Sri Lanka tea trade told to liberalise, tap stock market

Sept 10, 2010 (LBO) – Sri Lanka should consider liberalising tea imports to encourage blending and value addition while plantations companies could use the current stock market bull run to raise funds, a report said. “Given the current buoyancy of the equity market, however, it is opportune for such companies to start tapping the stock market.” RAM Ratings (Lanka) said that while since the early days, Sri Lankan tea has been considered among the best in the world, enabling it to command higher prices than its global peers, the island was losing its competitive position.

Sri Lanka has retained its status as one of the world™s top two tea exporters, albeit having relinquished its position as the largest global exporter of tea to Kenya in 2007.

“While still considered a producer of superior-quality tea, it is evident that Sri Lanka™s competitive position in the global tea arena has been slipping,” the rating agency said in a report on the tea industry.

“Heightened competitive pressures in the global market, coupled with several internal supply issues, have eroded the country™s competitiveness.”

Sri Lanka™s cost of production remains among the highest in the world, a result of lower labour p