Exporters’ Association Of Sri Lanka
Annual Report & Accounts
2019-2020
EASL Annual Report 2019/2020 Page 1
OFFICE BEARERS 2019/ 2020
CHAIRMAN Mr. Chrisso De Mel
Hayleys Plc
1st VICE CHAIRMAN Mr. Talal Shums Shums & Company Pvt Ltd
2nd VICE CHAIRMAN Mr. Lakshan Algama Perera
K I K Lanka (Pvt) Ltd
SECRETARIAT THE CEYLON CHAMBER OF COMMERCE 50, Nawam Mawatha, Colombo 2 TEL : +94 11 5588897/ 5588898
FAX : +94 11 2449352 EMAIL : [email protected] WEBSITE : www.exporterssrilanka.net
EASL Annual Report 2019/2020 Page 2
MANAGING COMMITTEE 2019/2020
MEMBER COMPANIES
Company Name Main Representative Alternate Representative
Akbar Brother (Pvt) Ltd Mr. Udesh Witharana
Ceylon Biscuits Ltd Mr. Jude Rubera Mr. Priyantha Bandara
Eastern Merchants PLC Mr. Harin De Silva
Hayleys PLC Mr. Chrisso de Mel Mr. Nalaka Ratnayake
Hatton National Bank PLC Mr. Janath Illangantileke Mr. Randeva Mahaarachchi
KIK Lanka (Pvt) Ltd Mr. Lakshan Algama Perera Mrs. Nadie Kahatapitiya Ms. Chamari Link Natural Products (Pvt) Ltd Wickramathilake Mr. Chanaka Gunathilake
Lion Brewery Ceylon PLC Mr. Ranil Goonetilleke
Meezan & Co. (Pvt) Ltd Mr. S Abdul Cader Mr. Azile Irshad
Rainco (Pvt) Ltd Mr. Ahmed Aroos Mr. Prasanna Chandrasiri K I K Lanka (Pvt) Ltd Mr. Lakshan Algama Perera Mrs. Nadie Kahatapitiya Algama Sri Lanka Export Credit Insurance Corporation Mr. D H J Ranasinghe Mr. S M T Silva
Shums & Company (Pvt) Ltd Mr. M H Talal Shums
Saboor Chatoor (Pvt) Ltd Mr. Gulam Chatoor Mr. Ejaz Chatoor
Tea Tang (Pvt) Ltd Mr. Rohan P Daluwatte
EASL Annual Report 2019/2020 Page 3
MANAGING COMMITTEE 2019/2020
MEMBER PRODUCT ASSOCIATIONS
PRODUCT ASSOCIATION REPRESENTED BY
1. Colombo Tea Traders‟ Association Mr. H D Hemaratne
2. Seafood Exporters Association of Sri Lanka Mr. Channa Weeratunga Mr. Dilan Fernando
3. Spices & Allied Products Producers Association Mr. Vernon Abeyratne Mr. Rumesh Jayasuriya
4. Sri Lanka Association of Manufacturers & Mr. Justin Seneviratne Exporters of Rubber Products
5. Sri Lanka Gem & Jewellery Association Mr. Ajward Deen Mr. Rizwan Nayeem
6. Sri Lanka Diamond Manufacturers Association Mr. Sanjaya Baid Mr. R D Samaranayake
7. Lanka Fruit & Vegetable Producers, Mr. S. Gnanaskandan Processors & Exporters Association Mr. Zuraish Hashim
8. Sri Lanka Apparel Exporters Association Mr. Aziz Rumy Mr. Athula Jayasundera
9. Colombo Rubber Traders Association Mr. Harin de Silva
10. Sri Lanka Association of Software Services Companies (SLASSCOM) Mr. Rifdy Fahmy Mr. Druvinda Jayamanne
11. Tea Exporters Association Mr. Deivoo Deivanayagam Mr. Ranjith Abeykoon
EASL Annual Report 2019/2020 Page 4
MANAGING COMMITTEE 2019/2020
PAST CHAIRPERSONS
Mr. Harin de Silva Eastern Merchants PLC (Immediate Past Chairperson) Mr. Fazal Mushin
Mrs. Dawn Austin Nidro Supply (Pvt) Ltd Mrs. Nirmali Samaratunga
Mr. A. S. M. Muzzamil Ceylon Foods (Pvt) Ltd
EASL Annual Report 2019/2020 Page 5
THE EXPORTERS’ ASSOCIATION OF SRI LANKA
MANAGING COMMITTEE 2019-2020
Standing from Left to right
Mr. Ranil Goonetilleke (Lion Brewery Ceylon PLC), Mr. Randeva Mahaarachchi (Hatton National Bank PLC), Mr. Ahmed Aroos (Rainco (Pvt) Ltd, Mr. Thakshila Gamage (Link Natural Products (Pvt) Ltd), Mr. Priyantha Bandara (Ceylon Biscuits Ltd), Mr. Azeez Rumy (Sri Lanka Apparel Exporters Association), Mr. Nalaka Ratnayake (Hayleys PLC), Mr. Janath Illangantileke (Hatton National Bank PLC), Mr. Udesh Witharana (Akbar Brother (Pvt) Ltd, Mr. S Gnanaskandan (Lanka Fruit & Vegetable Producers, Processors & Exporters Association), Mr. Vernon Abeyratne (Spices & Allied Products Producers Association), Mr. Justin Seneviratne (Sri Lanka Association of Manufacturers & Exporters of Rubber Products), Ms. Lakmani Wijethunga (Ceylon Chamber of Commerce/ EASL Secretariat)
Seated from Left to Right
Ms. Ushani Dassanayake (Ceylon Chamber of Commerce / EASL Secretariat), Mr. Deepal Chandrasekara (Past Chairman), Mrs. Dawn Austin (Chief Guest/ Past Chairperson/Nidro Supply (Pvt) Ltd), Mr. Lakshan Algama (2nd Vice Chairman/ K.I.K. Lanka (Pvt) Ltd), Mr. Talal Shums (1st Vice Chairman/ Shums & Company Pvt Ltd), Mr. Chrisso de Mel (Chairman/Hayleys PLC), Mr. Harin de Silva (Immediate Past Chairman/ Eastern Merchants PLC/ Colombo Rubber Traders’ Association), Ms. Nirmali Samarathunga (Past Chairperson), Mr. Fazal Mushin (Past Chairman), Mr. Rohan P. Daluwatte (Tea Tang Pvt Ltd/Past Chairman), Ms. Manori Dissanayaka (Ceylon Chamber of Commerce / EASL Secretariat)
EASL Annual Report 2019/2020 Page 6
Not Present: Mr. Gulam Chatoor (Past Chairman/ Saboor Chatoor (Pvt) Ltd), Mr. Ejaz Chatoor (Saboor Chatoor (Pvt) Ltd), Mr. D H J Ranasinghe (Sri Lanka Export Credit Insurance Corporation), Mr. S M T Silva (Sri Lanka Export Credit Insurance Corporation), Mr. A S M Muzammil (Past Chairman), Mr. S Abdul Cader (Meezan & Co (Pvt) Ltd), Mr. Umar Azwer (Meezan & Co. (Pvt) Ltd), Mr. Zuraish Hashim (Lanka Fruit & Vegetable Producers, Processors & Exporters Association), Mr. Athula Jayasundara (Sri Lanka Apparel Exporters’ Association), Mr. Rumesh Jayasuriya (Spices & Allied Products Producers Association), Mr. H D Hemaratne (Colombo Tea Traders’ Association), Mr. Ajward Deen (Sri Lanka Gem & Jewellery Association),Mr. Rizwan Nayeem , (Sri Lanka Gem & Jewellery Association), Mr. Channa Weeratunga (Seafood Exporters’ Association of Sri Lanka), Mr. Dilan Fernando (Seafood Exporters’ Association of Sri Lanka), Mr. Rifdy Fahmy (Sri Lanka Association of Software Services Companies (SLASSCOM), Mr. Druvinda Jayamanne (Sri Lanka Association of Software Services Companies (SLASSCOM), Mr. Sanjaya Baid (Sri Lanka Diamond Manufacturers Association), Mr. Deivoo Deivanayagam (Tea Exporters Association), Mr. Ranjith Abeykoon (Tea Exporters Association)
EASL Annual Report 2019/2020 Page 7
Highlights of Post Business Session of the Annual General Meeting of EASL
Chief Guest: Past Chairperson of EASL, MD Mr. Chrisso de Mel, Chairman, EASL of Nidro Supply (Pvt) Ltd, Mrs. Dawn Austin
Mr. Harin de Silva, Immediate Past Chairman, EASL Mrs. Dawn S. Austin, Mr. Chrisso de Mel, Mr. Harin de Silva
EASL Annual Report 2019/2020 Page 8
Mr. Lakshan Algama, 2nd Vice Chairman, Mr. Talal Shums, 1st Vice Chairman Mrs. Dawn S. Austin, Mr. Chrisso de Mel Mr. Chrisso de Mel, Chairman, Mr. Harin de Silva, Immediate Past Chairman
Mr. S Gnanaskandan, Mr. Azeez Rumy, Mr. Nalaka Ratnayake Ms. Nadie Kahatapitiya Algama, Ms. Ramya Weerakoon, Ms. Nirmali Samaratunga, Mr. Rohan Daluwatte
Mr. Fazal Mushin, Mr. Harin de Silva Mr. Priyantha Bandara, Mr. Udesh Witharana, Mr. Deepal Chandrasekera
EASL Annual Report 2019/2020 Page 9
LIST OF MEMBER COMPANIES AS AT 31ST MARCH 2019 A A BAUR & COMPANY (PRIVATE) LIMITED A F JONES (EXPORTERS) CEYLON LTD A S AGRI EXPORTS (PVT) LTD ADAMEXPO AGSTAR EXPORTS (PVT) LTD AITKEN SPENCE EXPORTS LTD AKBAR BROTHERS (PVT) LTD ANSELL LANKA (PVT) LTD
B
BANK OF CEYLON BEIRA BRUSH LTD BOGALA GRAPHITE LANKA PLC
C CEYLON BISCUITS LTD
CEYLON TEA MARKETING (PVT) LTD
CHAS P. HAYLEY & CO. LTD
CHEMANEX PLC
CIC HOLDINGS PLC
COCOTANA COCONUT PRODUCTS
COLOMBO RUBBER TRADERS' ASSCOCIATION COLOMBO RUBBER TRADERS'
COLOMBO TEA TRADERS ASSOCIATION COLOMBO TEA TRADERS ASSOCIATION
CONSOLIDATED BUSINESS SYSTEMS (PVT) LTD
EASL Annual Report 2019/2020 Page 10
D
DANKOTUWA PORCELAIN PLC
DELMEGE FORSYTH & CO. LTD
DIPPED PRODUCTS PLC
D P GLOBAL VENTURES (PVT) LTD
E E B CREASY & CO. PLC EASTERN MERCHANTS PLC EDINBOROUGH PRODUCTS (PVT) LTD ESWARAN BROTHERS EXPORTS (PVT) LTD EURO-SCAN EXPORTS (PVT) LTD EXPACK CORRUGATED CARTON (PVT) LTD EXPOLANKA (PVT) LIMITED EXPOLANKA FREIGHT (PVT) LTD EXPORTERS ASSOCIATION OF COCONUT BASED SUBSTRATES
F FINLAYS COLOMBO PLC
G GEORGE STEUART & CO. LTD GLOBAL RUBBER INDUSTRIES PVT LTD GORDON FRAZER & CO LTD
GREENFIELD BIO PLANTATIONS (PVT) LTD
EASL Annual Report 2019/2020 Page 11
H HAMEED BROTHERS COLOMBO (PVT) LTD
HARRISONS (COLOMBO) LTD
HATTON NATIONAL BANK PLC
HAYLEYS PLC
HELA CLOTHING (PVT) LTD
HELLMANN WORLDWIDE LOGISTICS (PVT) LTD
HEMACHANDRAS (KANDY) LTD
HIRDARAMANI INTERNATIONAL EXPORTS (PVT) LTD I
IMPERIAL TEAS (PVT) LTD
INDUSTRIAL CLOTHINGS LTD
ISHANA SPICE EXPORTERS
J
JAFFERJEE BROTHERS
JIFFY PRODUCTS S.L. (PVT) LTD
K
K. I. K . LANKA (PVT) LTD
L
LANKA BRUSH EXPORTS (PVT) LTD.
LANKA WALLTILES PLC
EASL Annual Report 2019/2020 Page 12
LANKEM CEYLON PLC
LINEA AQUA (PVT) LTD
LINK NATURAL PRODUCTS (PRIVATE) LTD
LION BREWERY (CEYLON) PLC
M
MABROC TEAS (PVT) LTD
MASCONS (PVT) LIMITED
MEEZAN & CO (PVT) LTD
MIAMI EXPORTS (PVT) LTD
MICROCELLS (PRIVATE) LTD
MONA PLASTICS (PVT) LTD
MORISON PLC J L
N
NATIONS TRUST BANK PLC
NIDRO SUPPLY (PVT) LTD
P
PATTAKANNUS (PVT) LTD
PREMIER NATURAL TEAS (PVT) LTD
PRINTCARE PLC
EASL Annual Report 2019/2020 Page 13
R
RANFER TEAS (PVT) LTD
RENUKA HOLDINGS PLC
RICHARD PEIRIS NATURAL FOAMS LTD
RILEYS (PVT) LTD
RAINCO (PVT) LTD
S
SABOOR CHATOOR (PRIVATE) LTD SAMPATH BANK PLC SEAFOOD EXPORTERS ASSC OF SRI LANKA SHUMS & CO. LTD SL ASSO.OF MANUFACTURURES & EXP OF RUBB PRDS SL ASSO.O SL FRUITS & VEG. PRODS, PROCS, & EXP AS. SLFRUITS & VEGPRODSPROCS SMITHKLINE BEECHAM (PVT) LTD SPICE & ALLIED PRODUCTS, PRODUCERS' ASSC SPICE & ALLIED PRODUCTS, SRI LANKA APPAREL EXPORTERS ASSOCIATION SRI LANKA ASSOCIATION OF SOFTWARE AND SERVICE COMP SRI LANKA DIAMOND MANUFACTURERS' ASSOCIATION SRI LANKA EXPORT CREDIT INSURANCE CORPORATION SRI LANKA GEM & JEWELLERY ASSOCIATION SL STASSEN EXPORTS (PVT) LTD
EASL Annual Report 2019/2020 Page 14
T
TEA EXPORTERS ASSOCIATION OF SRI LANKA TEA TANG (PVT) LTD THE SWADESHI INDUSTRIAL WORKS PLC TRELLEBORG LANKA (PVT) LTD
U
UNION COMMODITIES (PVT) LTD
V
VAN REES CEYLON LTD
EASL Annual Report 2019/2020 Page 15
LIST OF MEMBER PRODUCT ASSOCIATIONS AS AT 31ST MARCH 2020
1. Lanka Fruit & Vegetable Producers, Processors & Exporters Association 2. Sri Lanka Apparel Exporters Association 3. Colombo Rubber Traders’ Association 4. Spices & Allied Products Producers Association 5. Colombo Tea Traders’ Association 6. Sri Lanka Association of Manufacturers & Exporters of Rubber Products 7. Sri Lanka Gem & Jewellery Association 8. Seafood Exporters Association of Sri Lanka 9. Sri Lanka Diamond Manufacturers Association 10. Sri Lanka Association of Software and Service Companies 11. Tea Exporters Association of Sri Lanka
PAST CHAIRPERSONS OF THE EXPORTERS’ ASSOCIATION OF SRI LANKA Year From 1993 to 1997 August - Mr Lyn Fernando Chairman of the Export Section of the Ceylon Chamber of Commerce - Mr. Gulam Chatoor Chairman of the Federation of Exporters Association of Sri Lanka August, 1997 The Export Section of the Ceylon Chamber of Commerce & the Federation of Exporters Association of Sri Lanka merged to form EASL and the inaugural meeting of the Exporters' Association of Sri Lanka held on August 22nd 1997, This meeting was chaired by Mr Gulam Chatoor as Chairman of Federation of Exporters’ Association of Sri Lanka. Mr Lyn Fernando was elected as the Chairman of EASL.
Chairpersons from 1997 onwards; 1997-2000 - Mr. Lyn Fernando 2000-2003 - Mr. A S M Muzzammil 2003-2005 - Mr. Gratian Gunawardhana 2005-2007 - Mr. Mohan Mendis 2007-2008 - Mr. Deepal Chandrasekara 2008-2011 - Mrs. Nirmali Samaratunga 2011-2013 - Mrs. Dawn Austin 2013-2015 - Mr. Rohan P. Daluwatte 2015-2017 (February) - Mr. Fazal Mushin
EASL Annual Report 2019/2020 Page 16
THE EXPORTERS’ ASSOCIATION OF SRI LANKA The formation of the Exporters Association of Sri Lanka brought a wide spectrum of exporters, under one umbrella, and a strong platform was built to discuss and make representations on issues affecting the Export Trade, with one voice. The Association now represents around 1000 Exporters through direct and indirect membership, and contributes to over 80% of the total exports of the country.
History: In 1973, Chamber Members who engaged in individual export trade initiated the formation of the “Export Section of the Ceylon Chamber of Commerce”.
In 1987, the Export Development Board initiated the formation of the Federation of Exporters’ Associations of Sri Lanka (FEA), which was an umbrella organization of major export product specific Associations.
It was observed that there was a duplication of activities of these individual Organizations and that there would be more usefulness served if the two were merged to promote and protect the common interests of Members, whilst making a significant contribution to the growth of the Export Industry of Sri Lankan exporter.
In August 1997, Export Section of the Ceylon Chamber of Commerce (CCC) and the Federation of Exporters’ Association (FEA) passed resolutions at specially convened General Meetings by the two Institutions that the Institutions merge into one Association to be called the EXPORTERS ASSOCIATION OF SRI LANKA.
The first Chairperson elected after the merger, was Mr. Lyn Fernando, with Mr. Gulam Chatoor proposing his name from the chair. Mr. Lyn Fernando and Mr. Gulam Chatoor had both served as Chairpersons of the Export Section of the Ceylon Chamber of Commerce and as the Chairpersons of the FEA.
All members of both the Institutions took the membership of the EASL.
Membership The EASL now proudly represents practically the entire Export Sector of Sri Lanka through the Membership of Companies and Exporter Associations. Eligibility to join the EASL being made up of the following: 1. Any member of the Ceylon Chamber of Commerce engaged in or interested in export 2. Any properly constituted and functioning Association representing exporters of products and services 3. Any individual member of such an Association referred to in (2) above 4. Any Company or Individual engaged in exports of goods and services who are registered with Sri Lanka Export Development Board (SLEDB) or any respective Association duly constituted and functional.
The EASL’s single platform representation structure is acknowledged by all authorities in both the public and private sectors to be a responsible and credible voice of Exporters in Sri Lanka.
EASL Annual Report 2019/2020 Page 17
REVIEW OF ACTIVITIES 2019/2020
ANNUAL GENERAL MEETING (AGM)
The Exporters' Association of Sri Lanka (EASL) which is an approved Association of the Ceylon Chamber of Commerce held its 22nd AGM and the Post Business Session on 29th July, 2019 at 3.00 p.m. at the Ground Floor Auditorium of The Ceylon Chamber of Commerce. Mrs. Dawn S Austin, Past Chairperson of EASL and Managing Director of Nidro Supply (Pvt) Ltd, graced this occasion as the Chief Guest and the keynote speaker.
Mr. Chrisso de Mel of Hayleys PLC was elected as the Chairman for EASL whilst Mr. Talal Shums and Mr. Lakshan Algama Perera were elected as 1st Vice Chairman and the 2nd Vice Chairman respectively.
The EASL's mission is to promote and protect the interests of the Exporter Community at large and this has brought together a wide spectrum of Exporters under a strong single platform aimed at exchanging views and making representation on Macro issues relevant to the country's Exports.
The EASL has constantly engaged with Government agencies, representing and lobbying Exporter concerns for consideration, with a view to facilitating a dialogue with regard to national policy direction, whilst taking into account the shared goal of achieving strong national economic development through the combined endeavours of the Export Sector and the Government.
Exporters Association of Sri Lanka (EASL) Founder Member, Mrs. Dawn Austin presenting the keynote address at the 22nd Annual General Meeting (AGM) at the Ceylon Chamber of Commerce stated that the exporters are still struggling with a range of issues including inconsistent policymaking, high power prices, political instability and skilled labour shortages. She also said that many issues that have existed for a number of years still continue to pose challenges to exporters. Mrs. Austin pointed out that in order to remain competitive Sri Lanka’s exporters would have to invest more in automation but was prohibited from doing so, partly due to high electricity prices that were earlier highlighted to government policymakers for solutions.
However she pointed out that even six years later there has been no reduction of energy costs and exporters are still affected by unannounced or unscheduled power cuts. She also questioned why the Government had not at least encouraged renewable energy solutions in the country. Mrs. Austin also pointed out that even though the Government had worked to negotiate new trade agreements non-tariff barriers in existing free trade deals, especially with India, had not been tackled effectively. She pointed out that while food exports to India undergo numerous tests, similar Indian products can enter Sri Lanka with relative ease.
Mrs. Austin also called on the Government to evolve a proper labour migrant policy so exporters could employ people from other countries in South Asia. She also advocated a clearly defined Public-Private Partnership (PPP) strategy with clearly enunciated regulations and legal framework to encourage foreign investors.
EASL Annual Report 2019/2020 Page 18
“Reducing the overlapping of line ministries related to for example, agriculture, exports and investment to a more simplified process will definitely create a more conducive and transport environment for more PPPs and inflow of much valued FDIs,” she said.
Addressing the 22nd Annual General Meeting of the Exporters’ Association of Sri Lanka, Mr. Chrisso De Mel, the newly elected chairman of the EASL, also made the following remarks. Exporters’ Association of Sri Lanka, urged all government institutions to execute and fulfill all possible trade facilitation initiatives paving way to create ease of doing business and moving forward towards a national single window. “We the Exporters’ Association in the recent past has done and exhaustive study identifying key areas for improvement and action and published two valuable strategy documents that have been handed over to the ministry of finance and other key government institutions, though some of our proposals have been well received and even though some proposals have been well received and even incorporated to the national budget, we must say that we are disappointed that the proper implementation of the same has not been done, leaving us stranded in our blocks and not helped us to move forward.” “We have not seen the intent and commitment on the part of the government to fire all guns in order to grow exports. With the exceptions of the Ministry of Development Strategies and International Trade, ministry of Ports and Shipping and, since of late, the Ministry of Science and Technology,” he added Mr. de Mel further insisted that the trade cannot afford to entertain sudden changes in procedures and processes without proper planning and dialogue and without explaining reasons for the same, as done in many occasions in the recent past “Arbitrary increases of charges due to ad hoc procedural changes cannot be afforded without proper value addition to the supply chain. These measures will only make Sri Lanka uncompetitive, he added. Mr. de Mel also raised concern that a new procedure to be implemented with scanning of cargo will cost the trade additionally for exports and imports brought in for export. “While we are fully in support of the introduction of scanners and other modern, intelligent security devices, we are of the opinion that the trade should not be taxed or burdened, “de Mel noted. “We already have sour experiences in the past where several levies have been imposed under the guise of development and international marketing but have eventually been used for entertainment or a totally different purpose from what it was meant to be. Sri Lanka must be mindful and be sensitive to capture the transactional cost when pitching in with other efficient origins.” he added.
EASL Annual Report 2019/2020 Page 19
MANAGEMENT COMMITTEE MEETINGS & SUMMARY OF ITS ACTIVITIES
During the period under review (2019/2020) the Committee met on twelve (12) occasions.
EASL REPRESENTATION ON OTHER BODIES/PARTICIPATION AT OTHER FORUMS
. Committee of the Ceylon Chamber of Commerce - Chairman, Mr. Chrisso de Mel (Main representative) & Mr. M H Talal Shums (Alternate)
. Steering Committee on Trade Liberalization of the Ceylon Chamber of Commerce - Mr. Harin de Silva, Chairman & Mr. Chrisso de Mel, VC1 . National Agenda Committee on Trade & Logistics, The Ceylon Chamber of Commerce - Mr. Chrisso de Mel ,Chairman . National Agenda Committee on Trade, The Ceylon Chamber of Commerce - Mr. Chrisso de Mel, Chairman . Chamber 2025 Development Frame Work to Escalate Economy Working Group on Exports – Mr. Chrisso de Mel, Chairman . Monitoring Committee on Benefits of GSP+ and Labour Matters by Ministry of Labour, Trade Union Relations and Sabaragamu Development – Mr. Rohan P. Daluwatte
. Exporters Forum, Sri Lanka Export Development Board - Mr. M H Talal Shums
. Steering Committee of Expo 2020 Dubai - Mr. M H Talal Shums
. Working group for GAP spices, Sri Lanka Standards Institute - Mr. G S Chatoor
. Evaluation committee on Market Access Programme under Sri Lanka Export Development Board. - Mr. Lakshan Algama
. Employers Federation of Ceylon - Chairman, Mr. Chrisso de Mel (Main representative) & Mr. M H Talal Shums (Alternate)
. Advisory Commission Constitute Under the Intellectual Property Act No. 36 of 2003, Ministry of Industry & Commerce – Mr. Lakshan Algama Perera
. EU - Sri Lanka Trade related assistance project - Geographical Indication (GI) Ceylon Cinnamon, Ministry of Industry and Commerce – Mr. Lakshan Algama
EASL Annual Report 2019/2020 Page 20
The Association has maintained a closer dialogue with the following Institutions, on export related matters: . Ministry of Development Strategies and International Trade . Ministry of Industry and Commerce . Ministry of Finance, Economy & Policy Development . Ministry of Foreign Affairs . Sri Lanka Export Development Board . Department of Inland Revenue (VAT Dept) . Sri Lanka Customs . Board of Investment . The Central Bank of Sri Lanka . Sri Lanka Ports Authority . Department of Commerce . Department of Exchange Control . Joint Apparel Associations Forum . Sri Lanka Standards Institute
MAIN AREAS ADDRESSED DURING THE YEAR UNDER REVIEW
As the apex body representing over 100 Exporters through direct & indirect membership, who contribute over 80% to the total exports of the country, the EASL activities during the year under review, were primarily aimed at facilitating an environment for the Exporters with a focus on global competitiveness and achieving strong growth of the Sector.
In the year under review the EASL has forged ahead to capitalize on the Government’s declaration that all imperatives required to encourage the growth of Export will be addressed and resolved. Consistent and frequent representation has been made by the EASL to every related agency connected with Exports, drawing attention to aspects that constrain Export businesses from being able to achieve the targets which each sector has set for itself.
KEY EXPORT RELATED MATTERS ADDRESSED AND RESOLVED THROUGH EASL INTERVENTIONS AT MEETINGS WITH GOVERNMENT OFFICIALS AND OTHER EXPORT RELATED ORGANIZATIONS:
i) Clearing of import cargo from the Colombo Port during the lock down period. Amidst many challenges clearing of import cargo from the Colombo port had been gone on without any interruption. However, one of the main issues that the EASL discussed was,
1. Port demurrage (usually charged after 3 days from the date the container is discharged at port). 2. Shipping line demurrage (usually charged after 7days after the container is discharged at port).
EASL Annual Report 2019/2020 Page 21
Following the Association continuous lobbying, for concessions on the above, taking note of the difficulties faced by importers, the secretary to the Ministry of Ports and Shipping has issued a directive.
a. To All three terminal operators at the Colombo port to refrain from charging any demurrage until 13th April 2020 and thereafter from 14th April to 07th May to charge only the Basic rate and no penal charges to be collected.
b. To all shipping lines, NVOCC operators, freight forwarders and other delivery agents to refrain from charging liner demurrage until 09thApril 2020.
A. SLPA
1. Period between 16th March to 13th April- Non-billable days (Free) 2. Period between 14th April to 07th May- Non-Storage at the basic rate level will be charged. (USD 8/20’ USD 16/40’) with no penal charges. Note: Any containers arrived between the period 16th March to 13th April will be considered to have been discharged on 13thApril, giving a further 3 free days only for importers who have cleared their cargo on the 15th and 16th April, hence this category will also enjoy the benefit as stated in point 1 above. However, consignees, whose containers have arrived between the period 16th March to 13th April but have cleared shipments on or after the 17th April will be subject to the charge under point 2 above.
B. SAGT 1. Period between 14th March to 13th April- Non-billable days (Free) 2. Period between 14th April to 07th May- Non-Storage at the basic rate level will be charged. (USD 8/20’ USD 16/40’) with no penal charges.
Note: Any containers arrived between the period 16th March to 13th April will be considered to have been discharged on 13thApril, giving a further 3 free days only for importers who have cleared their cargo on the 15th and 16th April, hence this category will also enjoy the benefit as stated in point 1 above. However, consignees, whose containers have arrived between the period 16th March to 13th April but have cleared shipments on or after the 17th April will be subject to the charge under point 2 above.
EASL Annual Report 2019/2020 Page 22
C. CICT
1. Period between 16th March to 13th April- Non-billable days (Free) 2. Period between 14th April to 07th May- Non-Storage at the basic rate level will be charged. (USD 8/20’ USD 16/40’) with no penal charges.
Note: Any containers arrived between the period 16th March to 13th April that are cleared on or after the 14th April will be subject to charge under point 2 above. ii) Removal of charges in lieu of Port and Airport rent (demurrage)on Import cargo Letter sent to Dr. Priyath Bandu Wickrama, Member of Presidential Taskforce suggesting the followings; All importers be exempted of port and airport rent during the lockdown period (including the day in between, where the curfew was lifted for a few hours).
The Association also requested to facilitate prioritized clearance for the following categories;
1. Importers of essential goods be given top priority and encourage them to take delivery ASAP (A list of items to be given- Ideally HS code wise) 2. Importers of any DC cargo (especially if there is a risk in keeping at the port for too long) be encouraged and permitted to clear ASAP. 3. Importers of raw materials for export purposes. a. Imports of any manufacturing plants who are engaged in operations even in a small scale who may need to clear their import consignments ASAP. b. Any manufacturing plants closed during the curfew period who may not want their import consignments to be cleared during the locked down period.
Eventually, even after the curfew is lifted, it is important that a further free period for clearance of import shipments is given in order that there will not be a rush in clearance, which may result in crowds congregating, that may pose a great risk once again.
iii) Public - Private sector dialogue on local & international cross-border challenges due to COVID-19 As the Covid 19 outbreak continues to spread across the globe, government has resorted to varying levels of public health measures, including movement restrictions and boarder closures to tackle the pandemic. These measures have had huge impacts on national economies and global trade. The webinar was organised by the Ceylon Chamber of Commerce to discuss issues faced by trade and provide solutions to navigate imports and exports through the crisis. Mr. Chrisso de Mel, Chairman of EASL was invited to address the webinar as the panelist.
iv) IRD – Budget proposal on the reduction of the Economic Service Charge
EASL Annual Report 2019/2020 Page 23
v) MODSIT – Resulting from the Easter Sunday attack (28/4), concerns of exporters were submitted (given below) by the Sri Lanka Export Development Board (EDB) for the attention of the above Secretaries.
Long cooling time of export containers at the Colombo Port – Cooling times was reduced from 24hrs to 12hrs. It was requested to reduce the time further from 12hrs to 8hrs at the airport. Issue of unloading cargo for verification – SLEDB stated that they have requested to install new scanners at the Port and the Air Cargo Village. Exporters emphasized that the implementation process seems to be slow and a long term process. Exporters complained that their cargo were being damaged due to poor ground loading during the rainy season. They (exporters) had requested that necessary preventive steps be taken to avoid their cargo being damaged. It was agreed to have ramp and a plastic cover in the cargo unloading area within 3 months. The entry of unauthorized personnel to the Air Cargo Village was also highlighted. To resolve this issue, it was suggested to enhancing the security operations.
vi) Department of Commerce – “Step-By-Step” Functionality of the Sri Lanka Trade Information Portal (SLTIP) - This facility is a dedicated platform for trade regulatory & procedural information on exports and imports which is widely used by the trading community. Addressing Non-Tariff Barriers (NTBs) faced by Sri Lankan exporters when exporting to India in the form of standards, testing and inspection requirements.
vii) Sri Lanka Customs Meetings with Director General Customs Export Statistics to be available monthly for the benefit of the exporters to understand the competitiveness in the market Operational Issues relating to Sri Lanka Customs Export Facilitation Centre “Sri Lanka Custom’s Trader Re-registration initiative” AEO (Authorized Economic Operator Programme)
viii) Export Development Board Ongoing interaction with the EDB and members of the Managing Committee being included on the respective EDB Advisory Committees. Submissions for Exporters’ Forum The Chairman of the EASL was invited for a webinar discussion on inculcating the right culture and enhancing the spirit of doing business as the panelist.
EASL Annual Report 2019/2020 Page 24
ix) Foreign Exchange Department of the Central Bank of Sri Lanka (CBSL)
Proposed New Mechanism for Tracking Export Proceeds by Sri Lanka Customs EASL was invited to participate discussions to set up a mechanism for tracking repatriation of export proceeds, organized by Central Bank and Sri Lanka Export Development Board. The current rule for repatriation of export proceeds stands at 120 days with a grace period of 30 days (as per the provisions of the Foreign Exchange Act No 12 of 2017). EASL has opposed implementing the new mechanism proposed by Sri Lanka Customs which is a cumbersome procedure adding extra cost to the exporters.
SRI LANKA NATIONAL EXPORT STRATEGY (NES)
The Government of Sri Lanka unveiled the National Export Strategy (NES) on 19th July 2019, a blueprint for achieving increased exports, enhanced regional cooperation and job creation.
Alongside other national initiatives such as Enterprise Sri Lanka and Vision 2025, the Strategy is an important addition to the country’s development agenda and its goal of becoming a leading Asian export hub driven by innovation and investment. Technical assistance for developing the NES was provided through the EU-Sri Lanka Trade Related Assistance project funded by the European Union.
The five-year Strategy aims to enable Sri Lanka to reach its goal of $28 billion in exports by 2022. It benefits from the input of more than 600 public and private-sector stakeholders across Sri Lanka to reflect their export ambitions.
The Strategy sets out specific priority actions and investments to address competitiveness constraints, modernise regulatory systems for improved efficiency, and boost Sri Lankan industries in order to increase exports. It also sets targets to improve opportunities for Sri Lanka’s micro, small and medium-sized enterprises (MSMEs) and exporters in regional and global trade.
Advisory Committees were set up by the Hon. Minister, Malik Samarawickrema, Minister of Development Strategies and International Trade under the provision of the SLEDB’s Act No. 40 of 1979. These export “Advisory Committees” were rapidly reactivated for effective implementation and monitoring of the NES. These committees were set up for 3 year period. Members of the EASL committee have been invited to serve on these advisory committees.
The successful implementation of Sri Lanka’s National Export Strategy depends on the capacity and willingness of all public and private sector stakeholders to contribute, collaborate, own and drive towards a common national objective. Priorities need to be implemented at the earliest possible opportunity and the frequency of regular and structured public-private dialogues will be critical to maintain the momentum needed.
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x) Sri Lanka Standards Institute
Issues faced by Exporters when exporting fast moving consumer goods to India
Request for MRA to be established between SLSI and the Exporters and other statutory bodies in order to have reciprocity between Authorising Agencies.
Import Inspection Scheme
EASL suggested that Import and Export Control Department and Sri Lanka Standards Institution shall take into consideration to include products such as Chili powder, Curry Powder under the Import Inspection Scheme of SLSI.
xi) Board of Investment of Sri Lanka Request to extend the tax and other incentives given for new foreign investors to the existing local companies who want to add value, expand and upgrade their operations.
EASL’S AFFILIATION WITH OTHER ORGANIZATIONS ON EXPORT RELATED MATTERS
i) The Ceylon Chamber of Commerce Participation in monthly Chamber Committee meetings:
ii) Employers Federation of Ceylon As an Affiliated Association of the EFC, EASL participated in EFC regular meetings, where employee related matters were discussed.
AWARENESS BUILDING ACTIVITIES
A) Dissemination of Information
The membership was alerted on various issues affecting exporters, as well as matters of interest, by way of Circulars issued by EASL as well as the Ceylon Chamber of Commerce and various other affiliated bodies of the relevant local Chamber. This included information on matters of business interest to members, notices of topical seminars/workshops organized by the Ceylon Chamber of Commerce and affiliated Associations/Councils.
EASL Annual Report 2019/2020 Page 26
B) Seminars/Interactive forum During the year under review, there was no seminars organized by EASL.
i) Chairman was one of the panelists in a webinar organized by the Chamber : Public - Private sector dialogue on local & international cross-border challenges due to COVID-19 | 23rd April 2020
EASL Annual Report 2019/2020 Page 27 ii) Chairman was also a Speaker in a webinar organized by the Sri Lanka Export Development Board : PROFITS OR VALUES - A discussion on inculcating the right culture and enhancing the spirit of doing business| 04th June 2020
C) Website The site has proved to be an extremely useful information tool. http://www.exporterssrilanka.net.
D) Publicity Several Press releases and interviews were given by EASL to create awareness of developments and issues in the Sector, and the future outlook.
E) Membership
The Membership as at 31st March 2020 consisted of 95 individual Exporter members and 11 Product Associations.
EASL Annual Report 2019/2020 Page 28
F) Auditors and Annual Accounts
The Auditors of the Exporters Association of Sri Lanka for the period 2019/2020 were Messrs. HLB Edirisinghe & Co. The Audited Accounts of the Association is attached.
G) Secretariat
The Ceylon Chamber of Commerce continued to provide Secretarial Services to the Association during the period under review.
BY ORDER OF THE COMMITTEE
Sgd. Ushani Dassanayake For Secretary
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EXPORT SECTOR PERFORMANCE IN 2019/2020 AND FUTURE EXPORT CHALLENGES
OVERVIEW OF THE ECONOMY contraction in the global economy, triggered further uncertainties regarding the country’s During the year 2019, Sri Lanka’s dismal economic performance in 2020. In the near term, performance continued in terms of real the economy is likely to be impacted severely in economic growth, although macroeconomic terms of its growth, fiscal, external, and stabilisation measures helped correct the financial sector performance, while causing external sector imbalances to some extent, while hardships to all stakeholders of the economy. inflation pressures remained muted on average. The monetary policy space in terms of the low The Easter Sunday attacks had a severe impact inflation environment, and the banking sector on the tourism sector, and their adverse spillover space created by the maintenance of capital and effects were felt across the economy, worsening liquidity buffers above industry norms, enabled the sluggish growth of the economy and further the Central Bank to support the efforts of the dampening business confidence. Policy government to ease the burden on businesses as measures aimed at reducing pressures on the well as individuals. Despite the temporary balance of payments (BOP) and the exchange setback posed by the pandemic, appropriate rate continued in 2019, which together with growth supportive reforms to address steps taken to revive the economy, contributed longstanding structural issues and enhance to notable slippages in the fiscal sector. Subdued domestic production, improve export demand conditions allowed the continuation of orientation, attract foreign direct investment low inflation during the year, although extreme (FDI), facilitate innovation, improve factor weather conditions and resultant disruptions to productivity and efficiency, and improve policy domestic food supplies caused some volatility in buffers, if implemented without delay, would consumer prices. Growth of credit to the private enable Sri Lanka to realise the desired outcome sector decelerated sharply, driven by subdued of achieving sustained and equitable economic economic activity and weak business growth and becoming a prosperous nation in the confidence, affecting the performance of the period ahead. financial sector. Considering the need to support economic activity amidst muted inflation, well anchored inflation expectations and diminished pressures in the external sector, the Central Bank adopted an accommodative monetary policy stance, and took steps to expedite the transmission of monetary policy measures to the economy through regulatory action aimed at reducing market interest rates. As domestic economic activity started to show early responses to the policy measures taken to revive the economy and improving business sentiments at the beginning of the year 2020, the outbreak of the COVID-19 pandemic, the containment measures adopted by all countries including Sri Lanka, and the resultant projected EASL Annual Report 2019/2020 Page 30
Global Economic Environment and Outlook
Global economic growth slowed in 2019, and Brazil was noteworthy in 2019 over the compared to 2018, reflecting the impact of previous year. Reflecting subdued economic heightened trade tensions among the major activity across the globe, growth of world trade economies, geopolitical tensions and dampened volume of merchandise and trade in services domestic demand in key emerging market moderated notably in 2019 to 0.9 per cent economies. According to the World Economic in comparison to the growth of 3.8 per cent in Outlook (WEO) of the IMF, released in April 2018. As trade and manufacturing slowed 2020, global economic growth in 2019 was significantly, commodity prices showed a lower at 2.9 per cent, compared to 3.6 per cent significant drop in 2019, as reflected in the in 2018. Growth in advanced economies was decline in petroleum prices by 10.2 per cent in estimated at 1.7 per cent in 2019, compared to 2019, compared to the acceleration by 29.4 per 2.2 per cent in the previous year, reflecting cent in 2018. Supported by low energy prices subdued growth in the United States and the and subpar activity, consumer price inflation in Euro area, despite the improved growth advanced economies decelerated to 1.4 per cent performance in economies such as the United in 2019, from 2.0 per cent in 2018. However, Kingdom and Japan. Meanwhile, growth across consumer price inflation in emerging market and emerging market and developing economies developing economies accelerated marginally to moderated to 3.7 per cent in 2019 from 4.5 per 5.0 per cent in 2019, compared to 4.8 per cent in cent in 2018, largely due to country specific 2018, reflecting the impact of supply side shocks that weighed on domestic demand. disruptions, despite the muted demand pressures Among key emerging economies, the witnessed across these economies. the global moderation of growth of China, India, Russia economy, which had been on an arduous path of EASL Annual Report 2019/2020 Page 31 recovery amidst gathering economic and mid 2019 amidst escalating trade tensions, the political headwinds, showed signs of a far spillover effects of the cOViD-19 outbreak have reaching setback with the cOViD-19 pandemic. warranted a more rapid pace of monetary policy The April 2020 WEO of the IMF forecast the easing alongside increasingly important fiscal global economy in 2020 to experience its worst stimulus. Having reduced the federal funds rate recession since the Great Depression, dwarfing target range by a half of a percentage point the Global Financial Crisis in 2007/08. The between the scheduled Federal Open Market period of ‘the Great Lockdown’ resulting from Committee meetings in early March (the first the COVID-19 pandemic is likely to entail a such emergency move since the Global substantial shrinkage of global growth in 2020, Financial Crisis in 2007/08), the Federal followed by a partial recovery in 2021. Reserve of the United States proceeded to a Accordingly, global growth is projected to percentage point cut to bring the federal funds contract by 3.0 per cent in 2020, followed by an rate target range to 0.0 per cent to 0.25 per cent. expansion of 5.8 per cent in 2021. This reflects The Federal Reserve acknowledged that the a notable departure from the January 2020 WEO COVID-19 pandemic brought new risks and update of the IMF, wherein the global economy challenges to the economic outlook and noted was projected to grow by 3.3 per cent and 3.4 that the rate was to be maintained until it was per cent, respectively, in 2020 and 2021. The confident that the economy had weathered the growth in Advanced Economies is expected to recent events. The Federal Reserve also contract by 6.1 per cent in 2020, led by a announced several new measures to support the contraction in most economies including the flow of credit to households and businesses. United States, Japan, the United Kingdom, Meanwhile, the People’s Bank of China (PBOC) Germany, France, Italy, and Spain. The reduced both its benchmark lending rate, the emerging market and developing economies are Loan Prime Rate, and its medium term lending expected to suffer from the health crisis as well rate by 30 basis points. While announcing as the severe external demand shock and specific policy measures to support businesses tightening of global financial conditions. affected by the outbreak, the PBOC also reduced Accordingly, the growth in emerging market the reserve requirements for certain banks to and developing economies is expected to enable the flow of credit to micro businesses and contract by 1.0 per cent in 2020. Notably, other vulnerable sections of the economy while Emerging Asia is the only region that is injecting liquidity at lower rates to ensure expected to record a positive growth of 1.0 per smooth functioning of the banking system. The cent in 2020, despite the downward revision European Central Bank (ECB) launched from 5.8 per cent in the January update of the Targeted Longer Term Refinancing Operations WEO. Economies in this group such as China, (TLTRO-III) to support bank lending to firms India, and Thailand are expected to grow and households, and the Pandemic Emergency moderately in 2020. Meanwhile, the Purchase Programme (PEPP) to purchase expectations of improved economic prospects in private and public sector securities to counter 2020, prior to the COVID-19 outbreak, drove up significant risks to the monetary policy commodity prices, including petroleum. transmission mechanism, and recently adopted a However, this trend reversed dramatically in the package of temporary collateral easing measures face of the COVID-19 pandemic, as to facilitate participation in liquidity providing containment measures caused a sharp decline in operations. The Bank of Japan (BOJ) adopted global industrial activity. monetary easing measures to safeguard sentiments and maintain stability in financial While several key economies had begun to adopt markets. Since the onset of the pandemic, the an accommodative monetary policy stance from Reserve Bank of Australia also lowered its EASL Annual Report 2019/2020 Page 32 benchmark rate in two cuts to a historically low intervention of fiscal policy to strengthen near level of 0.25 per cent, directly citing the term demand. Fiscal measures are likely to be significant effect of the virus on the economy, more effective in directly addressing short term which is highly dependent on economic activity vulnerabilities faced by households, who may be in China. In addition to several targeted relief facing employment related losses, and those of measures, the Bank Negara Malaysia reduced firms who face an abrupt reduction in demand. the Overnight Policy Rate by 50 basis points to As several advanced economies have already 2.50 per cent and reduced the statutory reserve committed to undertaking some discretionary requirement ratio by 1 percentage point with due fiscal easing, additional measures may be consideration to weakened global economic adopted without impacting the debt conditions and disruptions to economic activity sustainability concerns. Despite fiscal fragilities within the region. Other regional central banks in emerging market economies, social transfers such as the Reserve Bank of India reduced its to low income groups and support for policy repo rate by 75 basis points to 4.40 per investment will need to continue to prevent cent and the reverse repo rate by 115 basis points negative macroeconomic effects from to 3.75 per cent thus far in 2020, and announced translating into economic imbalances with that the accommodative stance was to be political, economic and social implications. maintained for as long as necessary to revive the Meanwhile, the global community, including economy and mitigate the impact of the COVID- multilateral financial institutions, is expected to 19 pandemic. The Bangko Sentral Ng Pilipinas boost concessionary financing and provide other reduced its overnight reverse repo rate by 125 relief, such as debt moratoria and debt basis points across three cuts to 2.75 per cent so restructuring, for low income economies as well far in 2020, alongside a temporary relaxation of as other vulnerable economies to enable such regulations on banks and a reduction of reserve economies to weather the impact of the requirement by 2 percentage points. Meanwhile, pandemic and facilitate meeting growing fiscal the Bank of Canada, the Bank of England, the needs for medical purposes and strengthening Bank of Japan, the European Central Bank, the social safety nets. US Federal Reserve and the Swiss National Bank announced coordinated action to enhance There are significant downside risks to the the provision of liquidity through standing US global growth momentum. The substantial dollar liquidity swap line arrangements. These amount of uncertainty that surrounds the are expected to serve as key liquidity backstops pandemic across several aspects ranging from to ease strains in global funding markets and the intensity of the spread to containment efforts thereby to help curb the effects of any such and their repercussions and the likelihood of strains on the supply of credit to households and permanent changes in sentiments and behaviour, businesses across the world. There is a wide make it difficult to ascertain the degree of the policy consensus that monetary policy will need economic fallout. Despite the substantial to remain accommodative to ensure that long downgrade to global growth, risks to the outlook term interest rates remain low. While most key are also on the downside. Key risks include a economies possess policy space for more persistent pandemic and thereby effecting accommodation, economies with negative a long lasting impact on economic activity and interest rates, such as the euro area and Japan, financial markets. There is also the concern of a will need to continue undertaking ‘second wave’ of an outbreak as the virus may unconventional monetary policy measures to again spread from residual clusters in the event address the challenges of subpar growth and of a hastened withdrawal of containment undershooting of inflation. The low interest rate measures. It may also stem from imported cases. environment can also pave way for active Hence, the recovery may be hampered due to EASL Annual Report 2019/2020 Page 33 both the persistent and staggered nature of outbreaks, which could imply persistent disruptions. There is also a concern that despite the slowdown in the spread of the virus, it may have long lasting implications such as persistent uncertainty about the contagion, lack of sufficient and timely restoration of business confidence, structural shifts in the behaviour of households and firms, all of which may culminate in more lasting disruptions to supply chains and denting of aggregate demand. The weak global demand alongside low oil prices are likely to result in a softening of inflation in the near term, although the current undertaking of increased liquidity support, fiscal stimulus and social safety measures could cause inflationary pressures with the abating of the pandemic and a shift recovery in demand. Risks related to oil prices are tilted to the downside in the near term as producers face storage constraints due to the accumulation of stocks in the wake of poor demand. Over the medium term, the risks are While Sri lanka has been able to curb a major balanced with upside risks including faster spread of the COVID-19 outbreak in the containment of the pandemic and a country, the interconnected nature of the global strengthening of the OPEC+ deal. However, a economy will result in Sri lanka experiencing key downside risk could be the rapid slowdown spillover effects of the pandemic. Sri Lanka has in global economic activity alongside a collapse had long standing economic linkages with of the OPEC+ coalition. Investor risk aversion China, where the virus spread began in the latter in the wake of the rapid spread of the virus part of 2019. Hence, the downturn in the caused a capital outflow from emerging market Chinese economy is expected to have a economies, and the magnitude of such outflows significant impact on Sri Lanka across several is expected to be higher than that observed sectors such as tourism, construction, and during the Global Financial Crisis of 2007/08. apparel in the near term. The reduction in global At times of such heightened global risks, the tourist movements as a result of the widespread difficulty in mobilising dollar financing could nature of the outbreak can negatively affect lead to a self-fulfilling prophecy of a decline in value chains in the domestic tourism industry, capital inflows, followed by a sharp currency including food, beverages and transport. depreciation, which could drive further capital However, some benefits may also be realised flow reversals. from the weak global demand translating into lower commodity prices, as reflected in recent oil price movements. Further, it is also noteworthy that Sri Lanka may be able to benefit from the increasingly accommodative monetary policy stance globally, which may translate into lower financing costs. In spite of such expectations however, the rise in emerging
EASL Annual Report 2019/2020 Page 34 market sovereign bond yields amidst the flight closely monitor incoming data. Targeted and of capital towards liquidity and quality, will forward looking policy interventions will need remain a key concern. Despite already to be undertaken with due consideration to both implemented proactive policy measures to the near term and medium term, in a proactive contain the pandemic while sustaining the manner to sustain the growth trajectory of the Sri economy, policymakers will need to be Lankan economy amidst the current challenging continuously vigilant of developments and external environment.
Direction of Trade
Sri Lanka’s major trading partners broadly the USA increased to 26.3 per cent compared to remained unchanged in 2019 from the previous 25.9 per cent in 2018. Export earnings from the year. In value terms, India continued to be the USA increased by 1.8 per cent to US dollars major trading partner of Sri Lanka in 2019, 3,141 million in 2019, mainly due to exports of followed by China and the USA, all of which garments, rubber products, base metals, food, together contributed around 40 per cent of total beverages and tobacco and tea, which accounted trade of Sri Lanka. However, total trade with for about 87 per cent of total exports to the USA. India, which exceeded US dollars 5 billion in The USA continued to be the single largest 2018, declined to US dollars 4.7 billion in 2019. garment export destination for Sri Lanka as well, Trade with China also declined but remained accounting for about 45 per cent of total garment above US dollars 4 billion as in the previous exports in 2019. However, earnings from year, and trade with the USA exceeded US seafood exports to the USA declined dollars 3 billion. The United Arab Emirates considerably by 37.9 per cent in 2019, while (UAE), the UK, Japan, Singapore and Germany earnings from machinery and mechanical were the other major trading partners, which appliances, spices and coconut kernel products accounted for total trade to the value of more exports to the USA also declined. The UK, as than US dollars 1 billion each in 2019. The the second largest export destination, accounted decline in total trade with India in 2019 was due for 8.4 per cent of Sri Lanka’s exports with to a notable reduction in imports and moderate around 14 per cent of Sri Lanka’s garments reduction in exports in comparison to 2018. being exported to the UK. Export earnings from Total trade with China dropped owing to a the UK increased in 2019 by 1.8 per cent to US decline in imports from China. In addition, total dollars 998 million due to increased earnings on trade with the UAE, Japan, Singapore and account of garments, machinery and mechanical Germany also declined in 2019 in comparison to appliances made up textile articles transport 2018. In contrast, total trade with the USA and equipment and seafood, rubber products and tea. the UK increased due to the combined effect of However, food, beverages and tobacco, coconut increased exports and imports with these products and spice exports to the UK declined in countries in 2019 in comparison to 2018. 2019. Total exports to India, the third largest Western countries, mainly the USA and the UK, buyer of Sri Lanka’s exports accounting for 6.4 continued to be the major destinations for Sri per cent of total exports, declined by 1.1 per cent Lankan exports in 2019 as well, while Asia, to US dollars 768 million in 2019 from US mainly China and India, towered over the rest dollars 777 million in 2018. This decline mainly with respect to imports to Sri Lanka. The USA emanated from the decline in earnings from remained the single largest buyer of Sri Lankan exports of petroleum products, garments, base exports. The share of total export earnings from metal and articles, and machinery and
EASL Annual Report 2019/2020 Page 35 mechanical appliances. However, animal positive impact of the restoration of the EU fodder, coconut kernel products, textiles and tea GSP+ facility and the removal of the ban on exports to India increased in 2019. Meanwhile, exports of fisheries products to the EU. In 2019, exports to Germany, which accounted for 5.4 per the Middle East and Commonwealth of cent of total exports, increased by 5.5 per cent in Independent States (CIS) led by Russia were the 2019. Garments, rubber products and tea, which main export destinations for Sri Lanka’s tea accounted for around 70 per cent of total exports exports. They contributed 42 per cent and 17 per to Germany, largely contributed to the increase cent, respectively, of total tea export earnings, in export earnings from Germany in 2019. Italy, despite registering a decline in tea exports to which accounted for 4.4 per cent of total export these countries. earnings remained the fifth largest export China regained its position as the main source of destination of Sri Lanka, despite a decline in imports of Sri Lanka in 2019, for the second export earnings by 7.7 per cent in 2019, mainly time since 2016. China accounted for a notable due to a decline in garments, rubber products share of 20.2 per cent of total import expenditure and gem, diamonds and jewellery and tea in 2019 in comparison to the share of 18.5 per exports, which accounted for about 89 per cent cent recorded in 2018. However, import of total exports to Italy. Exports to the EU, being expenditure from China declined by 2.0 per cent the most dominant region for Sri Lankan exports to US dollars 4,034 million in 2019, mainly due accounting for about 30 per cent of total exports, to lower imports of telecommunication devices, increased by 2.2 per cent to US dollars 3,552 base metals and chemical products. Major million in 2019. imports from China during the year 2019 were Increased export earnings from garments, textiles and textile articles, machinery and seafood and transport equipment, which equipment and building material, which accounted for 65 per cent of total exports to EU, accounted for 64 per cent of import expenditure largely contributed to this increase, reflecting from China. India and the UAE followed as the the
EASL Annual Report 2019/2020 Page 36 second and the third import sourcing countries equipment and chemical products, accounting in 2019, recording US dollars 3,899 million for 89 per cent of import expenditure from (accounting for 19.6 per cent of total imports), Singapore. Expenditure on imports from Japan and US dollars 1,669 million (accounting for 8.4 declined by 44.8 per cent to US dollars 875 per cent), respectively. With respect to India, million in 2019, reducing its share to 4.4 per cent main imports comprised textiles and textile from 7.1 per cent in 2018 mainly due to the articles, petroleum products, building material, reduction in imports of personal motor vehicles. machinery and equipment and chemical Major imports from Japan during 2019 were products, which altogether accounted for 51 per personal motor vehicles, transport equipment, cent of total imports from India. Major imports and machinery and equipment, which accounted from the UAE were petroleum products, mineral for 79 per cent of imports from Japan. products and base metals, which accounted for 88 per cent of total imports from the UAE. Singapore and Japan were the fourth and fifth largest import sourcing countries, accounting for 4.8 per cent and 4.4 per cent of total imports, respectively, in 2019. Expenditure on imports from Singapore declined significantly by 29.7 per cent to US dollars 964 million in 2019, decreasing its share of total imports to 4.8 per cent from 6.2 per cent in 2018, mainly due to the considerable reduction in imports of petroleum products. Major imports from Singapore in 2019 consisted of petroleum products, machinery and
Export Performance Earnings from merchandise exports continued its growth in 2019, albeit marginally, amidst heightened domestic and external vulnerabilities. Earnings from merchandise exports increased at a higher rate during the first half of the year, but decelerated thereafter, limiting the year-on-year export growth to 0.4 per cent. Accordingly, earnings from merchandise exports recorded US dollars 11,940 million in 2019 in comparison to US dollars 11,890 million in 2018.
Earnings from industrial exports contributed to the increase in export earnings, while earnings supported by the growth in exports of textiles from agricultural and mineral exports declined. and garments. Accordingly, industrial exports Earnings from industrial exports, which increased by 1.8 per cent to US dollars 9,426 accounted for around 79 per cent of total export million in 2019 from US dollars 9,258 million in earnings, increased in 2019, predominantly 2018. Being the largest contributor to exports,
EASL Annual Report 2019/2020 Page 37 earnings from textiles and garments increased increased, driven by exports of residues from by 5.2 per cent to US dollars 5,596 million in food industries, while earnings from printing 2019. Earnings from garment exports to the industry products increased with exports of USA in 2019 increased by 3.0 per cent to US currency notes. In contrast, earnings from dollars 2,338 million. Garment exports to the EU petroleum products exports, which mainly also showed an increase of 4.9 per cent to US comprise bunker and aviation fuel, declined by dollars 2,153 million, benefitting from the 16.2 per cent to US dollars 521 million in 2019. restoration of GSP+ facility, while the UK, Lower export volumes driven by the high being the largest single buyer within the EU, competition between bunkering ports in the accounted for US dollars 747 million. In region and cancellation of several flights addition, Italy, Germany, Belgium and the following the Easter Sunday attacks as well as Netherlands in the EU as well as Canada, lower prices caused the decline in export Australia, China, India and Japan, were among earnings from bunker and aviation fuel. Exports the largest buyers of Sri Lankan garments in of other petroleum products, including 2019. Earnings from textiles and made up textile lubricants and petroleum bitumen, also declined articles also increased in 2019 due to increased in 2019. Despite the increase in earnings from demand from India, the UK, the USA, Germany rubber glove exports, earnings from rubber and Pakistan. Meanwhile, export earnings from product exports declined by 1.1 per cent to US gems, diamonds and jewellery grew by 10.0 per dollars 866 million during 2019, driven by lower cent to US dollars 306 million in 2019, tyre exports. Earnings from machinery and recovering from the low amount of export mechanical appliances exports declined by 8.0 earnings recorded in 2018. Earnings from per cent to US dollars 400 million due to low transport equipment increased by 21.3 per cent export earnings from most sub categories, to US dollars 146 million, with a significant despite higher export earnings from machinery increase in export earnings from ships, boats and and equipment parts. In addition, earnings from floating structures, reflecting mainly the supply food, beverages and tobacco exports declined, of a naval craft to Japan. Earnings from chemical led by lower manufactured tobacco exports, products exports also increased by 5.7 per cent, while all exports of sub sectors under leather, driven by exports of activated carbon. Further, travel goods and footwear also declined during export earnings from base metals and articles 2019. increased by 6.7 per cent, mainly due to the increase in export earnings from iron and steel and articles. Earnings from animal fodder
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SECTORAL EXPORT PERFORMANCE 2019/2020
Tea cent of the total output, declined by 1.0 per cent in 2019 to 189.9 million kilogrammes. The Tea The downward trend in tea production that average yield in the smallholder sector was was observed since 2017, continued in 2019 as generally higher than that in the large plantation well, primarily due to domestic factors. Tea sector, reflecting the potential for increasing the production in 2019 declined by 1.3 per cent to yield by replanting and infilling old plantations 300.1 million kilogrammes, owing to labour with high yielding tea plants and applying good issues that emerged during wage negotiations in agricultural practices. Despite the reduction in the sector, dry weather conditions that prevailed output, the quantity of tea traded at the Colombo in the first half of the year as well as heavy rains auction as well as the amount exported increased in the fourth quarter. Accordingly, high grown in 2019. However, the average export price tea production reported a decline of 3.0 per cent (FOB) of tea decreased by 9.1 per cent to US to 63.1 million kilogrammes, while the medium dollars 4.6 per kilogramme in 2019, compared to grown tea output increased marginally by 0.1 US dollars 5.1 per kilogramme recorded in 2018. per cent to 47.2 million kilogrammes. Low Meanwhile, the annual average price at the grown teas, which account for around 62 per Colombo Tea Auction (CTA) declined by 6.0 per cent to Rs. 546.67 per kilogramme from Rs. EASL Annual Report 2019/2020 Page 39
581.58 per kilogramme reported in 2018. The improve warehousing and packaging facilities highest yearon-year decrease in tea prices at the as well as quality assurance throughout the value CTA was observed for high grown tea (10.9 per chain up to the consumer. Building direct cent), followed by medium grown tea (10.0 per linkages with foreign buyers by developing cent) and low grown tea (3.6 per cent). In order producers’ own brand names will ensure better to increase earnings from tea exports, it is prices and a stable market for tea producers. essential to enhance value addition in the sector,
Rubber
Rubber production, which has been on a declining trend in recent years, further reduced exported. Accordingly, natural rubber exports of by 9.5 per cent to 74.8 million kilogrammes in Sri Lanka declined by 7.0 per cent to 13.0 2019, reporting the lowest annual output in million kilogrammes in 2019 in comparison to history. This decline was reflected in both the previous year. Domestic consumption of smallholder and plantation sectors, and was rubber in the industrial sector, which decreased mainly driven by disruptions to tapping over the last few years, further declined by 16.8 operations due to rainy weather conditions in the per cent to 113 million kilogrammes due to the latter part of the year and abandonment of subdued performance of the rubber related tapping operations due to low remunerative domestic manufacturing sector. Meanwhile, the prices. The decline was reflected by a significant cost of production of rubber increased by 2.4 per drop in the production of sheet rubber, which cent to Rs. 210.00 per kilogramme in 2019. accounts for about a 50 per cent share of total However, average prices of Ribbed Smoked rubber production. Accordingly, sheet rubber Sheet No. 1 (RSS1) and latex crepe were Rs. production declined by 9.5 per cent to 37.4 288.51 per kilogramme and Rs. 302.32 per million kilogrammes from 41.3 million kilogramme, respectively, at the Colombo kilogrammes in 2018. Crepe rubber production Rubber Auction, resulting in lower profit also recorded a marginal decline of 0.5 per cent margins, which discouraged tapping operations to 14.4 million kilogrammes. Production of and further investments in rubber plantations by other categories of rubber, which accounts for producers. Both international and domestic around 30 per cent of total rubber production, demand for natural rubber was low under the declined by 14.3 per cent to 22.9 million slowing down of global economic activities and kilogrammes, in comparison to the previous relatively low petroleum prices. During the year, year’s production of 26.8 million kilogrammes. natural rubber imports dropped by 24.0 per cent Lower output in the rubber sector during 2019 in to 50.0 million kilogrammes, although synthetic turn reduced the volume rubber imports increased by 2.1 per cent to 64.0 million kilogrammes owing to relatively low global crude oil prices.
EASL Annual Report 2019/2020 Page 40
Coconut
Coconut production in 2019, estimated at which are mainly produced for the export 3,085.6 million nuts, was an improvement of market, recording a 5.8 per cent growth in 17.6 per cent over the output in 2018. The comparison to the previous year. increase in output is attributed to the lagged Coconut prices at the Colombo Coconut effect of favourable rainfall in 2018 reported in Auctions (CCA) remained low during 2019 the coconut triangle and other coconut growing compared to the previous year, due to the areas. In line with increased nut production, the increase in supply. The average auction price of production of major coconut based products also coconut at the CCA declined to Rs. 27.55 per nut showed an improvement. Accordingly, the in 2019 from Rs. 45.55 per nut in 2018, while production of desiccated coconut (DC), which the average retail price of coconut in 2019 reported a 16.7 per cent decrease in the previous declined to Rs. 50.64 per nut by 27.4 per cent year, rebounded considerably with an increase compared to the preceding year. The decline in of 79.0 per cent to 44,081 metric tons. Coconut prices was observed with respect to other oil production also increased by 309.2 per cent coconut products as well. Accordingly, the to 44,648 metric tons while virgin coconut oil average price of coconut oil decreased by 8.0 per production increased by 2.8 per cent to 12,725 cent to Rs. 260.16 per 750 ml bottle while the metric tons in 2019. Accordingly, the average local market price of desiccated coconut importation of palm oil declined significantly to decreased to Rs. 251.03 per kilogramme in 2019 155,997 metric tons in 2019 from 217,730 from Rs. 378.22 per kilogramme in 2018. metric tons in 2018. Meanwhile, improved Meanwhile, DC exporters were able to harness coconut production helped expand the value the full benefits of increased domestic added industries in 2019, including coconut production, as reflected by the 154.7 per cent cream, coconut milk powder and coconut milk, growth in DC exports during 2019.
Minor Export Crops
The production of minor export crops recovered cent to Rs. 517.60 per kilogramme during the in 2019, despite the adverse weather conditions year continuing its declining trend, reflecting the that prevailed during the year. According to the low global demand in 2019. Mainly due to the provisional estimates of the Department of prolonged drought during the flowering and Export Agriculture, the production of minor fruiting seasons, the pepper harvest also export crops increased by 6.0 per cent in 2019, declined by 1.8 per cent in comparison to the compared to the decline of 12.3 per cent previous year. Moreover, the production of recorded in 2018. The production of clove, cinnamon marginally decreased by 0.2 per cent cocoa, arecanut, nutmeg and mace registered a to 20,352 metric tons in 2019 from 20,398 growth in 2019, while the production of pepper, metric tons in 2018. Further, the decline in cinnamon, cardamom and citronella declined. prices also discouraged the farmers, resulting in Accordingly, clove production grew by 42.4 per a national dialogue on minor export crops. cent to 4,786 metric tons. Further, production of Meanwhile, the export volumes of clove, cocoa grew by 32.7 per cent to 548 metric tons, nutmeg and mace increased while export and nutmeg and mace production grew by 22.5 volumes of pepper, cardamom and coffee per cent to 5,119 metric tons. Meanwhile, declined in 2019, resulting in a 1.7 per cent farmgate prices of pepper decreased by 11.6 per decline in total earnings from minor export EASL Annual Report 2019/2020 Page 41 crops. Erratic rain patterns remained a challenge sector should be a strategic priority to address for the minor export crops sector creating low the challenges posed by rising costs of yields and post harvest losses. The promotion of production and to capture higher share in the value addition in the minor export agriculture international market.
Vegetables
Supply of vegetables declined in 2019 owing to 2019. The vegetable cultivation in the pest damages and extreme weather conditions. intermediate season also declined due to weather The total vegetable production declined related setbacks. Accordingly, frequent price considerably by 11.8 per cent to 1,497,733 fluctuations were observed in the third quarter of metric tons in 2019, in comparison to 1,698,698 the year though the vegetable supply from the metric tons in 2018. This decline was mainly due Northern Province helped reduce price pressures to the lower production of vegetables in 2018/19 in the vegetable market. However, towards the Maha season, which recorded a decline of 15.2 end of the year, vegetable prices increased once per cent over the previous Maha season, caused again following the seasonal price patterns, by the Fall Armyworm infestation and amplified by crop damages and interruptions of prolonged dry weather conditions in the early supplies caused by heavy rains. Further, 23,957 part of the year. Vegetable production during the metric tons of vegetables with a value of US 2018/19 Maha season was also affected by the dollars 32.0 million were exported in 2019. decline in the extent of land used for vegetable Regular supply disruptions and price cultivation, following increased paddy fluctuations highlight the necessity of policy cultivation in the 2018/19 Maha season. measures to promote Good Agricultural Meanwhile, 2019 Yala production also declined Practices (GAP), enhance cold storage facilities, by 7.1 per cent, as a result of heavy rainy popularise improved technologies on crop weather conditions in the fourth quarter of the cultivation and improve post harvest handling year. Responding to the reduced vegetable and processing, with the aim of increasing the supply in the Maha season, both upcountry and efficiency of the sector. low country vegetable prices increased in May
Fruits
The production of fruits declined in 2019 owing decline in imported volume over the quantity to drought weather conditions. Fruit production imported in 2018. As in the preceding year, recorded a decline of 3.1 per cent in 2019, apples, oranges and grapes were the main against the notable growth of 28.8 per cent in the varieties of fresh fruit imported. Meanwhile, Sri previous year. More specifically, mango, Lanka exported 38,896 metric tons of fresh fruit plantain and avocado production decreased worth US dollars 41.1 million during 2019. Post considerably while orange, melon, papaw, harvest losses of the sector are estimated at passion fruit and pineapple production reported around 30 - 40 per cent, which emphasise the a growth. Sri Lanka imported 68,602 metric tons importance of preserving fruit by means of agro- of fresh fruit, incurring a cost of US dollars 75.7 cold warehousing, canning and dehydration. million during 2019. This is a 12.9 per cent Although a favourable export demand exists for
EASL Annual Report 2019/2020 Page 42 local fruits, the inability to supply large linkages with the stakeholders and further quantities on a continuous basis remains a development of contract farming system are constraint. Maintaining forward and backward important to improve the fruit export market.
Textiles & Apparel
The manufacture of wearing apparel activities Although the export oriented garment and textile showed a subdued performance amidst slower industry has made a significant contribution to growth in major traditional export markets while the Sri Lankan economy in terms of generating the manufacture of textile activities recorded a employment and creating opportunities for local marginal contraction. The manufacture of the entrepreneurs, escalating labour costs and wearing apparel sub sector, which accounts for excessive dependence on GSP+ concessions around one fifth of the IIP, registered a moderate have reduced the competitiveness of the industry growth of 1.9 per cent in 2019 in comparison to and increased vulnerability of the sector to a growth of 3.9 per cent in the previous year. shocks in global markets. Therefore, it is crucial Meanwhile, the manufacturing of textile to take necessary steps to make the industry products, which showed an expansion of 3.6 per more competitive in the global market, through cent in 2018, reported a decline of 1.7 per cent the diversification of export markets and in 2019. The decreased production of finished increased value addition, while facilitating to fabric and coir mattresses largely contributed to diversify beyond the apparel industry. the contraction in textiles production in 2019.
Fisheries
According to the Ministry of Fisheries and conditions and the implementation of Aquatic Resources, fish production in 2019 management regulations. During the year, declined by 4.0 per cent. The decline in fish around 89 million fingerlings were stocked in production was partly due to the decline in water bodies. Meanwhile, the production in marine fish production, which consists of the aquaculture sub category also increased during coastal and lagoon and deep sea fish production the period under review. Nevertheless, the and accounts for around 82 per cent of the total shrimp farm category witnessed a considerable fish production. The contraction in marine decline of 21.8 per cent to 6,400 metric tons output was primarily driven by the deep sea mainly due to the white spot syndrome disease category, which declined by 9.2 per cent to reported in many shrimp farms. Meanwhile, 172,910 metric tons, owing to disturbances to according to the Ministry of Fisheries and fishing activities due to frequent cyclonic Aquatic Resources, total fish imports increased conditions in the Indian Ocean. Accordingly, by 13.2 per cent to 95,637 metric tons. During several multi day fishing trips were cancelled the year under review, dried or salted fish based on weather warnings. Moreover, output in imports increased by 16.8 per cent to 37,590 the coastal and lagoon sub sector also declined metric tons, while canned fish imports also by 2.6 per cent to 242,580 metric tons. increased considerably by 31.1 per cent to Meanwhile, output of the inland fisheries and 36,806 metric tons. In response to a drop in aquaculture sector, which accounted for around production, prices of large fish varieties 18 per cent of total production, increased by 3.0 increased by 6.8 per cent and small fish varieties per cent, mainly due to the stocking of increased by 20.2 per cent during the year. fingerlings in reservoirs despite adverse weather Meanwhile, fish exports witnessed an increase EASL Annual Report 2019/2020 Page 43 of 11.5 per cent to Rs. 53,483 million in terms of fish in order to increase its export market share. value, while registering a growth of 2.8 per cent In this regard, regional connectivity needs to be in terms of volume to 28,771 metric tons during improved further to reduce the time taken for 2019. In the meantime, earnings from exports of domestic transportation of ornamental fish to ornamental fish were Rs. 2,913 million during ports, while supporting the local packaging the period under review. Sri Lanka needs to manufacturers. improve the handling and packing of ornamental
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