Investment opportunities for SL in Japan seen to be on the rise

The Island - 12/03/2015
By Ifham Nizam

Japan’s interest in China and the United States as future markets is decreasing, according to recent global surveys, when it comes to the ICT industry and business, says a top Japanese IT expert, thus hinting that Sri Lanka has a very good opportunity for investment in Japan.

Japan IT Services Industry Association, Global Affairs Department, Senior Executive Hidemi Yamamoto addressing a seminar for more than 60 Sri Lankan ICT export firms in Colombo recently said though Sri Lanka doesn’t come under the 20 companies surveyed by the JISA Global Business Committee members, Sri Lanka has the potential to penetrate the Japanese market.

He said that China and US were the most important current markets in 2012/2014. Indonesia is a focused destination as the future market though not many JISA members have current operations there.

Yamamoto said that Singapore, Vietnam and Thailand are also important markers for them.

Answering questions, he stressed Japan ICT companies don’t know very much about Sri Lanka when it comes to corporations, products, software and solutions etc.

He said that their task was to promote Sri Lanka and spread the capacity of Sri Lanka companies in the region.

However, he noted that a knowledge of the English language was the biggest stumbling block to the two nations adding they would work on that area to iron out the differences and to cement more opportunities in both countries.

Yamamoto also said: "We have 600 Japanese IT firms under JISA. We have leading Japanese software developers, information processing and database service suppliers among us. We have alliances with foreign industry associations and I am highly impressed by Lankan IT Industry."

Meanwhile, Ministry of Industry and Commerce estimates that Sri Lanka’s hi-tech exports are projected to cross the USD 1bn mark this year.

"We are looking to create business tie-ups between Lankan and Japanese ICT firms and today’s seminar is the first step-bringing awareness to Lankan ICT firms, said Kazuhiko Obama (Resident Representative-JETRO Colombo).

He added: "We are planning to conduct the follow-up, the Business Matching event in October this year in Tokyo. Before that Sri Lanka EDB will bring a Lankan ICT company delegation to Tokyo for Japan IT Week this May."

"We are a leading systems integrator in Japan and I have almost 40 years of experience in this, said Tsuyomu Tsuchiyama (Corporate Officer, Strategic Planning Division, Nippon RAD Inc) and added: "I look forward to give to Lankan ICT exporters. 99 per cent of my firm Nippon Rad’s business is domestic and in Sri Lanka we are looking for mutual market opportunities and tie-ups. Business and systems integration in the form of JV or BPO/Outsourcing, is possible."

   Export Development Board chairman Bandula Egodage said: "The top three Lankan exports to Japan in 2013 were tea (22%), apparel (17%), and seafood (17%).  The total trade with Japan stood at USD 566 million in 2014, increasing by 58% to USD 894 Mn in 2013. Our exports to Japan in 2014 stood at USD236 mn, increasing by 6% from 2013’s exports of the same at $224 Mn."

SL-Singapore Business Council, Singapore (Sri Lanka) Club hold networking event

Daily FT - 07/03/2015

From left: Amanda Senewiratne, Secretariat, Ceylon Chamber of Commerce; Rohitha Mendis, Vice President, SLSBC; Upali Bandaranayake, Vice President, SLSBC; B.C. Tan of  Prima Group; Janaka Gunasekera of A. Baur & Company; Naserah Tyebally, President, Singapore Club; Shamil Mendis, President of SLSBC; R.D. S. Kumararatne, Director General, Department of Commerce; Sujatha Weerakoon, Director General, Export Development Board; Champa Mohinani, Singapore Club; Nirupa Peiris, Overseas Reality (Ceylon); Renuka Weerakone, Executive Director (Investment Promotion), Board of Investment; and Weon Cheol Koh, Director General, KOTRA

A joint Networking Evening was organised by the Sri Lanka-Singapore Business Council (SLSBC) of the Ceylon Chamber of Commerce and the Singapore (Sri Lanka) Club.

The event was organised with the objective of providing an opportunity for members to interact amongst themselves, with the Singapore expatriate community in Sri Lanka and senior officials of key Government institutions relevant to business. The organising of this event is in keeping with an objective of the Sri Lanka-Singapore Business Council as a facilitator of business for its members.
The event which was held at the Roof Top Function Room of Prima Tower was well attended by over 85 persons including members of the SLSBC which has now grown to 67 member companies, members of the Singapore Club and special invitees.

Representatives of Prima, Overseas Realty, Singapore Airlines, Keppel Land and other Singapore connected companies attended the event. Senior officials of the Department of Commerce, the Export Development Board and the Board of Investment of Sri Lanka were present as well as representatives from the Japan External Trade Organization (JJETRO) Korean Trade & Investment Agency (KOTRA) and representatives from the Embassy of Japan and the Indonesian High Commission who were amongst the special invitees.

Shamil Mendis, Chairman/ Managing Director, Spear Global Holdings Ltd., President of the Sri Lanka – Singapore Business Council, the committee of the SLSBC and Naserah Tyebally, the President of the Singapore (Sri Lanka) Club welcomed the members.

The Sri Lanka-Singapore Business Council inaugurated in 1997 as the 18th bilateral Business Council formed under the aegis of the Ceylon Chamber of Commerce. The prime objective of the Council is to promote trade, tourism and to create an environment to enhance the commercial activity between Sri Lanka and Singapore as well as to facilitate investment by Singapore companies in Sri Lanka.

Following the successfully concluded Trade & Investment Promotion Missions to Singapore last year, the SLSBC will organise the next Business Delegation to Singapore during July 2015 in conjunction with the High Commission of Sri Lanka in Singapore and the Singapore Business Federation (SBF) Singapore’s apex and largest business chamber.

The Singapore Business Federation with a membership of over 16,000 members intends to conduct a seminar titled Doing Business in Sri Lanka – Development Potential and Opportunities in July followed by a business matchmaking and networking session.

Several inward delegations are expected from Singapore in the period ahead. The SLSBC is in regular contact with the Singapore Business Federation (SBF), IE Singapore, the Government Agency driving Singapore’s external economy, the Singapore Chinese Chamber of Commerce and Industry and the Singapore Indian Chamber of Commerce and Industry.

The SLSBC is pleased to call applications from interested companies to join its membership in order to participate in the above activities. For more details please contact the Secretariat on 5588800/59 or E-mail: amandas@chamber.lk.

Sri Lanka should reconsider its export items and destinations

The Nation - 08/03/2015
By  Amila Muthukutti

Sri Lanka, since colonial era, has been playing a significant part in international trade. The main reason why imperialists came to this tiny Island was its export-oriented natural resources such as spices mainly Cinnamon. Since then, exports of this nation have been primary and not value-added. It ought to be mentioned here that with the introduction of open economic policy in 1977, imports began to play an important role in Sri Lankan economy. However, Sri Lanka has become a country that imports more and exports less, resulting in a balance of payment crisis.

The country has been exporting to a limited number of markets such as Middle East, USA and EU. It remains important to note here that Sri Lanka has brushed aside some emerging markets like Latin America. Furthermore, some fluctuations can also be seen in the Sri Lankan export sector, majority of which have a bad impact on the economy. It is recently reported that European Commission has decided to impose a ban on fish exports from Sri Lanka to the European Union (EU), as Sri Lanka had not taken effective measures to tackle illegal fishing.The state of affairs is worse, as Sri Lanka is the second largest fish exporter to the EU. What should be is that fish exporters need to find out new markets. This reminds the nation that not only comparative advantages but also many other factors such as human rights, being environmental friendly and adhering to international standards can influence the international trade of any particular country. By extension, a country should not always depend on one market, as the international market is volatile by nature.

Sri Lanka’s share of the world exports is on the decline. Apparel and tea exports claim a large share of Sri Lankan exports though the country has lost its previous comparative advantages in both categories. It is known that the country could attract international investors to the apparel sector, due to the highly educated and cheap labor in the country. That is why, it has been the largest contributor to export earnings. However, the industry is currently facing numerous challenges in the competitive world market. Facilities for workers were upgraded and wages also had to be increased resulting in higher cost of production. It can be clearly seen that girls who have been the largest labor force in apparel sector, are reluctant to join with the industry, mainly because of the social stigma attached to the sector. Nevertheless, countries like Bangladesh are ahead of Sri Lanka in terms of low cost production. Therefore, it can be seen that the country has lost previous comparative advantages in the sector. In addition to that, Sri Lankan garments are exported to USA. Hence, economic recession in USA also had a bad impact on the sector.

The driving force that has been contributing to the export earnings for decades, is Tea. Although Ceylon Tea has gained wide currency all over the world, from the recent past, it has been facing challenges in the world market. The Middle East is the largest market for Sri Lankan tea. It remains important to add some value to the exporting tea, so that higher prices can be earned per Kilo Gram of tea. Packaging as tea-bags results in the highest value per Kg. However,the share of tea-bags in total exports has stagnated below 10%. The second highest value per Kg is fetched by instant-tea. But it accounts for less than 1% of total tea exports. Accordingly, the emphasis ought to be given for adding some value to the tea exporting.

Kenya is the most powerful competitor that Sri Lanka has in the global tea market. Kenya has so many advantages over Sri Lanka, especially, Kenyan lands are flatter compared to Sri Lanka. That will of course assure higher yields. By extension, technology is used at a lower level, resulting in low productivity. Our country has tea estates that were grown and maintained by the British. It is needless to state that the older estates give lower harvests. As a consequence, cost of production goes up in comparison to other countries like Kenya. Tea estates suffer from the lack of sufficient labor force, as the younger generation is reluctant to join with the sector. As tea industry is used to be labor intensive, it will have a bad impact on the sector.

Sri Lankan tea exporting destination has been chiefly the Middle East countries. However, opportunities should be found to turn the Latin American region into our tea market.

The time has come for the country to look beyond traditional export items. Instead of tea, rubber, coconut and garments, new services like education can be exported. Sri Lanka, fully utilizing its peaceful environment, must create a conducive environment where education providers and foreign students can meet each other. Singapore and Malaysia are countries that were behind Sri Lanka, but now export education as a quality service.

Sri Lanka used to be a labor intensive country. However, it seems that the country is losing its comparative advantages in labor intensive products. Therefore, what has to be done is that more and more FDIs ought to be attracted to the country, creating a capital intensive environment. It has been proved that a peaceful environment alone doesn’t pave the way to attract FDIs.

It has to be penned down that this is the best time for the country to diversify its exports and look for new export destinations in the world. While retaining its traditional markets Sri Lankan presence in the global market should be expanded.

National Chamber of Commerce announces Ayur

By Inshira Shainaz

Minister of Health and Indigenous Medicine Dr. Rajitha Senarathne launching the official website of Ayurved Expo 2015 together with officials of the National Chamber of Commerce – Pic by Kithsiri De Mel

For the fifth consecutive year, the National Chamber of Commerce of Sri Lanka announced the three-day mega exhibition ‘Ayurveda Expo’ which will be held from 3 to 5 July at the BMICH.
The exhibition is being held in association with Ministry of Health and Indigenous Medicine, Sri Lanka Export Development Board, Ministry of Industry and Commerce, Board of Investment, Sri Lanka Tourism Promotion Bureau and Dept. of Commerce and other institutions and with the participation of Minister of Health and Indigenous Medicine Dr.Rajitha Senaratne.

Ayurveda Expo 2015 will mainly focus on the manufacturers of Ayurveda and herbal, nature friendly healthy foods and beverages, health resorts and spas,Ayurveda hospitals and clinics, educational institutions, yoga, acupuncture, homeopathy, beauty care products, herbal cosmetics and production.
Minister Senaratne stated that the Ayurveda and indigenous healthcare scheme has been recognised by the public as a highly effective way of treatment, with many overseas countries incorporating indigenous medicines to lead a healthy life. The Sri LankanAyurveda system has been so popular that delegates from China, Thailand, Vietnam and Germany have visited the Ayurveda School in past years.

“An Ayurvedic Department is to be developed and next month I will be opening the first herb garden, organised by the Chairman of the Ayurveda Corporation in Kurunegala,” he added.
The objective of the exhibition is to promote the Ayurveda system of medicine locally and internationally, to educate the public on achieving wellness through nature friendly indigenous medicine and to create a platform for local and overseas organisationsin the indigenous healthcare sectorto meet their counterparts and establish business relations with each other.
Local and foreign participation, exhibitors and visitorsfrom countries such as India, Bangladesh, Nepal,Japan and China and more are expected.

Ayurveda Expo 2015 will create awareness about products, services, facilities and expertise available in Sri Lanka to treat ailments through the indigenous medical system and will popularise Sri Lankan Ayurveda medicine and practices among the local and international public while also promoting investment in the sector and in tourism.

A symposium and public seminar on Ayurveda and indigenous medicine will also be held, featuring local and international speakers. This exhibition will promote the wellness of Ayurveda, lifestyle and healing through Ayurveda and the Sri Lankan indigenous medical system.

Emerging food standards causing concerns for Sri Lankan tea industry

The Island - 01/03/2015 
By Janaka Wijayasiri

Over the last two decades, there has been a tightening of public standards, a shift from product standards to process standards, an increase in theimportance of private standards and a widening scope of standards. These developments haveraised concerns amongst developing countries, as standards can become non-tariff measures with falling tariffs. Failure to comply with standards could potentially result in loss of international market, a decrease in employment and a decline of an industry. However, compliance offers the possibility of enhancing international competitiveness and encourages the advancement of an industry.

Sri Lanka's tea industry, which is predominately export oriented, is increasingly governed by strict and complex standards. Thisreflects the evolving trends in the standards environment globally.

In order to export tea, companieshave to comply with local and foreign standards and regulations pertaining to food quality and safety. These are usually mandatory, product standards. In this regard, tea has to comply with ISO3720 product standard for black tea. In addition to ISO3720, the Sri Lanka Tea Board requires tea exports to comply with other product standards, including foreign matter, micro-biological contamination, heavy metal and pesticide residue limits, which are specified and monitored by the Tea Board.

International food assurancestandards such as Hazard Analysis and Critical Control Point (HACCP) and ISO22000 (Food Safety Management System) are also increasingly becoming important in the tea trade. While these standards are voluntary at the moment, compliance with either HACCP or ISO22000 is becoming necessary and considered as de facto mandatory standards. Initially, companies selected ISO9001, which is a quality management system (QMS) but with the introduction of HACCP and subsequently ISO22000, which are more relevant to the food industry, tea exporters are switching to HACCP and/or ISO22000 certifications. The drive towards obtaining these standards in the tea industry gathered momentum when the EU stipulated in 2006 that food imports including tea into Europe must meet the HACCP standard.

In addition to the mandatory and voluntary public standards, there are a number of private standards which have been voluntarily adopted by tea exporters.These go beyond the realm of public standards in food quality and safety, and cover a gamut of issues including social and environmental concerns. Commonly stated private standards by tea exporters include: BRC (British Retail Consortium) Global Standard, Organic, Fair Trade (FT), Ethical Tea Partnership (ETP), and Rainforest Alliance (RA), which have been collectively set and monitored by third party agencies. There are also private standards or private codes of conduct, specific to individual buyers; for example, supermarkets (i.e., Japanese supermarkets) and fast-food chains (i.e., McDonalds) have their own set of standards and requirements. The emergence of private standards reflects a growing interest by buyers, and ultimately consumers, about the conditions under which tea is produced.

Compliance Challenges

So far, tea exporters from Sri Lanka have been able to meet various standards, and ship tea to some of the most stringent markets in the world. However, they still face a number of difficulties in complying with such standards, which needs to be addressed in order to ensure that Sri Lanka remains one of the leading tea producing and exporting countries.

Lack of testing infrastructure and human resources: Although there are a number of laboratories operating in country - both government and privately run - they are not accredited to undertake tests for certain chemicals. For example, the Tea Board has set up a state of the art laboratory, but it is not accredited while the government-run Industrial Technology Institute's (ITI) laboratory can analyze only certain chemicals. Similarly, private laboratories are not accredited for certain chemicals. As a result, it is sometimes necessary to send tea samples abroad - to either to Singapore or to India - for testing. The absence of fully-accredited laboratories is compounded by lack of qualified scientific personnel to conduct tests. In the case of Tea Board, not only is the laboratory not accredited but the Analytical Laboratory Division does not have qualified staff to do testing despite the huge demand to get tea samples screened.

Compliance costs: The most common challenge faced by the exporters was the compliance cost which involved upgrading factories, audit/certification fees, consultant fees, training costs, etc. All of these add up to a substantial amount and contribute towards increasing the total cost of production. They are unable to pass this cost to the buyers as it makes them uncompetitive in the market. Whilst exporters were willing to bear various costs associated with standards, they were frustrated about the lack of monetary return for compliance.

Changing the mindset of workers: Apart fromimplementation costs, many companies faced internal resistance to their adoption.Initially, exporters found it difficult to change the mindset of workers to fall in line with the standards,although they are now more or less compliant. Training has to be continuous as workers tend to revert back to their old ways.

Proliferation of standards: This is also becoming increasingly challenging for exporters, as there is multiplication of costs (certification and audit fees, etc.) and effort (in maintaining various documents). Exporters are also disillusioned that different versions of the same standard are brought out regularly, requiring them to continuously upgrade in order to comply with the latest version of the standard. While there have been some efforts towards harmonization between various private standards, proliferation of private standards is likely to continue in the foreseeable future.

Assistance for Compliance

While tea exporters have managed to comply with standards and regulations, they still have to overcome a number of challenges in order to stay competitive in international markets. In this regard, exporters require assistance to comply with the changing standards environment.

Forms of assistance required include financial assistance (loans with low interest rates, and longer pay back periods), and technical assistance to comply (training). There is also the need to harmonize standards as there is duplication of costs and an effort to comply with different requirements of various countries and buyers, and obtain accreditation for laboratories operating in the country.

Given that standards are likely to multiply and become further complicated in the future, the government and the industry should provide exporters the necessary support to comply withsuch standards and ensure continued access to the global tea value chain.

(Janaka Wijayasiri is a Research Fellow and the Head of International Economic Policy research at the Institute of Policy Studies of Sri Lanka (IPS).This article is based on his PhD thesis on 'Food Standards and Governance in the Tea Industry in Sri Lanka: A Value Chain Analysis' from Monash University.To view the article online and comment, visit the IPS blog 'Talking Economics' - www.ips.lk/talkingeconomics)

EDB unveils srilanka servicexport.com Service-exporters urged to join, reap benefits

The Island - 22/02/2015

As Sri Lanka's top service exports -ICT- started moving towards crucial US dollar one billion mark this year, the country's apex exports body EDB announced a major initiative on 17 February to further diversify exports beyond merchandises and to move for service exports.

"srilankaservicexport.com is the first, specialised web portal for all our service exporters and a one stop for them to link with international partners. This portal is absolutely free for exporters" said Saman Maldeni (Director, Export Services of SLEDB) on 17 February in Colombo.

EDB Director Maldeni was addressing the seminar on Opportunities for 'Export Market for Sri Lanka's Printing Sector' organised by EDB and held on 17 February. Also joining the session were Sujatha Weerakoone (DG-EDB), Keerthi Gunawardena (Chairman-ICCSL), print exporters of Sri Lanka and Anselm B. Perera (Managing Director-Euro Scan Exports).

Sri Lanka's service exports have been showing steady rise. In 2013, exports of ICT and construction services jumped by 8% to $774Mn from 2012's $714 Mn and these do not contain printing service exports etc. The 2013 exports volumes of ICT and construction services are more than twice the volumes of 2009 at $358 Mn. In 2013, ICT exports alone surged by 21%.

"As per EDB Director Maldeni said: "srilankaservicexport.com is an online registration portal introduced by EDB. This is the first, specialised web portal aiming at our service exporters. It is a showcase of the capabilities of the Sri Lankan Service exporters to the world and more importantly, a one stop for our service exporters to find international partners. Not ICT and electronic exporters but even exporters of professional services, such as finance, accounting, legal, health, construction, pre-press & printing and ship repairing services. srilankaservicexport.com will also establish an ideal forum for the Sri Lankan service professional community to express their views and interact with each other on related industry issues. It is now open for registrations of services exporters. The services of this portal are absolutely free."

EDB projects 2014 ICT exports to be around $820 Mn, and dollar one billion mark as early as 2015.

Sri Lankan Pineapple- Best in The World

By Quintus Perera

Twenty-five years of hard work by the Sri Lanka Fruit and Vegetable Producers, Processors and Exporters Association (FVPPEA) has enabled it to establish a name for Sri Lanka in the world as a resource for quality vegetable and fruits.

Annual turnover of vegetable and fruit exports stands at Rs 300 million. The association wants its members to double exports by requesting its membership to spread out to the vegetable and fruit growing areas in the provinces, instead of only working in the metropolis.

Members have been requested to set up their own model farms and start a farmer out-grower network serving a duel purpose of ensuring good prices for produce from rural vegetable and fruit farmers and at the same time enhance the country's national wealth through increased exports.

Sarath de Silva, FVPPEA President who himself has a farm in Embilipitiya, said that out of a 52-strong membership, more than six members have put up farms in the provinces and established a farmer out-grower network.

Tess Agro has put up a farm in the Mahaveli B area with a farmer out-grower network of around 600 farmers; Consolidated Business Systems has a farm and purchasing centres (forward contract) in Rajangana; Cecil Foods has set up a processing unit in Galgamuwa and purchases more than 1000 metric tons of vegetable and fruits annually while International Food Stuff Co (Pvt) Ltd has set up an up-to-date high-tech farm in Uda Walawe with complete drip irrigated nursery plant house and also a dehydration unit.

Silva, President of the Association for four consecutive years, said association members were involved in purchasing, processing and exporting vegetable and fruits. Some are exporting fresh produce. The main aim of the association has been to revive, motivate and activate exports.

He said members had to ensure only quality produce is exported, paving the way - for example - for Sri Lanka pineapple to be the finest in the world and creating high demand.

The task of the FVPPEA does not end after establishing modern farms but lies in the commitment to set up model farms and impart knowledge for farmers scattered all over the country on modern technology and the latest know on ensuring quality high yields at minimum cost. These farmers are also trained to cultivate market-oriented crops.

Silva said that to achieve high quality and high yields they are in the process of showing farmers the importance of using high-breed seed and planting material so that production could reach international standards. These processes would increase the yields fivefold, if deviated from the old traditional systems of cultivation.

He stressed the need to reduce post harvest losses which was now above 40 percent. Through the awareness campaigns and the use of modern packaging in transit the association has been able to bring it down to 30 percent.

Silva said that for the first time in Sri Lanka the Thai highbred Guava, highbred Indian drum sticks and Vietnamese dragon fruit were introduced at his farm and all of them have export orders. Highbred seed planting material would be propagated and distributed among the farmers through the out-grower network.

Unlike in the garment industry, local inputs for cultivation are more than 95 percent and the beneficiaries would be the small-scale farmers around the country. Excess production would be channeled to the local market.

Silva said if proper nursery practices are adopted, using the correct seed material and if drip irrigation system is used, it would not only greatly reduce the cost of production but also help conserve a large quantity of water.

Further, if the farmers could use poly tunnels they would be able to produce throughout the year high quality products that match international standards at reduced cost.

He said that current exports of more than 30,000 metric tons of pineapple per annum could be doubled if inter-cropping in coconut land is encouraged. At the correct price there is an unlimited export market for pineapple. "Our closest competitors in this area are India, South Africa, Australia and Kenya." Silva said adding that these countries provide strong competition as their farmers enjoy state subsidies for internal transport from the producing areas to the airport, power and also if drip irrigation is used.

Australia refunds a major portion of the airfare. In Kenya, its national carrier offers cheaper airfreight helping Kenyan beans to be sold in England and France.

Japan, Sri Lanka discuss possible trade agreement

Daily FT - 19/02/2015

Japan has given the green light for the first-ever prospective trade agreement coveted by Sri Lanka, inspired by the new resurgence under the leadership of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe. “We’d like to particularly stress the Memorandum of Cooperation on the Vitalisation of Intergovernmental Economic Policy Dialogue (MoU-VIGEPD). In my discussions with Prime Minister Ranil Wickremesinghe on this, he agreed to proceed with VIGEPD. I am calling Tokyo to verify when we can start the VIGEPD dialogue with Sri Lanka,” Japan’s Ambassador Nobuhito Hobo has told Industry and Commerce Minister Rishad Baithudeen .


“I see new dynamism in Sri Lanka now, in terms of changing economy and particularly in new reconciliation prospects” said Hobo, and added: “With the new Government of Sri Lanka we would like to continue enriching bilateral relations based on the foundation built on the past six decades. We’d like to particularly stress on the agreed points when Japanese Prime Minister Shinzo Abe paid his official visit to Sri Lanka in September last year, chief amongst which is the VIGEPD MoU. This is an incremental policy effort. Not only policymakers, I also wish to enlist Lankan line ministries on economy at Government level, including the Ministry of Industry and Commerce, which is the signatory.”

“I am pleased to inform we are in receipt of the Communique and we have suggested a two-day visit to Tokyo from our side,” said Bathiudeen, responding to Hobo, and added: “This is a great development for our international trade and for the export growth vision of the President Maithripala Sirisena as well as our Prime Minister Ranil Wickremesinghe. My Ministry officials, the Department of Commerce and I are ready to extend our fullest assistance on implementing the VIGEPD. I also thank the people of Japan for the aid given to Sri Lanka’s development.”

Both Bathiudeen and Hobo also discussed other forms of bilateral cooperation during the meeting.
Commerce Department Director General R.D.S. Kumararatne, EDB Chairman Bandula Egodage, Deputy Ambassador of Japan to Sri Lanka Asako Okai and Resident Representative of JETRO Colombo Asako Okai were also associated at the meeting.
Sri Lanka’s bilateral trade with the world’s third largest economy is also now closing in on the $ 900 million mark.

On 7 September 2014, during the visit of Japanese Prime Minister Shinzo Abe to Sri Lanka, the VIGEPD MoU between the Ministry of Industry and Commerce and the Ministry of External Affairs of Sri Lanka and the Ministry of Economy, Trade and Industry and the Ministry of Foreign Affairs of Japan was signed in Colombo. The Department of Commerce of Sri Lanka believes that VIGEPD may gradually and incrementally progress towards Free Trade Agreement or Economic Partnership Agreement negotiations.

Abe was the first Japanese Prime Minister to visit Sri Lanka in 24 years, the first Japanese Prime Minister to visit Colombo being Kishi Shinsuke (1957).

Japan, the world’s third largest economy, is the ninth largest destination for Lankan exports and is the sixth largest product supplier to Sri Lanka. Japan’s total trade with Sri Lanka increased by 16% in 2013 (from 2012) to $ 894.15 m and in January-June 2014 alone registered $ 477.87 m. Tea, apparel and seafood/fish are Sri Lanka’s top three exports to Japan while 59% of imports from Japan are automotives.

Japan has also been playing a leading role in the socio-economic development of Sri Lanka in the past six decades since it became a member of the Colombo Plan in 1954. In 2013, Japan came forward to extend aid to Sri Lanka exceeding $335 m.

Growth prospects in the food processing industry in Sri Lanka

Daily FT - 18/02/2015

The food processing industry in Sri Lanka is one of the emerging and lucrative industries in terms of production, consumption, export and growth prospects

Food processing sector is indispensable for overall development of an economy as it provides a vital linkage and synergy between the agriculture and industry. It helps to diversify and commercialise farming; enhance income of farmers; create markets for export of agro foods as well as generate greater employment opportunities. Through the presence of such industries, a wider range of food products could be sold and distributed to the distant locations.

The term ‘food processing’ is mainly defined as a process of value addition to the agricultural or horticultural produce by various methods like grading, sorting and packaging. In other words, it is a technique of manufacturing and preserving food substances in an effective manner with a view to enhance their shelf life; improve quality as well as make them functionally more useful. It covers spectrum of products from sub-sectors comprising agriculture, horticulture, plantation, animal husbandry and fisheries.

The Food Processing Industry (FPI) in Sri Lanka is one of the emerging and lucrative industries in terms of production, consumption, export and growth prospects. Earlier, food processing was largely confined to the food preservation, packaging and transportation, which mainly involved salting, curdling, drying, pickling, etc.

However, over the years, with emerging new markets and technologies, the sector has widened its scope. It has started producing many new items like ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat products, etc. It also include establishment of post-harvest infrastructure for processing of various food items like cold storage facilities and packaging centres.

The liberalisation of the Sri Lankan economy as well as rising consumer prosperity has thrown up new opportunities for diversification in the FPI and opened up new avenues for growth. Demand for processed and convenience food is increasing constantly due to urbanisation, changing life-style and food habits of people. Accordingly, Sri Lankan consumers are being offered newer high quality food products made by using the latest state-of-the-art technology.

The Government of Sri Lanka has given a high priority, with a number of fiscal reliefs and incentives, to encourage commercialisation and value addition to agricultural produce, for minimising pre/post-harvest wastage, generating employment and export growth. Sri Lanka’s FPI covers a wide range of products, viz, fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods.

Sri Lankan FPI is widely recognised as a “sunrise industry” having huge potential for uplifting agricultural economy, creation of large scale processed food manufacturing and food chain facilities, and the resultant generation of employment and export earnings. The industry is estimated to be worth around $ 100 million and employing about 1.4 million direct and indirect employees.
The food processing sector is geared to meet the international standards. The Food Safety and Standards Institute has the mandate to develop standards and also to harmonise the same with International Standards consistent with food hygiene and food safety requirements. The Food Advisory Committee coming under the Ministry of Health functions as the governing and advisory body to the industry on food safety and consumer protection.

Agencies such as, Export Development Board (EDB), Ceylon Chamber of Commerce and Ministry of Fisheries involves in promoting exports. Ministry of Fisheries is responsible for overseeing all fish and seafood product exports; EDB on the other hand, holds responsibility for the exports of other processed food products.

Factors contributing to the development of FPI in Sri Lanka

• Diverse agro-climatic conditions with a large and diverse raw material base suitable for food processing companies
• Sri Lanka is currently on an aggressive path for investment in infrastructure, packaging and marketing
• Vast scientific and research talent pool 
• Infrastructure and distribution network 
• Rapid urbanisation, increased literacy, changing life style, increased number of women in workforce, rising per capita income- leading to rapid growth and new opportunities in food and beverages sector 
• More than one third of household expenditure by consumers are for food items
• Strategic geographic location (proximity of Sri Lanka to markets in Europe and Far East, South East and West Asia).

Key growth drivers in FPI

• Increasing spending on health and nutritional foods.
• Increasing number of nuclear families and working women 
• Changing lifestyle 
• Functional foods, fresh or processed foods 
• Organised retail and private label penetration 
• Changing demographics and rising disposable income levels

Key opportunities in FPI

• Processable varieties of crop 
• Contract farming 
• Investments in infrastructure through Public Private partnership (PPP) 
• Mega Food parks 
• Integrated cold chains 
• Food Safety Management Systems

Key segments in the FPI
Fruits and vegetable 

Fruits and vegetables is one of the most important and fast growing sub-sectors of the FPI. Over the last few years, there has been a positive growth in ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience spice pastes, processed mushrooms and curried vegetables. Reasons being increase in consumption by nuclear families, working women, students and single employees living alone.
There are abundant investments opportunities in expanding the export market. An increasing acceptance of new products with market development efforts has been witnessed lately given the fact that there is a good international demand for certain fruits and vegetable products. Country’s strategic geographic location gives it the unique advantage of connectivity to Europe, Middle East, Japan, Singapore, Thailand, Malaysia and Korea. In 2013, Sri Lanka’s export of fresh fruit and vegetable was estimated at Rs. 8,128 m.

Dairy processing
Sri Lanka is on a path to increase its domestic milk production with an estimated production of 319.8 million litres in 2013. Cow milk accounts for 80.6% of the total milk production in 2013.
The country has a unique pattern of production, processing and marketing/consumption of milk, which is not comparable with any large milk producing country. About 35% of milk produced in Sri Lanka is processed.

Fisheries sector
The export of marine products has steadily grown over the years to Rs. 91 m in 2013. Marine products account for approximately 6.1% of the total exports from Sri Lanka.
Frozen shrimp continued to be the single largest item of export in terms of value during 2013. In terms of quantity, fish accounted for the major share at 40% (shrimp 21%). European Union (EU) was the largest market during the year 2012-13 with a percentage share of 32.6% followed by China 14.8%, Japan 14.6%, USA 11.9%, South East Asia 10%, Middle East 5.5% and Other Countries 10.6% in 2013.

Consumer food industries
Consumer food industry includes pasta, breads, cakes, pastries, rusks, buns, rolls, noodles, corn flakes, rice flakes, ready-to-eat and ready-to-cook products, biscuits etc. Bread and biscuits constitute the largest segment of consumer foods. Country’s biscuits industry is the largest among all the food industries
The consumer food industry is classified under two sectors: organised and unorganised. Bread and biscuits are the major part of the bakery industry and cover around 80% of the total bakery products. Biscuits stand at a higher value and production level than bread. This belongs to the unorganised sector of the bakery industry and covers over 70% of the total production.

Foreign Direct Investment in FPI
100% FDI is allowed for food processing industry and food infrastructure including food parks, distillation and brewing of alcohol, cold storage chain and warehousing. The total inflow of Foreign Direct Investment in food processing sector during 2009-2013 was Rs.25.7 billion.

Future outlook
Sri Lankan FPI is projected to grow to Rs. 15.5 billion by 2016. Also, food consumption in Sri Lanka is estimated to grow at a CAGR of 5.32 % by 2016. Further, it is expected that processed food output will grow at a strong 7 % CAGR in terms of value in 2016. With the Government initiative to provide a 50% tax concession for the fruit and vegetable industry through the 2015 interim budget, the future prospects seems bright for this industry.
More and more people are consuming value-added and processed food products. The industry possess high export opportunities and its growth seeks to bring immense benefits to the economy by raising agricultural yields, enhancing productivity, creating employment and raising life-standards of a large number of people across the country, especially those in rural areas.
Thus, there exists innumerable business opportunities in the diverse areas of FPI. However, the FPI still remains largely untapped because of high packing costs, cultural preference of the people for fresh food, seasonality of raw materials, lack of adequate infrastructural facilities and quality control mechanism.
As a result, there is a need to diversify the sector by fully harnessing its potential, providing greater incentives as well as creating a conducive environment for more investments and exports.

Larger presence of Sri Lankan Exporters at Gulfood 2015 in Dubai

news.lk - 18/02/2015

50 Sri Lankans Companies participated at the Gulfood 2015 in Dubai from 8 – 12 February 2015 displaying food and beverage products such as tea, spices, processed food, soft drinks, biscuits, virgin coconut oil, dried fruit, herbal products etc.  The Sri Lanka Export Development Board (EDB) under the Ministry of Industry & Commerce and the Sri Lanka Tea Board (SLTB) in collaboration with the Consulate General of Sri Lanka in Dubai organized two country pavilions for tea and other food items.  Gulf Food is the fastest growing international trade fair for the food and beverage sector and the biggest in the MENA region.

The five day exhibition attracted 4800 companies from across the world, including Saudi Arabia, India, Pakistan, Sri Lanka, Australia, the UK, the United States, France and Germany among other countries.

Many exporters attended the show were looking for distributors not only in the UAE, but also from the regional countries. The UAE is a hub for re-exports which makes it attractive for international companies that want to expand their operations in the region beyond the UAE market.

Apart from the exhibition, Gulfood hosted a variety of conferences including the Halal Investment Conference which discussed business opportunities in the global halal market and the role of halal in Dubai’s vision to be the capital of the Islamic Economy. Meanwhile the World Food Security Summit highlighted the food security concerns in the region and Food Franchising Forum discussed ways to create a successful franchise in the global market by foreign companies.

The Consulate General of Sri Lanka in Dubai in association with Ras Al Khaimah Free Trade Zone Authority organized a Business Networking Dinner on 10th February 2015 at Crown Plaza Hotel inviting UAE based companies, members of the Sri Lanka Business Councils and the Sri Lankan professional organizations in UAE.

Speaking at the occasion, Abdul Raheem, Consul General of Sri Lanka in Dubai stated that larger participation of Sri Lankan food exporters at the Gulf Food 2015 showed the increasing interest of Sri Lankan exporters to venture into UAE market as well as the Middle East and North Africa region.  He encouraged more Sri Lankan companies to set up their business in Dubai as the city being the transit trading hub in the region.   Mr. Wasim Khan, Head of Global Business Development from the Ras Al Khaimah Free Trade Zone Authority made a presentation on cost effective business operation in the UAE.  Air Arabia which flies daily to Sri Lanka from Sharjah sponsored two return air tickets for the winners of  the raffle at the Business Networking Dinner.

SL merchandise exports up 6.7% to US$ 11bn in 2014

The Island - 15/02/2015

Coconut product exports had a decline of eight percent to 40 million dollars while natural rubber declined by 36 percent to 46 million dollars.

Sri Lanka's annual provisional merchandise exports increased by 6.67 percent to 11.079 billion rupees, Export Development board of Sri Lanka (EDB) said in a statement.

These provisional numbers do not yet reflect the service exports values and therefore, actual exports values are expected to be much higher.

Apparels earned 4.9 billion dollars up by 9.26 percent in 2014, industrial products at 8 billion rupees increased by 6.1 percent, tea at 1.6 billion up by 5.43 percent and agriculture products at 2.7 billion US rising by 9 percent, data released by EDB showed.

Manufactured products at 2.4 billion US dollars up by 9 percent. Coconut exports up by 49 percent to 538 million dollars while fisheries increased by 8.5 percent to 265 million dollars.

Natural rubber declined by 36 percent to 46 million dollars and other export crops dropped by a mere 3 percent to 506 million dollars. Diamonds and gems too experienced a decline 15 percent to 372 million dollars.

Taken on a month-on-month basis, 2014 December provisional monthly exports surged across the board totalling 10.01 billion dollars up by 8.72 percent.

These numbers too, do not yet reflect the service exports values of December, EDB said.

Apparel exports in December rose by 7.3 percent to 450 million dollars. Industrial products rose by 9.7 percent to 734 million dollars.

Manufacturing exports rose by 22 percent to 234 million dollars, agri exports rose by 5 percent to 239 million dollars,tea by 1.5 percent to 138 million dollars , natural rubber up by 50 percent to 2.79 million dollars while other export crops grew by 26 percent to 58 million dollars.

Fisheries for the month of December 2014 up by 7.8 percent to 22.83 million rupees. Declines experienced by coconuts by eight percent to 40 million dollars and diamonds, gems and jewellery by 11 percent to 25 million dollars, data showed.

'Much potential in leather industry'

Sunday Observer - 08/02/2015
By Sanjeevi Jayasuriya

The footwear and leather industry in Sri Lanka has been identified as a value added manufacturing sector that has taken up the role of generating export revenue and employment opportunities.

“It is necessary to strengthen and sustain the image of the footwear and leather industry as it has the potential to become a vital component in the export revenue basket," said Sri Lanka Export Development Board Chairman Bandula Egodage at the launch of the Footwear and Leather Fair 2015 at the BMICH on Friday.

This is the seventh edition of the fair.

"The abilities of the industry need to be showcased to attract buyers, local and international, to generate more revenue. Technological advancement could be made use of to take the industry to the next level,” he said.

“As two key aspects of exports are value addition and market diversification, we need to make the footwear and leather industry a thrust industry to generate export income.

The industry has generated US $ 100 million in exports last year, a 100 percent growth compared to the previous year and with more capital infusion, the industry could reach a higher level,” Egodage said. The Fair which concludes today has 225 stalls with 114 local and 11 foreign participants. Among the foreign countries represented are India, Pakistan and Nepal.

The Fair has been organised by the Export Development Board with the Ministry of Industry and Commerce, Industrial Development Board, Sri Lanka Footwear and the Leather Products Manufacturers Association.

The footwear industry employs about 40,000 people at various levels providing direct and indirect job opportunities. The sector is largely represented by 10 large export companies, 30 medium scale companies and over 3,000 small scale manufacturers.

A diverse range of modern shoes such as canvas and rubber boots, thongs, sports shoes and leather shoes are produced using different types of raw materials.

Sri Lankan footwear exporters have already established themselves as suppliers of fashion footwear to well known international brands such as Mark and Spencer, Bata France, H.H. Browns, Clarks, Aerosols and Nike.

In the leather industry, apart from manufacturing processed leather, small leather goods such as gloves, wallets, bags, purses, belts, key tags are also produced. There are about five large scale manufacturers and exporters with 1,000 small timers.

There are around 11 tanneries producing 25 tons of leather per day. The local leather product manufacturers also cater to famous international brands such as Play Boy, Helen Kaminski and Laurel.

Sri Lanka a haven for medical tourism

Daily News - 07/02/2015

Think Sri Lanka and some of the things that come to mind are Asian elephants and Ceylon tea. Delve deeper and you'll discover a nation of rich heritage and wonders including lush greenery, monasteries, palaces, temples and theatres.

The country is among the beauties of the sub-continent that features a peaceful environment and a hard-working community.

Among ancient cities, a visit to Anuradhapura is a must as it holds the title as a sacred city by Buddhists around the world. Kandy is a scene to behold. With spiralling roads and refreshing environment, Kandy is especially beautiful around the Monsoon season when cool temperatures call to unwind with a warm cup of Ceylon tea.

For the adventurous, water sports such as rafting and gliding are slowly gaining popularity across its gleaming streams.

Wildlife is abundant in Sri Lanka, as it is known to be among the top five hotspots for biodiversity. Visitors to the Bundala National Park can spot monkeys, fruit bats and various species of water and migratory birds, as well as other fauna and flora - a photographer's treat.

Safari to view nature's best

Pinnawala Elephant Orphanage is a nursery and breeding ground for wild Asian elephants. It's a great place to get up close and personal with the mammals. Visitors can also feed the animals from a high point. You can also embark on a safari to view nature's best.

Tea gardens spanning across lush fields denote the country's booming tea production. Fresh, aromatic and bursting with flavour, Sri Lanka's tea leaves are fragrant and refreshing, not to mention it offers great value for quality. It is also proud of its traditional crafts that showcase its distinct culture. Sri Lanka is also an attractive destination for medical tourism with world-class internationally accredited healthcare about 70 per cent comparatively cheaper than Singapore and Thailand.

Spas and massages are a favourite among tourists offering mineral-enriched packs and herbal, therapeutic concoctions to melt stress away.

According to the Sri Lanka Tourism Development Authority (SLTDA), the country saw a 19.8 per cent rise in tourist arrivals in 2014 with 1,527,153 visitors compared to 1,274,593 in 2013.

In January 2012, the country introduced the Electronic Travel Authorisation (ETA) for short-term visa in order to ease the flow of arrivals.

Ideal holiday destination

A chunk of Sri Lanka's GDP comes from tourism and in an attempt to further raise numbers, the Ministry of Economic Development launched a five-year Tourism Development Strategy where it aims to reach a target number of 2.5 million visitors by the year 2016. This includes improving the country's infrastructure, agriculture and product market.

A report by the Department of Census and Statistics shows that Sri Lanka's GDP expanded by 7.7 per cent in the third quarter of 2014, compared to the same period the year before. Agriculture and tea production takes precedence in exports aside from textiles and rubber.

Keeping up with the rest of the world, Sri Lanka has set Millennium Development Goals (MDG) as a priority in the national agenda in a bid to improve the overall structure of the nation and combat poverty by the end of year 2015.

Its lush cities combined with warm hospitality and scrumptious food makes it an ideal holiday destination, attracting thousands of tourists every year. The UAE is home to a number of Sri Lankan expats, who take up respectable positions and contribute to their home country's economy via remittances. The nation is on its way to steady growth alongside notable tourism and investment opportunities.

Sri Lanka’s footwear and leather exports double within a year

Daily FT - 07/02/2015

• EDB’s 7th Footwear & Leather Fair opens in Colombo
• 'F&L exports surge to $ 110 m’-Rishad
• ‘Thanks to new processing zone’-Industry
• ‘Real value addition here is fashion’-EDB Chairman/CEO Egodage

Sri Lanka’s footwear and leather exports have doubled within just one year and posted the highest revenues so far in recent times.

The Ministry of Industry and Commerce said the sector believed the surge was due in large part to the construction of a modern tannery complex.

“Today I am pleased to announce that the $ 51 million export revenue in 2013 from this sector has more than doubled in 2014 to $ 110 million, showing this sector’s strong revenue potential. This performance supports the export promotion efforts of the 100-day program of President Maithripala Sirisena as well,” said Industry and Commerce Minister Rishad Bathiudeen while speaking in Colombo yesterday. Minister Bathiudeen was addressing the seventh edition of the annual Footwear and Leather Fair, organised by EDB and held at the BMICH.

The event – which is supported by the Industrial Development Board (IDB), Sri Lanka Footwear and Leather Products Manufacturers’ Association (SLFLPM), as well as other industry stakeholders – is set to conclude on Sunday 8 February. Also attending the opening session were Government officials and members of the diplomatic community.

“I wish to commend the more than 40000-strong workforce in this sector as well as producers and award-winning Sri Lankan footwear exporters in Sri Lanka,” the Minister said. “They are successfully supplying global footwear brands such as JC Penny, John Lewis and Bata Switzerland to such competitive markets as Italy. As you are aware, the leather and footwear industry of Sri Lanka has been identified by the Ministry of Industry and Commerce as a thrust industry for development. Ten large export companies, 30 medium companies and about 3000 small manufacturers have been engaged in this sector, contributing to its increasing export growth,” he added.

“Experienced senior individuals of the Sri Lankan footwear and leather industry, university lecturers and assessors of this sector are on the panel of judges of the design competition to be held. The increasing demand for our products creates the need for more raw materials and input. India has become a steady supplier of raw material to this sector.”

The export revenues from the F&L sector witnessed steady growth over the years. Total exports of F&L in 2010 which stood at $ 35.64 million have tripled to $ 110 million in 2014, which is also a YoY growth of 215% over 2013 values. The leading three markets for Sri Lanka’s leather products are Germany, Canada and Spain while Australia, Vietnam and Italy lead in the footwear segment.
Addressing the event, Ceylon Leather Products Plc MD/CEO Sithendra Senaratne said: “During the last ten years, the tanners in the leather sector have been given several promises by various governments to relocate them all over the country. Finally, with Minister Bathiudeen’s help, we managed to get a 100-acre site in the Mannar District. Minister Bathiudeen was kind enough to accommodate us in his own electorate. We thank him for this. We leave it in his good hands to safeguard this industry, which is a forex-earning source.”

“This industry is quite important to the Lankan economy as it contributes almost 40000 employees to the workforce,” said EDB Chairman and CEO Bandula Egodage.

“We are upgrading tech capabilities for the SME sector and encouraging value addition. We are not just selling footwear but selling fashion footwear. That is the value addition we are talking about,” he added.

One hundred and fourteen local and 11 foreign companies are displaying their products across 225 stalls at the seventh edition of the annual Footwear and Leather Fair. International buyers from Nepal, Oman, Pakistan and India are present at this year’s fair.

Need to diversify export items and destinations

Sri Lanka, since colonial era, has been playing a significant part in international trade.As a country that is blessed with natural resources, the main reason as to why imperialists came to this tiny island was its export-oriented natural resources such as spices mainly cinnamon. Since then, exports of this nation have been primary and not value-added. It ought to be mentioned here that with the introduction of the open economic policy in 1977, imports began to play an important role in the Sri Lankan economy. However, Sri Lanka has become a country that imports more and exports less, resulting in balance of payment crisis. The country has been exporting to the limited number of markets such as Middle East, USA and EU. It remains important to note here that Sri Lanka has brushed aside some emerging markets like Latin America. Furthermore, some fluctuations can also be seen in Sri Lankan export sector, majority of which have a bad impact on the economy. It was recently reported that European Commission decided to impose a ban fish exports from Sri Lanka to the European Union (EU), as Sri Lanka had not taken effective measures to tackle illegal fishing. The state of affairs is worse, as Sri Lanka is the second largest fish exporter to the EU. What has to be done is that fish exporters have to find out new markets.

This reminds the nation that not only comparative advantages but also many more factors such as human rights, being environmental friendly and adhering to international standards can influence international trade of any particular country. By extension, a country should not always depend on one market, as the international market is volatile by nature. Apparel and tea exports Sri Lanka’s share of world exports is on the decline. Apparel and tea exports claim for a large share of Sri Lankan exports both of which have become exports that the country has lost its previous comparative advantages. The country could attract foreign investments due to the highly educated and cheap labour in the country. That is why it has been the largest contributor to export earnings. However, the industry is currently facing numerous challenges in the competitive world market. Facilities for workers were upgraded and wages also had to be increased resulting in higher cost of production. It can be clearly seen that girls who have been the largest labour force in apparel sector, are reluctant to join with the industry, mainly because of the social stigma attached to the sector. Nevertheless, countries like Bangladesh are ahead of Sri Lanka in terms of low cost production. Therefore, it can be seen that the country has lost previous comparative advantages in the sector. In addition to that, Sri Lankan garments are exported to the USA. Hence, economic recession in USA also had a bad impact on the sector. The driving force that has been contributing to the export earnings for decades, is tea. Although Ceylon tea has gained wide currency all over the world, from the recent past, it has been facing challenges in the world market. The Middle East is the largest market for Sri Lankan tea. It remains important to add some value to the exporting tea, so that higher prices can be earned per kg of tea. Packaging as tea-bags results in the highest value per kg. However, the share of tea-bags in total exports has stagnated below 10 percent. The second highest value per kg is fetched by instant-tea. But it accounts for less than 1 percent of total tea exports. Accordingly, the emphasis ought to be given for adding some value to the tea exporting. Kenya is the most powerful competitor that Sri Lanka has in the global tea market. Kenya has so many advantages over Sri Lanka, especially, Kenyan lands are flatter compared to Sri Lanka. That will of course assure higher yields. By extension, technology is used at lower level, resulting in low productivity. Our country has tea estates that were grown and maintained by the British. It is needless to state that older estates give lower harvest. As a consequence, cost of production goes up in comparison to other countries like Kenya. Tea estates suffer from the lack of sufficient labour force, as younger generation is reluctant to join with the sector. As tea industry is used to be labour intensive, it will have a bad impact on the sector.Sri Lankan tea exporting destination has been chiefly the Middle East countries. However, the possibilities should be found out to turn the Latin American region into our tea market. Looking beyond traditional exports The time has come for the country to look beyond traditional export items.Instead of tea, rubber, coconut and garments, new services like education can be exported. Sri Lanka, fully utilizing its peaceful environment, must create a conducive environment where education providers and foreign students can meet each other. Singapore and Malaysia are countries that were behind Sri Lanka, but now export education as a quality service. Sri Lanka, since its inception, has been used to be a labour intensive country. However, it seems that the country is losing its comparative advantages in labour intensive products. Therefore, what has to be done is that more and more FDIs ought to be attracted to the country, creating capital intensive environment. It has been proved that only the peaceful environment doesn’t pave the way to attract FDIs. It has to be penned down that this is the best time for the country to diversify its exports and look for new exporting destinations in the world. While keeping traditional markets as they are, Sri Lankan presence in the global market should be expanded. 

Lanka needs to project itself as an IT-BPO destination

Sunday Observer - 01/02/2015
By Sanjeevi Jayasuriya

Sri Lanka is fast emerging as a global IT–BPO destination in the world. However, it is necessary to promote and enhance the significant contribution that digital technology can make to Sri Lanka’s economic prosperity, Chairman Federation of Information Technology Sri Lanka. Chintaka Wijewickrama told Sunday Observer Business.

.“We need to look into certain things as the industry needs to progress in a rapid manner.

It could become one of the three key revenue generating industries with proper facilities and human resources,” he said.

The country needs to project itself as a destination for IT/BPO by having knowledge, soft skills and correct attitude to attract more businesses.

We need to showcase the opportunities by having exhibitions and through promotional work by the Chambers of commerce where display of talent and facilities could be made, he said.A recently carried out survey has found that Sri Lanka's fast-growing information communications technology (ICT) industry faces difficulties in hiring skilled staff, finding good office space and accessing fast Internet links, it said.

Although the IT export industry will continue to grow fast, the industry is confronted with various concerns that could become a hindrance to its future progress, according to a new survey by PricewaterhouseCoopers.

A key concern is the inability to access ‘quality’ office space with parking facilities at a reasonable cost, said the survey commissioned by the Export Development Board which wants to make IT a top export sector.

“Lack of skilled staff, particularly with high-end technical skills and English language skills remains critical,” it said.

ICT and BPO (business process outsourcing) companies still faced high costs associated with communication as well as poor service quality internet facilities, the report said.

The sector also faced competition from rival IT export nations.

“Access to markets remains a significant concern with the client base opting for cheaper markets followed by lack of opportunities for small companies,” the report said.

“Poor country visibility as an IT destination, absence of up-to-date technology, and time consuming procedures to obtain services from institution such as the Department of Inland Revenue and Customs further act as barriers to the industry,” it said. “In addition, global competition from IT giants such as India and emerging market such as Eastern Europe and South America remain a hindrance to the future growth of the industry.”

Fish exports: EU ban to cost US$ 100mn

Nation.lk - 01/02/2015

Sri Lanka is likely to lose an estimated US$ 100 million annually due to the recently imposed ban on fish exports from Sri Lanka to the European Union (EU), a local think tank said last week.Executive Director, Institute of Policy Studies (IPS), Dr. Saman Kelegama addressing the 20th Annual General Meeting (AGM) of the National Chamber of Exporters (NCE) stated that Sri Lanka had earned US$ 94 million in 2013 by exporting 7,400 tons of fish, but the amount was projected to increase this year. The ban was put in place as Sri Lanka had not taken effective measures to tackle illegal, unreported and unregulated (IUU) fishing.  However, a top official from the Export Development Board, Sri Lanka’s apex organization for the promotion and development of exports said they were yet to estimate the loss resulting from the ban imposed on Sri Lanka by the European Commission (EC).

According to Director General of the Export Development Board (EDB) Sujatha Weerakoon, the impact of the ban on the sector cannot be estimated yet as the ban was imposed recently. “I cannot say what loss or affect it will have on the fisheries as well as the export sector without analyzing the situation,” she said. However, she went on to say it is sure to affect the exporters as most fisheries exports are sent to the European Union (EU). According to her, while EDB does not have a part to play in getting the ban lifted she said that authorities must continue with discussions and do the needful to ensure conditions set by the EC are adhered to.

Speaking to The Nation Gain Roshan Fernando, Managing Director of Tropic Fisheries and President of the Seafood Exporters Association of Sri Lanka said the ban has adversely affected the sector adding that due to the ban around two million workers linked the to the sector will also suffer as a consequence.
“There are 37 companies registered in the association all of whom export mainly to the EU,” he said adding that they have not calculated the possible loss yet as they were hoping the ban would be postponed.

According to him, having exported to the EU for over 30 years moving to an alternate market will be a Herculean task. While 70 percent of fisheries produce is exported to the EU according to Fernando exporters are not able to maintain the prices they have been paying local fisherman.

When asked as to why EC regulations were not adhered to he said while the Association has always extended its support to the government controlling the fleet and situation was the responsibility of the Department of Fisheries.  Also speaking to The Nation Gain, Janaka Perera, Managing Director of Power Freight Pvt. Ltd, a fisheries exporter said in order to continue trade some companies are attempting to operate the business from the Maldives but are, in return, suffering massive losses. “Some are looking towards Russia and China as alternative markets, however as they are new markets we will not be able to earn a profit,” he said adding that these countries are not willing to pay premium price for the produce. He also went on to say that as a result of the ban most fishermen have reduced or stopped fishing altogether.

The proposal to impose the ban was revealed in October last year where the Ministry of Fisheries and Aquatic Resources under the previous Government pledged to address the issue and ensure Sri Lanka meets the EU requirements.  However, the EU imposed the ban on the importation of Sri Lankan fisheries as the country had failed to keep to its pledge.

The EU had imposed the ban after Sri Lanka continued to violate international regulations on deep-sea fishing. Sri Lanka is the second biggest exporter of fresh and chilled swordfish and tuna to the EU with Euro 74 million of imports in 2013. While under the previous government, Sri Lanka was given time to remedy the situation before the ban took effect this month, the government had failed to meet the requirements.

The European Commission, however, has offered Sri Lanka assistance to meet regulatory requirements for an early lifting of the ban on fish exports to the EU, the Sri Lankan foreign ministry said Thursday.

Tea industry brews highest ever exports

Daily FT - 28/01/2015

Turkey displaces Russia as the single largest market for Sri Lanka
In a major boost, the country’s tea industry has achieved an all-time high export performance both in volume and value.

Ceylon Tea Brokers said yesterday that cumulative Sri Lanka tea exports for the period January/December 2014 recorded 327.87m kgs thus recording an all time high surpassing the previous highest of 327.41m kgs in 2006. January/December 2013 recorded a quantity of 319.66 m kgs.


The total quantity of tea exports for December 2014 was 30.28m kgs vis-à-vis 29.00m kgs in the same period in 2013 (+1.28m kgs)

“Cumulative tea export earnings for 2014 was Rs. 212.91b thus recording an all time high surpassing the previous high of Rs. 199.44b recorded in 2013. In dollar terms the value of exports in 2014 was $ 1.63 b vis-à-vis $ 1.54b in 2013,” Ceylon Tea Brokers added.
Turkey replaced Russia as Sri Lanka’s top export country with an export volume of 44.74m kgs in 2014. Russia along with the other CIS countries continues to be our biggest export market.

IJT Tokyo expands Lanka’s foray into diamond trade

Daily News - 27/01/2015

International Jewellery Tokyo (IJT-2015) show concluded successfully with the participation of more than 1000 exhibitors, buyers and other stakeholders. This was the 25th IJT event and people from all over the world visited the show.

IJT had many faceted and diamonds and diamond jewellery are at its forefront of the industry. The abundant stock of high quality diamonds in the Japanese market makes Japan one of the most attractive places to source for quality diamonds and diamond jewellery.

Several officers from the Sri Lanka Gem and Jewellery Authority and several Sri Lankan gem traders participated for the event. IJTis a gateway to expand Sri Lanka's business in Japan and the Asian region A wide variety of products in the jewellery industry gathers under one roof, at the world trend-setting city, Tokyo.

Participating in this event will help to activate proactive business discussions and attract new business into Sri Lanka. Several top gem exporters in the country participated at this year's gem and jewellery exhibition.

Sri Lanka exported 330,318 carats of blue sapphire to the value of US$ 53.20 million in 2013. Sri Lanka should market its precious stones through various international exhibitions which will help attract international buyers, its sources said. The Export Development Board (EDB) targets revenue of US$ one billion from exports of gem and jewellery in 2015 and US$ 15 billion by 2020 from all gem exports. Sri Lanka's export revenue currently is around US$ 10 billion.

India seeking mutual benefit through strengthening of Indo-SL FTA

The Island - 26/01/2015
By Zacki Jabbar in Jaffna

India says it is looking to strengthen the Indo-Lanka Free Trade Agreement in a manner that would be mutually beneficial to both countries.

The Consul General of India in Jaffna, A.Natarajan who was the Chief Guest at the opening ceremony of the  sixth edition of the Jaffna International Trade Fair (JITF) held at the Jaffna Library on Friday said that with an ever increasing number of  Indian companies doing business with Sri Lanka, it would be an opportune time to strengthen the Indo-Lanka FTA, which if tapped to its true potential would serve both nations well.

With  around fifty percent of the  exhibitors who participated in JITF 2015 being Indian affiliated, he assured the presence of   more industrialists and entrepreneurs from his country at next  years edition of the event. "I will  encourage more of our    businessman to  individually or in partnership with their Sri Lankan counterparts invest in the Jaffna Peninsula."

The three day event which was held at the Municipal Ground, in close proximity to the Jaffna Library concluded on Sunday.

Commending the organizers of JITF, the Presidential award winning Lanka Exhibition and Conference Services (LECS) for hosting the event for the sixth consecutive year, Natarajan observed that it had become  a one stop shop for  servicing industries in sectors ranging from construction, hospitality, food and beverage, packing , automobile industry, ICT, financial services, apparel, agricultural , consumer goods and many others.

Chairman of the Northern Provincial Council  C. V. K. Sivagnanam said that he welcomed more industrial and  trading partnerships between the North and South of the country and even with India and other nations in a conducive environment that had been created by the installation of a new government headed by President Maithripala Sirisena.

President of the Chamber of Commerce and Industries of Yarlpanam, K. Vignesh urged the  northern industries to make maximum use of the  vast opportunities that JITF had presented them with. 

Managing Director of LECS, Arjun Dharmadasa said that their trade exhibition had made great strides since it was launched six years ago." We, are happy that JITF has contributed to the development of Jaffna and are working towards taking it to a higher level."

Founder Chairman of JITF, Kosala Wickremenayake recalled that when they first hosted the exhibition, infrastructure in the region including the  main road was in a poor state, but had since improved mainly due to the demand created by JITF, resulting in a large number of goods, machinery and equipment and people having to be transported to and fro.

India, he noted had at that time contributed Rs.100 million for initial infrastructural development.

Chief Executive Officer of LECS Asim Mukthar said they were happy that many of the pioneer exhibitors associated with JITF continued to come back year after year, which indicated that  they had received a good response for their products.

The Kalvi or Education Pavilion at the JITF had contributed to many campuses and educational institutes being established in Jaffna, he added.

The exhibition had been  organized with the prime objective of helping various industries to make inroads into the peninsula, Mukthar observed. "The doors are wide open for entrepreneurs and businesses to operate in an environment which is conducive for long and short term investments."

With a clear mandate and a road map for development, there were many opportunities for a wide range of industries to thrive in the northern most tip of the country , General Manager of LECS Husine Rauff noted, adding that  the over 200 exhibitors who had offered their wares and services at JITF included around 100 Indian affiliated  businesses representing various sectors.

The event was supported by the  Consulate General of India in Jaffna, Federation of Chamber of Commerce & Industry of Sri Lanka, Ceylon Institute of Builders, Sri Lanka Convention Bureau, and the Jaffna Municipal Council. It, has been endorsed by the  Ministry of Traditional Industries and Small Enterprise Development and the Sri Lanka Export Development Board.

Top European trade delegation in Sri Lanka to initiate US$ 8 million project

A top European trade delegation has arrived in Sri Lanka to formulate a trade-related capacity building project, which will enhance the overall performance of the export sector of Sri Lanka.

The proposed US$ 8 million project, which is scheduled to implement from 2016, will be funded by the European Union, the Minister of Commerce and Industries Rishad Bathiudeen said.

"This latest initiative matches very well with our new government's vision and a great start! Therefore on behalf of the President Maithripala Sirisena, I extend our thanks to the EC (European Commission) for interacting very quickly with us in this event as well as all our trade initiatives and issues," the Minister said addressing the delegation.

The European delegation from Geneva's International Trade Centre (ITC) led by Xuejun Jiang, Chief-Office for Asia and the Pacific, ITC, Geneva, met the Minister and Commerce Ministry officials on 21 January at the Export Development Board in Colombo.

The delegation also included top officials of the United Nations Industrial Development Organization (UNIDO) in Geneva.

The head of the delegation Xuejun Jiang said under the Joint Commission's Working Group on Trade at Brussels meeting last year, possible EU assistance for capacity development was inquired into and EU responded positively. Subsequently a proposal was followed through EU Embassy in Colombo resulting in a grant in the range of Euro 2 to 7 million for a capacity development exercise in Sri Lanka.

According to Minister Bathiudeen, Sri Lanka has picked ITC for as coordinator for the entire program. Other economic agencies of the country including government agencies and various trade chambers are stakeholders in this exercise. The concept will be developed and implemented by Geneva's ITC. The Department of Commerce is the local coordinator of the project. UNIDO is also extending its expertise. The new project is expected to commence within a year from now to span three to four years.

EU is Sri Lanka's single largest export market and has also been SL's second largest trade partner for a long time. Total exports to EU in this year's January-November provisional exports stood at US$3.21 billion-huge 32% of the period's total exports at US$10.1 billion. Total trade with the EU in 2013 was a steady US$ 4.95 Billion, slightly rising from 2012's $4.94 billion.

The Minister said the European Commission (EC) has given Sri Lanka continued and strong support in this project as well as to boost the trade capacity in general. The consultation process got started very recently, in October and already the work has moved to next phase, the Minister said. ITC has already extended its support to the Ministry of Commerce and Industries in 2012 in its EDB benchmarking test and more recently in 2014 July, formulating the 'Performance Improvement Roadmap' for EDB. Sri Lanka's bilateral trade with EU, which provides Sri Lanka with the GSP facility, in the first eleven months of 2014 stood at US$ 3.2 billion. In 2013, Sri Lanka's exports to EU stood at US$ 3.28 billion rising from 2012's US$ 3.billion, while imports from EU fell to US$ 1.67 billion from 2012's US$ 1.79 billion.