Rubber industry can grow bigger than garments

Daily FT - 10/11/2014

• Potential to become a 10 billion dollar business: Prabhash Subasinghe

Global Rubber Industries Managing Director Prabhash Subasinghe receiving the Platinum Sponsor award from Minister of Economic Development Basil Rajapaksa at the recently concluded Global Rubber Conference 

The rubber industry in Sri Lanka has the potential to grow bigger than the garment industry. “Unfortunately, foreign investors have not seen the possibility of this factor,” says Global Rubber Industries Ltd (GRI) Managing Director Prabhash Subasinghe.

According to GRI, a leading industrial solid tyre manufacturer based in Sri Lanka; supplying solid tyres to Original Equipment (OE) manufacturers and replacement markets in more than 45 countries worldwide since 2001; Sri Lanka is the world’s largest producer of high-quality solid tyres, dominating about 60% of the global market.

Commenting on Industry & Commerce Minister Rishard Bathiudeen’s statement at the recently held Global Rubber Conference (GRC) 2014, the MD of GRI said that Sri Lanka can become a natural polymer hub and that the country needs to strive towards making this goal a reality. The Global Rubber Conference, held for the first time in Sri Lanka earlier this month, was co-organised by the Sri Lanka Export Development Board and supported by the International Rubber Research Development Board (IRRDB). The conference had over 20 global government agencies and associations participating in the event.

Currently Sri Lanka exports just under a billion dollars’ worth of value added rubber products says Prabhash Subasinghe. “Sri Lanka is the largest producer of solid tyres in the world. The value addition in this segment is over 60% and we can categorically state that this is the highest value addition especially in comparison with the garment industry. I am by no means being negative about garments but looking at the rubber industry on a positive note, I would like to explain why there is a huge future for the rubber industry in Sri Lanka. Taking into account the significant value addition as well as the vast potential for future investment; this industry in Sri Lanka can be a 10 billion dollar business.”

Since the solid tyre business category is relativelya small one, the MD of GRI points out that there is a need for Sri Lanka to increase production of rubber in order to grow the business. He says that the subsidy for rubber farmers in this year’s budget was an encouraging step towards this goal as that would help to promote more rubber production and especially support the small holders.

Speaking of the tyre trade he says, “We need large foreign manufacturers to come and invest in our tyre tradeas well as to look at other businesses which are parallel to the solid tyre business let it be in construction tyres, miningtyres, and agricultural tyres to name a few. As much as Sri Lanka is the global leader in solid tyres, we can also become global leaders in related industrial tyre products – and that should be our absolute target.”

The Export Department Board has said that by 2020, Sri Lanka should export 3 billion dollars worth. Currently exports from garments are valued at 5 billion dollars while rubber exports stand at only $ 1 billion.  However, according to Prabhash Subasinghe the value addition from rubber is far higher than most other products.

“What is important for a country is the value addition from exports because that value addition can only be kept within the country. When you look at our Sri Lankan foreign trade, we import products and we export products. In the case of garments, we have to import majority of the raw material from overseas, add value and then export; so your value addition percentage is smaller. This is certainly not the case with the tyre business; because we produce and grow rubber in Sri Lanka andwe add value in Sri Lanka as well. More than 80% of the rubber produced in Sri Lanka is value added locally.

“We also expect to increase our production in the future and hence the value addition in this trade will be far higher. High value addition is necessary for any country to grow, because value addition stays in the country.  In the case of the tyre manufacturing sector for export a value addition of 60% is currently retained in Sri Lanka.  Where there is more value addition a country can become more prosperous.”

Prabhash Subasinghe says we need to be known as a serious player in the raw material production if Sri Lanka is to attain ‘hub’ status, which is why rubber production overall needs to increase and manufacturing processes need to increase parallely in order for the country to become No. 1 in this industry. The plus factor according to him is that the country already has a lot of it in place, and only requires more awareness and the will to achieve the goal.

Trade renewal in offing with largest Nepali biz visit in a decade

Daily FT -  03/11/2014

• ‘Time for air links, new trade’: Nepal’s Dhakwa
• ‘Sending two teams’: EDB’s Egodage
• Bilateral trade at $ 5 m
• ‘Come to us & get Indo, Thai markets’: Nepal’s Dhakwa

TEPC Member of Board of Directors and the leader of the visiting Nepali delegation Bikash R. Dhakwa (third from right) gifts a copper and gold dust plated Shakyamuni Buddha statue crafted by Nepali artisans to EDB Chairman and CEO Bandula Egodage on 29 October in Colombo

As Lanka-Nepal trade leaped by threefold and showed new signs of revival, the biggest Nepali business delegation to Sri Lanka after almost a decade concluded their visit successfully on 2 November and also gave an unprecedented opening for the country’s artisans to enter two of the highly profitable craft markets in the region through Nepal and Sri Lanka’s creative artisans have been invited to November’s International Fair in Kathmandu.

“Sri Lanka and Nepal have historic relations and now is the time to go to the next step; towards stronger bilateral trade. The main reason we are coming to Sri Lanka is that you have very good gem processing technology – also we need your natural precious stones,” announced Trade and Export Promotion Center (TEPC) Member of Board of Directors and the leader of the visiting Nepali delegation Bikash R. Dhakwa on 29 October in Colombo.

Director Dhakwa was addressing the EDB top officials’ team led by EDB Chairman and CEO Bandula Egodage during his delegation’s visit to EDB on 29 October. The visiting 12 member business delegation from Federation of Handicraft Associations of Nepal was the largest ever Nepali business delegation to come to Sri Lanka in recent times. This was also the first ever such handicraft focused delegation to visit Sri Lanka from Nepal, with leading Nepali handicraft, gold, silver and metal crafts and other artisan entrepreneurs in it.
Several of the visiting businesses are also well-linked to the craft markets of India and Thailand. Notable among the Nepali reps were international jewellery designer Suman Dhakwa (Proprietor, Valhalla Enterprises) as well as Sanam Shakya (Executive Member, Federation of Handicraft Associations of Nepal and sole craft supplier to Dalai Lama).
Also present at the session EDB were EDB DG Sujatha Weerakoone, EDB ED Dr. Yousuf Maraikkar, EDB Director – Market Development Jeevani Siriwardena and other top officials.
“We warmly welcome one of the largest business teams from Nepal. Today’s meeting with your delegation could be considered as a preparatory meeting of our craft sector for Kathmandu SAARC sideline meeting as well,” said Egodage, addressing Director Dhakwa and the delegation, and added: “Relations between Sri Lanka and Nepal have been historic. The arrival of such a large team strengthens these on-going relations further and helps increase trade.”
As for bilateral trade, both countries remain promising virgin markets to each other. In 2013, Sri Lanka’s exports to Nepal stood at $ 5.07 million, a sudden 296% jump from 2012’s $ 1.2 million. Handicraft and jewellery exports to Nepal totalled $ 0.42 million in 2013. Sri Lanka’s top exports to Nepal in 2013 were printed books, newspapers and other printing products, pepper, fowls, electrical apparatus/switches, rubber tyres, and industrial machines.
Director Dhakwa responding said: “Sri Lanka and Nepal relations have been historic and now is the time to go to the next step-towards stronger bilateral trade. Both Nepali handicrafts and jewellery sector representatives are here. Unlike in Sri Lanka, jewellery, gold, silver and precious stone crafts are included as part of ‘handicrafts’ in Nepal. We have 22 different kinds of key crafts being exported to 60 countries. The main reason we are coming to Sri Lanka is that we believe that you have very good processing technology of precious and semi-precious stones here – that is stone cutting-as well as a strong manufacturing sector in them.
“Also we need your natural precious stones to be used in our jewelleries. Our jewellery producers have very good linkages with Thailand and India and these two markets are continuously fed by our artisans. Sri Lankan precious stones will help us to meet the increasing demand for high quality precious stones embedded crafts in these two markets. For Sri Lankan gem, silver and handicraft exporters, there are huge prospects in the $ 420 million Nepali gold, silver, jewellery and handicraft making industry which already employs two million workers. “These prospects are within Nepal and through Nepal to countries such as India and Thailand. Apart from SAARC meet, we also invite a Sri Lankan handicraft, silver and gold crafters team to the Nepali Handicraft Trade Fair held 20-24 November at the Bhrikuti Mandap Exhibition Hall in Kathmandu. We also suggest that it is time to renew direct air-links between Kathmandua and Colombo.”
“We are looking forward to meet you during SAARC meet,” said EDB’s Egodage, and added: “We are also planning to send a business delegation to Nepal in January.”
The previous Nepali delegation of this magnitude to visit Colombo was the business delegation organised by the Economic Forum of Nepal, way back in December 2003.

Two Lankans clinch global rubber glory

Daily FT - 30/10/2014

• Prof. Attanayaka and Lalan’s Hapangama win top awards at Global Rubber Conference

Industry and Commerce Minister Rishad Bathiudeen hands over the GRC Wickham Award 2014 to Chairman, Lalan Rubbers Lalith Hapangama (left) and DPSTG Attanayaka (who collected on behalf of the winner Prof. DPSTG Attanayaka) on 28 October in Colombo. Chairman and CEO of EDB Bandula Egodage and Chairman Confexhub Sdn Bhd, Malaysia, Dr. Abdul Aziz (far right) were also present

Two Sri Lankans won GRC Wickham awards at the Global Rubber Conference 2014 (GRC) held at the Cinnamon Grand Hotel on 28 October.

“At the next Global Rubber Conference, the knowledge received at today’s sessions should be reflected and evaluated. In such a background it is important for us to continuously review developments in all the closely related aspects and industries including the global economy and currencies as well,” said Industry and Commerce Minister Rishad Bathiudeen said while speaking at the conference.

The GRC drew more than 250 delegates from 28 countries, including ASEAN, US, EU, East Asian and North Asian nations, and concluded yesterday.

This is the fourth GRC to be held and the first to be staged in Sri Lanka.

The GRC Wickham Award for Technology Innovation 2014 was awarded to Prof. DPSTG Attanayaka, who is presently serving as the Dean of the Faculty of Agriculture and Plantation Management of the Wayamba University of Sri Lanka. He is also the Regional Secretary (Sri Lanka) of the Society for Advance Breeding Research in Asia and Oceania (SABRAO).

“During his career at the Rubber Research Institute of Sri Lanka, he contributed immensely to the natural rubber industry by improving productivity of rubber plantations. He also pioneered the incorporation of Molecular Breeding to rubber breeding and the selection program of the institute. He has more than 85 research articles to his credit,” the GRC organisers announced.

The GRC Wickham Award for Technology Commercialisation 2014 award was presented to Lalan Rubbers Chairman Lalith Hapangama.

“A pioneer in the rubber industry and a visionary entrepreneur, Hapangama is one of the leading manufacturers and exporters of disposable, surgical, household, industrial gloves, rubber bands and rubber mattresses to 48 countries with seven offshore offices in four continents. His operation is a vertically integrated company with rubber plantations across 17000 acres with two centrifugal facilities. “He was singlehandedly able to establish Sri Lanka as a formidable competitor in the global market especially for gloves, exporting to the most renowned supermarkets in the world and supplying to automotive, aircraft, chemical, electronic, food and construction industrial brands, with his ability to provide livelihood to 15000 families,” the organisers stated.

Minister Bathiudeen said: “Today’s conference sessions have given all of us much food for thought and there was productive opinion-sharing during the sessions. More importantly, we are pleased with the commitment and interest shown by the international participants. Let me stress that sectors such as transport, health, chemicals and heavy machinery need to be watched. Also we need to closely watch currency exchange rates.”

The GRC Wickham Award was established in commemoration of Sir Henry Wickham. Sir Wickham brought rubber seeds from the Amazon jungles to the UK in 1876 and thereby introduced rubber to the world for the first time.

Sri Lanka attends ICC Conference on Global Economic recovery in Dhaka

Asian Tribune - 31/10/2014

The Export Development Board of Sri Lanka led a trade delegation from Sri Lanka to participate at the International Chamber of Commerce Conference on Global Economic Recovery which was held in Dhaka on 25-26th October 2014.

On the sidelines of the Conference, nine Sri Lankan companies included in the delegation participated in two Business Match-Making sessions with the members of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) and the Dhaka Chamber of Commerce and Industry (DCCI) at two events on 27th October. The participating companies represented printed packaging products, garment and textile accessories, IT and education, food processing and electric cable sectors. The delegation also met with the senior officials of the Board of Investment of Bangladesh and Bangladesh Garment Manufacturers and Exporters Association.

During their interactions with Bangladesh entrepreneurs, the members of the Sri Lankan business delegation expressed their keen interest to invest in suitable sectors of Bangladesh. Both sides agreed that despite sharing similar basket of export goods, there is a need to complement each other’s products than to compete against one another.

In addition to the Chamber interactions, the Export Development Board had organized separate Meeting sessions for the 12-member delegation with individual companies in collaboration with the High Commission of Sri Lanka in Bangladesh. The Mission had also organized an interaction for the visiting delegation with the Sri Lankan entrepreneurs already established in Bangladesh on the evening of 26th October.

Global Rubber Conference 2014 kicks off in Colombo

Daily FT - 29/10/2014

The local rubber industry received much emphasis yesterday with the Global Rubber Conference (GRC) 2014 kicking off in Colombo.

The four-day event, which started on 27 October, is taking place for the fourth consecutive year.
The GRC is recognised to be one of the world’s leading conferences on natural rubber and NR-based products and is held on an annual basis rotating in different rubber-producing countries.

Organised by the Sri Lanka Export Development Board (SLEDB) and Confexhub with the support from the Ministry of Plantation Industries and the Ministry of Industry and Commerce, the event saw about 250 delegates from over 25 countries come together to discuss and get updated on the pertinent issues affecting the global rubber industry.

The conference aimed to fulfill five key objectives which are, to bring together regulatory authorities and commercial players of the rubber industry to provide updates on current trends and future challenges faced by NR industry, to facilitate the exchange of information and subsequently open up new turfs of business opportunities and expansion, to promote industry-wide investment opportunities in Pan Asia countries in general and the host country specific, to provide a platform for policymakers and association heads to discuss determining factors within the industry and to enable industry experts to communicate the latest R&D innovations.

While GRC 2014 was officially opened yesterday, on 27 October a pre-conference study tour was arranged to visit Lankem Crepe Rubber Processing Plant and Sloe Crepe Production Centre at Padukka Estate, Kotagala Rubber and Tea Plantations at Rayigam Estate and the Sri Lanka Rubber Research Institute, the oldest in the world.

The technical sessions that will come to a close today included two keynote addresses on ‘Global Economic Growth Prospects and Commodity Markets’ by The World Bank (WB), USA, Senior Economist Dr. John Baffes and ‘Sri Lankan Government’s Policy on the Development of Rubber Based Product Manufacturing Industries’ by Ministry of Industry and Commerce Secretary Anura Siriwardena, along with technical sessions highlighting six key areas.

The six areas comprehensively deliberated were, ‘Global Rubber Situation and Prospects: Supply, Demand and Price Forecast for 2015’, ‘Defining Sustainability: The Game Changer for the Natural Rubber Sector’, ‘Enhancing Quality of Rubber Materials’, ‘New Dir3ections and Strategies for Sustainable Rubber Supply’, Tyre Industry: Market Outlook and Strategic Direction for Sustainable Development’ and ‘Directions of World Economic Forces on Dipped Goods Sector’. On 30 October the visiting delegates will be given the opportunity to visit the Rubber Auction Market which is the only one in the world. The GRC was incepted in 2005 as ASEAN Rubber Conference and was renamed in 2011 as the Global Rubber Conference. It has been held in seven ASEAN countries including Thailand, Vietnam, Cambodia, Philippines, Laos PDR, and Malaysia and the last was held in Indonesia.

Sri Lanka has an impressive record in planting, production & export of rubber – President

Asian Tribune - 28/10/2014

Sri Lanka has an impressive record in the planting, production and export of rubber which is today the third largest sector to the country’s economy, said President Mahinda Rajapaksa.

Rubber is an important part of the country’s plantation sector and its contribution to agro-industry provides gainful employment to more than 300,000 persons making it a mainstay in the socio-economic aspects of the country, he added.

Sri Lankan Rubber and Rubber products have today earned worthy recognition for good quality and reliability in the international market, he stated.

The business-friendly environment that prevails in Sri Lanka today has great promise for the further development of the Rubber Industry, the President stated in his message issued for the Global Rubber Conference (GRC) 2014, inaugurated today (Oc. 27) at the Cinnamon Grand Colombo.

Following is the full text of the message by President Rajapaksa;

“I am pleased to send this message on the occasion of the Global Rubber Conference 2014 being held in Colombo.

Sri Lanka has an impressive record in the planting, production and export of rubber which is today the third largest sector to the country’s economy. Rubber is an important part of the country’s plantation sector and its contribution to agro-industry provides gainful employment to more than 300,000 persons making it a mainstay in the socio-economic aspects of the country.

Sri Lankan Rubber and Rubber products have today earned worthy recognition for good quality and reliability in the international market. This success is largely due to the cooperation of the state and private sectors in the rubber industry, and the special role of multi-national companies operating in Sri Lanka in this sector.

The business-friendly environment that prevails in Sri Lanka today has great promise for the further development of the Rubber Industry. This is made possible by increased investment in infrastructure facilities, and the development of ports and highways that help open new opportunities to the business sector, both among the small and large investors.

International market trends give good indications of an excellent growth potential for the Rubber Industry with a rise in global demand for natural rubber. To help to meet this demand, the Government has taken several measures to modernize, streamline and increase rubber production in the country and encourage the maximum value addition to this important product of the plantation sector.

In this context the holding of this Global Rubber Conference - 2014 in Sri Lanka is most timely and of much value to the progress of this industry, through the exchange of knowledge and experience by those in the international rubber market who are able to analyze the emerging trends in the global rubber industry, and thus contribute to Sri Lanka’s potential for further advancement in this sector. It will also contribute much to attracting foreign investment to Sri Lanka in this well established area of agro-industry.

I commend the Sri Lanka Export Development Board and M/s Confexhub Sdn Bhd. of Malaysia, for organizing this event in Sri Lanka and also thank the Ministry of Industry and Commerce, Ministry of Plantation Industries and all other relevant stakeholders for their contributions to the holding of this event in Colombo.
I wish the Global Rubber Conference 2014 every success”.

The Conference which will be held until October 30 is co-organized by the Sri Lanka Export Development Board (SLEDB) and supported by the International Rubber Research Development Board (IRRDB) and over 20 global Government agencies and associations.

The GRC 2014 is locally supported by the Ministry of Industry and Commerce and the Ministry of Plantation Industries.

Global Rubber Conference 2014 themed “Sowing the Seeds for Sustainable Future” is expected to bring together over 500 experts and delegates including government officials, rubber producers & planters, traders, importers & exporters, manufacturers of rubber products, commodity and investment analysts, rubber machinery & equipment suppliers and their supporting industries representing over 25 countries.

They will converge at this event to discuss a wide spectrum of commercial and R&D developments, share experiences, get updated on the latest trend and technologies transformation at the same time strengthen friendship.

It will be addressed by 18 eminent guest speakers who represent Government agencies, rubber research bodies, rubber associations and commercial companies.

The conference aims to bring together both regulatory authorities and commercial players of the rubber world to provide updates on current trends and future challenges faced by the natural rubber industry.

Lanka’s top global FDI partner in yet another $ 1 b rollout

Daily FT - 28/10/2014

• Malaysia places Lankan SMEs as top priority
• Going up to $ 1 b: – Delegation Lead Abdullah
• Great news for our SMEs: Rishad
• We are moving to SA via Lanka: SME Factors’ Al Qudsy
• Lanka-Malaysia trade at $ 577 m

Sri Lanka’s largest global FDI partner Malaysia is mulling a new wave of incremental FDI totalling $ 1 b with an emphasis on SMEs.
It will become one of the largest-ever Private Public Partnership (PPP) ventures in Sri Lankan SMEs and the entry of biggest SME financier in Malaysia to Sri Lanka is the first step in their South Asian leap.
“We are thinking of another $ 1 billion portfolio in Sri Lanka in addition to the current investment portfolio here by EXIM Bank of Malaysia. SMEs are the priority sector in this new $ 1 b rollout while other sectors are also being mapped,” said Syed Zed Al Qudsy, President of SME Factors, Jalan, Malaysia on 15 October, addressing Minister of Industry and Commerce Rishad Bathiudeen at the EDB Building in Colombo.

Al Qudsy was a member of the visiting Malaysian business delegation that made a courtesy call on Bathiudeen. The delegation was led by Dato’ Latt Shariman Abdullah (Special Functions Officer to Malaysian Prime Minister and the Finance Minister).

“This is the first time that we have been invited to Sri Lanka and this invitation is by Senior Minister for International Monetary Co-operation Dr. Sarath Amunugama. I will be reporting back to Malaysian Prime Minister Najib Razak of our successful tour to Sri Lanka,” said Abdullah.

He added: “The Malaysian business delegation I am leading now is of mostly financial sector consisting of Government as well as private sector firms. We are looking to partner with the financial sector, especially SME financing, and also mulling a new FDI incremental investment wave running up to $ 1 b in addition to what is here.”

Bathiudeen responded: “We warmly welcome your decision to enhance current FDIs to new levels. The National Enterprise Development Agency (NEDA) has been working to uplift the SME sector. This sector’s importance is recognised even by the vision of President Mahinda Rajapaksa.  SMEs are vital in many ways; they contributing more than 50% of our GDP. NEDA too reported that financing is a very critical issue. Your visit can help boost our bilateral trade too.”

In 2013, Sri Lanka-Malaysia bilateral trade totalled $ 577.66 m. The balance of trade has been heavily in favour of Malaysia due to high volume of imports of petroleum, palm oil and cement from Malaysia.
“We are a leader in SME financing in Malaysia, and the number one in SME receivable financing specifically. We have a proven track record in Malaysia. We intend to work with local partners in Sri Lanka and develop capacity with the objective of building the SME industry here. The sectors for the new $ 1 b rollout have to be mapped out in detail, since it’s still preliminary, but SMEs are priority. We need time to create the investment stories when we go into new territories. Operations-wise, we are in Malaysia but we have also gone to Thailand and Indonesia as well. SME Factors is also looking to expand with regional offices to South Asia and South East Asia, one important reason we are partnering here,” said Al Qudsy.
He added: “Such an expansion will boost business. We are coming to Sri Lanka with the hope and aspiration to partner and increase our presence. We have been supporting SMEs here already. In this next wave, we want to have an incremental investment running up to $ 1 b in addition to what has already been invested here. SME sector is the priority sector in this next $ 1 b new rollout and other sectors are being mapped. EXIM Bank of Malaysia is already partnering with SME Factors of Malaysia.”

Bathiudeen stated: “When it comes to Sri Lanka’s SMEs, it is the most neglected sector with regard to financing. As a result of lack of collaterals, they are continuously hampered and Lankan financial institutions too avoid them. In such a background, entry of firms such as yours can help our SME cash flows.”
Once the $ 1 b new investment from Malaysia comes in, it would become one of the largest-ever Private Public Partnership (PPP) ventures in the Lankan SME sector, which contributes more than 50% of Lankan GDP.

According to the Department of Commerce, the cumulative realised investment from Malaysia has surpassed $ 1.4 billion. Malaysia has become the number one investor in Sri Lanka and Dialog Axiata is the largest investor in Sri Lanka with over $ 1 billion realised investments.

In addition to Dialog, Maxis Berhard, Naratha Agro Industries, Wincon Development Ceylon Ltd., APPIT College and Merbok are among other Malaysian investment projects in Sri Lanka.