Aug 27, 2015 (LBO) – Sri Lanka needs to build goods and services which can be competitive in the global market and plug in to value chains to gain cost advantages in the path towards a competitive economic nation, economic legislator and newly elected member of parliament, Harsha de Silva said.
“We are not the only nice looking girl on the beach. There are so many nice looking girls on the beach and Sri Lanka is no longer that nice looking,” de Silva said, referring to the global market.
“So Sri Lanka’s objective in the next five years is how we are going to be the most competitive in the world.”
The island’s export earnings recorded a decline of 4.2 per cent, year-on-year, to 944 million US dollars in June 2015, led by lower earnings from tea, textiles and garments. Rbber products and seafood exports were also weaker, but total imports rose 13.5 percent to 1.33 billion dollars led by imports of vehicles for personal usage and business purposes, resulting in a widening of the trade gap.
De Silva said earlier that Sri Lanka’s export competitiveness was weakening in the past few years with share of gross domestic product taken by exports dropping to about 15 percent from 35 percent 10 years ago. He argued that some export taxes discourage the exporters and those kind of taxes should be removed.
The new government elected would act to bring back export competitiveness to Sri Lanka through removing constraints and putting policies in right places, he says.
One of the ways to approach global markets is through tradable goods.
“If we want to become competitive, we have to start moving our goods from non-tradable to tradable and we have to become the best,” de Silva said.
“If we are stuck in non-tradable like construction, transport, retail and wholesale, we will never become a competitive economy that we want to become. “So we have to jump in the deep end and compete with the rest of them who are competing with us.”
He added that the competitive economy can be achieved through cooperative measures with similar markets.
“We should be able to network and form partnerships while we plug ourselves to value chains.” De Silva said.
Adjusting macro-economic variables by depreciating the currency would not help Sri Lanka in the long run as it creates many other problems to the economy.
The newly elected govenment is still to announce ministries shared between the main two parties which analysts say ‘might create political uncertanity in the island again.’