Sri Lanka’s annual untapped export potential is $ 10 billion
The Morning: Sri Lanka’s untapped export potential is about $ 10 billion annually while tapping this potential could create over 142,000 additional jobs, according to the World Bank.
According to the Sri Lanka Development Update for October released on Thursday (10), the export performance in the post-conflict decade (2010-’19) was below potential in Sri Lanka.
The World Bank said that Sri Lanka’s ‘missing’ merchandise exports stood at $ 10 billion. Given the nation’s observable characteristics (economic size, level of development, remoteness, and factor endowments) potential exports are estimated at about $ 20.1 billion (about twice the current level).
The bank said that at the destination level, the largest portion of untapped export potential lay in Asia.
In 2020, 70% of missing exports for Sri Lanka were accounted for by five destinations: China ($ 3.5 billion), India ($ 1.5 billion), Japan ($ 1 billion), Indonesia ($ 0.7 billion), and South Korea ($ 0.5 billion).
“This points to a lack of active trade diplomacy in the region,” the bank added.
World Bank estimates suggest that the missing exports are mostly in manufacturing, particularly in machinery and equipment, and to a lesser extent in minerals, metals, and chemicals.
It added that clothing exports were substantially above potential, consistent with the historic pattern of specialisation of the economy.
Furthermore, the World Bank said that the export sector in Sri Lanka could potentially create an additional 142,500 jobs if export potential was tapped into.
Of these, 19,000 jobs could be created in agriculture exports and 123,500 in manufacturing exports, according to the bank.
“While some of these jobs could be newly created, others may involve the reallocation of labour from lower productivity, domestic-oriented firms to higher productivity, export-oriented firms,” the report said.
OSL take:
Sri Lanka’s exports sector is on a steady growth path and has become a key revenue generator for the country. The increasing revenue from the exports sector is indicative of the overall expansion in the sector, which in-turn has created many business/investment opportunities. The many trade agreements and trade concessions enjoyed by Sri Lanka with other countries and the continuous promotional campaigns carried out by local authorities in foreign markets have all helped boost the country’s exports sector. In a bid to expand the foreign markets accessed by Sri Lanka, local authorities have urged local exporters to diversify and expand their export product portfolios to meet the evolving demands of the foreign markets. Given all these developments, it is evident that Sri Lanka’s exports sector has a yet untapped business potential that could be exploited by foreign businesses/investors looking for lucrative opportunities in the country’s expanding economy. With Sri Lanka’s exports sector showing an increasing growth and business potential, foreign businesses/investors could confidently explore the expanding opportunities in the sector while also looking at forming collaborations with local businesses to expand operations.
Article Code : | VBS/AT/20241015/Z_1 |