of stocks during the non-harvesting period.
Earnings from industrial exports, which account for more than three fourths of total export earnings increased by 2.5 per cent, year on-year, to US dollars 637 million in February 2014, with earnings from export of textiles and garments growing by 6.6 per cent to US dollars 396 million.

A notable increase of 35.7 per cent was observed in export of garments to non-traditional markets, reflecting greater diversification of markets in the industry. Garment exports to USA and to the EU increased by 8.8 per cent and 8.7 per cent, respectively. Export of rubber products grew by 6.3 per cent to US dollars 70 million mainly due to the increase in export of rubber tyres, although export earnings from rubber gloves declined during the month.

Export earnings from chemical products, petroleum products, food, beverages and tobacco also increased in February 2014. However, earnings from gems, diamonds and jewellery declined by 14.1 per cent, year-on-year, to US dollars 26 million, mainly due to the substantial decline in diamond exports as a result of low global demand.

Expenditure on imports declined by 6.2 per cent, year-on-year, to US dollars 1,345 million in February 2014, as a result of a decline in both intermediate and investment goods. Expenditure on intermediate goods imports declined by 4.7 per cent, year-on-year, to US dollars 827 million mainly due to the decline in import of diamonds and precious stones and precious metals including gold by 82 per cent. Despite the strong growth in textiles and garment exports, textiles and textile article imports declined by 6.4 per cent, reflecting higher domestic value addition in the garment industry. Expenditure on fuel increased marginally by 0.6 per cent, year-on-year, to US dollars 421 million in February 2014 due to the increase in refined petroleum products by 51.3 per cent despite the decline in import of crude oil. The increase in imports of refined petroleum products was due to greater dependence on thermal power generation as hydropower generation declined due to adverse weather conditions. The high growth rate in the import of wheat and maize recorded during the month was mainly due to the low base. Despite the reduction in prices, expenditure on importation of fertilizer increased by 133.3 per cent in February 2014, due to the high usage of fertilizer for paddy and other crops during the Yala season as well as the low base.

Expenditure on imports of investment goods declined by 17.7 per cent, to US dollars 293 million in February 2014, mainly due to the decline in transport equipment imports which declined by 53 per cent. A reduction in imports of almost all sub categories contributed to the contraction in transport equipment import in February. Import expenditure on building materials declined by 21.8 per cent due to lower imports of iron and steel, cement and mineral products. However, expenditure on machinery and equipment imports increased by 2.7 per cent, due to the increase in import of engineering equipment, agricultural machinery and medical and laboratory equipment, although import of electronic equipment, telecommunication devices and textile industry machinery declined.

Despite the decline in import expenditure on intermediate and investment goods, import of consumer goods increased by 7.2 per cent, year-on-year, to US dollars 224 million in February 2014, reflecting increases in both food and non-food consumer goods imports. Import of food and beverages increased by 1.4 per cent with import of dairy products growing by 34.6 per cent, on account of the increase in the price of milk powder in the international market. However, imports of many sub categories including oil and fats, seafood, vegetables and sugar and confectioneries declined in February 2014. Non-food consumer goods imports increased by 12 per cent, mainly due to the significant increase in vehicle imports by 61.4 per cent. However, import expenditure on home appliances declined significantly during the month.
In February 2014, workers' remittances increased by 6.9 per cent to US dollars 502 million from US dollars 469.4 million in February 2013. Accordingly, cumulative inflows of workers' remittances during the first two months of 2014 amounted to US dollars 1,057.5 million, a rise of 8.8 per cent from the corresponding period of 2013.

Net inflows to the government securities market upto 21 April 2014 amounted to US dollars 123.3 million, comprising net inflows to Treasury bills and Treasury bonds amounting to US dollars 99.8 million and US dollars 23.5 million, respectively. The investment threshold for foreign investments in government securities has been fully utilized and it has resulted in relatively lower levels of foreign investments in government securities market.

In the meantime, inflows to the government on account of long term loans upto February 2014 were US dollars 119.9 million compared to US dollars 300.7 million during the corresponding period of 2013. Foreign investments in the Colombo Stock Exchange (CSE) recorded a cumulative net outflow of US dollars 55.9 million upto 21 April 2014 including primary market inflows upto end February 2014 amounting to US dollars 4.3 million. In 2013, Foreign Direct Investments (FDI) including foreign loans amounted to US dollars 1,421 million, compared to US dollars 1,382 million in 2012 while, inflows to the Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs) increased resulting in a net increase of US dollars 1,781 million in 2013.

Sri Lanka also successfully issued its seventh international sovereign bond in April 2014.
The 5-year international sovereign bond of US dollars 500 million was issued at a yield of 5.125 per cent per annum. The issue represents the balance of the US dollars 1,500 million approved international sovereign bond programme for 2014, of which US dollars 1 billion was issued in January 2014 at a yield of 6.0 per cent per annum.

Sri Lanka's textile & garment exports grow 6.6% in Feb'14

Fibre2Fashion - 06/05/2014

Sri Lanka’s earnings from exports of textiles and garments grew by 6.6 percent to US$ 396.2 million in February 2014, compared to earnings of $371.6 million recorded in same month last year, according to a press release on ‘External Sector Performance – February 2014’ issued by the Economics Research Department of the Central Bank of Sri Lanka.

The statement reflected two key trends in Sri Lanka’s textile and garment trade—an increase in apparel exports to non-traditional markets and a higher local value addition in the clothing industry.

“A notable increase of 35.7 per cent was observed in export of garments to non-traditional markets, reflecting greater diversification of markets in the industry,” the press release said.

Meanwhile, Sri Lanka’s garment exports to the US and the EU increased by 8.8 percent and 8.7 percent, respectively, during February 2014.

“Despite the strong growth in textiles and garment exports, textiles and textile article imports declined by 6.4 percent, reflecting higher domestic value addition in the garment industry,” the statement said.

In January-February 2014, Sri Lanka’s textiles and garments exports jumped 14.6 percent to $808.2 million, as against exports of $705.5 million made during corresponding period last year.

On the other hand, imports of textiles and textile articles declined by 5.5 percent to $346.1 million during the two-month period, compared to imports worth $366.1 million made during the same period last year.

In 2013, Sri Lanka’s earnings from textile and garment exports grew by 13 percent year-on-year to $4.508 billion, while its value of imports declined by 9.7 percent year-on-year to $2.045 billion.

Africa’s Switzerland hunting for Sri Lanka trade for the first time

Asian Tribune - 06/05/2014

Bothata Tsikoane, the New Delhi based High Commissioner of Lesotho (left) discusses with Rishad Bathiudeen (Minister of Industry and Commerce of Sri Lanka-right) on 25 April in Colombo.

The only country in the world to be entirely surrounded by another country and also called as Africa’s Switzerland, signaled on 25 April for the first time that it is now ready to initiate multi-faceted bilateral ties with Sri Lanka. “We can begin our bilateral trade with Ceylon Tea exports to Lesotho. Then we can proceed to agriculture cooperation” said an upbeat Bothata Tsikoane, the New Delhi based High Commissioner of Lesotho for Sri Lanka on 25 April in Colombo.

Bothata Tsikoane was addressing Rishad Bathiudeen (Minister of Industry and Commerce of Sri Lanka) on 25 April at EDB in Colombo during his first courtesy call made on Minister Bathiudeen.

“We want to establish bilateral cooperation with Sri Lanka in a more formal way and in a multi-faceted way. Then we want to see about the strategic hub outlook of Sri Lanka so that we can make use of it. We can begin our bilateral trade with Ceylon Tea exports to Lesotho. Then proceed to agriculture cooperation” said Tsikoane on 25 April. “Our country is described as the Switzerland of Africa due to its snow-capped mountains and scenery therefore it is a key tourist attraction in the region. We have a stable economic outlook, and though Lesotho industry sector is not as diversified as Sri Lanka’s, our garment industry plays a key role in the economy. In fact, it’s the dominant industry for us. We like to send our garments to South and East Asia too. Since we import most of our food needs from South Africa, including rice, we can absorb Sri Lankan food exports, especially rice. We can achieve these by firstly establishing bilateral cooperation in a more formal way” (HE) Tsikoane stressed.

According to the Department of Commerce, Sri Lanka’s trade with Lesotho is almost minimal with a total trade $ 0.03 Mn (only) in 2012. More than 75% of food requirements of Lesotho are imported to the country, with only around 25% of the requirement produced inland.

Responding to Tsikoane, Minister Bathiudeen said: “Sri Lanka is the emerging strategic hub located in South Asia and in 2013 we have shown record apparel earnings despite difficult international market conditions. Lesotho is a promising virgin market for Sri Lanka’s exports and our exporters will be glad to make their entry which I and my Ministry can facilitate. Our apparels are readily snapped up by top global brands. We invite Lesotho’s apparel firms to invest in our reputed apparel sector, partner with it in JVs and use our hub positioning to reach the Asian markets. I and my Ministry are ready to extend our fullest support to investors from Lesotho. We are also ready to supply you with renowned Ceylon Tea. As we are now a rice exporter, I am pleased to say that Lesotho can import our rice as well. We already export rice to several African countries -Kenya, Somalia, Ethiopia- and also to Dubai. We are open to agricultural and other types of cooperation with Lesotho and I believe that such initiatives can be followed successfully once ties are more formalised.”

Both Tsikoane and Minister Bathiudeen also mulled other potential areas of cooperation to strengthen bilateral understanding.

Lesotho to begin economic ties with tea, rice imports

Lanka Business Today - 05/05/2014

The only country in the world to be surrounded by another country and also described as Africa’s Switzerland, is now to initiate multi-faceted bilateral ties with Sri Lanka.

“We can begin our bilateral trade with Ceylon Tea exports to Lesotho. Then we can proceed to agriculture cooperation” said an upbeat Bothata Tsikoane, the New Delhi based High Commissioner of Lesotho for Sri Lanka.

The Lesotho envoy made these observations while meeting Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka on 25 April at the Export Development Board offices in Colombo during his first courtesy call made on Minister Bathiudeen.

“We want to establish bilateral cooperation with Sri Lanka in a more formal way and in a multi-faceted way. Then we want to see about the strategic hub outlook of Sri Lanka so that we can make use of it. We can begin our bilateral trade with Ceylon Tea exports to Lesotho. Then proceed to agriculture cooperation,” said the ambassador.

“Our country is described as the Switzerland of Africa due to its snow-capped mountains and scenery therefore it is a key tourist attraction in the region. We have a stable economic outlook, and though Lesotho industry sector is not as diversified as Sri Lanka’s, our garment industry plays a key role in the economy. In fact, it’s the dominant industry for us. We like to send our garments to South and East Asia too. Since we import most of our food needs from South Africa, including rice, we can absorb Sri Lankan food exports, especially rice. We can achieve these by firstly establishing bilateral cooperation in a more formal way,” ambassador Tsikoane stressed.

According to the Department of Commerce, Sri Lanka’s trade with Lesotho is almost minimal with a total trade $ 0.03 million (only) in 2012. More than 75% of food requirements of Lesotho are imported to the country, with only around 25% of the requirement produced inland.

Responding to ambassador Tsikoane, Minister Bathiudeen said: “Sri Lanka is the emerging strategic hub located in South Asia and in 2013 we have shown record apparel earnings despite difficult international market conditions. Lesotho is a promising virgin market for Sri Lanka’s exports and our exporters will be glad to make their entry which I and my Ministry can facilitate.

"Our apparels are readily snapped up by top global brands. We invite Lesotho’s apparel firms to invest in our reputed apparel sector, partner with it in JVs and use our hub positioning to reach the Asian markets. I and my Ministry are ready to extend our fullest support to investors from Lesotho. We are also ready to supply you with renowned Ceylon Tea. As we are now a rice exporter, I am pleased to say that Lesotho can import our rice as well. We already export rice to several African countries - Kenya, Somalia, Ethiopia - and also to Dubai. We are open to agricultural and other types of cooperation with Lesotho and I believe that such initiatives can be followed successfully once ties are more formalised,” said the minister.

Both ambassador Tsikoane and Minister Bathiudeen also discussed other potential areas of cooperation to strengthen bilateral understanding.

Sri Lanka exports up 5.4-pct in February, imports fall

Lanka Business Online - 05/05/2014

Sri Lanka's exports rose 5.4 percent in February 2014 from a year earlier, with apparel exports up 6.6 percent, while imports fell amid weak credit growth, official data showed.

In the first two months of the year exports were up 13.9 percent to 1,739 million US dollars, the Central Bank said.
Agricultural exports rose 15.3 percent to 201.2 million US dollars with tea up 11.7 percent to 115.6 million US dollars.

Textile and garment exports were up 6.6 percent to 396.2 million US dollars with export to the USA up 8.8 percent and to the EU up 8.7 percent.

Imports fell 6.2 percent to 1,344.7 million US dollars. Consumer goods rose 7.2 percent to 223.8 million US dollars and intermediate goods fell 4.7 percent to 827.4 million US dollars.

Fuel imports were a slight 0.6 percent up to 420.9 million US dollars.

Textile and textile articles were down 6.4 percent to 152.5 million US dollars despite higher apparel exports, which the central bank said was due to local manufacture of inputs.

Investment goods fell 17.7 percent to 292.6 million US dollars in February, with building materials down 21.8 percent to 81.8 million US dollars and transport equipment down 53 percent to 39.6 million US dollars.

The trade deficit contracted 20.7 percent to 503.7 million US dollars.
In the first two months of 2014, exports rose 13.9 percent to 1,739 million US dollars from a year earlier, imports rose just 1.1 percent to 2,998.6 million US dollars and the trade gap contracted 12.5 percent to 1,259 million US dollars.

Sri Lanka's trade deficit is triggered when foreign exchange earnings outside of exports such as through worker remittances, tourism or even foreign borrowings trigger imports.

High volumes of exports also trigger more imports when the proceeds are spent.

Imports usually fall when credit growth is weak and not all foreign receipts are spent within a given period, resulting is build ups of domestic liquidity and foreign reserves.

Sri Lanka's credit growth has slackened after a credit bubble fired a balance of payments crisis in 2011/2012. In February private credit fell in absolute terms.

Fadna Cinnamon Tea gets certification of Pure Ceylon Cinnamon

Daily Finance Times - 05/05/2014

The Fadna Cinnamon Tea, produced and distributed by Food and Nature Company was recently awarded the Pure Ceylon Cinnamon Quality certificate by Sri Lanka Export Development Board. This certification which is awarded only for highest quality export products is granted on the recommendation of a committee of experts appoined by the SLEDB. Here Minister of Industries and Commerce Rishard Bathiudeen awards the certificate to the Marketing Manager of the Food and Nature Company, Udara Mangala at a ceremony at the SLEDB