With economic expansion in post war situation:

Exports show signs of recovery

Sanjeevi Jayasuriya

The country could expect an expansion of the economy in the post war situation. The number of tourist arrivals is increasing steadily. Gross official reserves have surpassed USD 4 billion. The Stock Exchange surged to its highest point during this period. The IMF mission has also commented that the economic development achieved has been better than expected, Exporters Association of Sri Lanka Chairperson, Nirmali Samaratunga told Daily News Business.

Exports will show signs of recovery with the global recession easing. However, there is a need to support the sector and get it back on track - particularly in view of the expectations on exports in the current scenario, she said.

She stressed the need for an enabling environment for exporters as the prevailing conditions in the country are conducive to produce exportable goods at a competitive price. Competitiveness is of paramount importance to achieve export targets and keeping costs down is a critical need. Inflation is now down to a single digit, a positive development and it is hoped that it will be kept under control, she said.

The rate of exchange is being currently managed through Central Bank intervention, whereby the appreciation of the rupee has been stalled, and thus, not adversely impacting the sector as before. However, it is being watched, in view of the potential impact if allowed to appreciate. A realistic exchange rate is necessary for strong growth of the sector, she said.

Another pressing concern was the cost of finance, which again has been addressed with a reduction in interest rates. This should impact positively on the sector, particularly the SME exporters, for whom cost and access to finance was a serious impediment. The high cost of dollar borrowing also needs to be addressed, as it far exceeds the much lower rate in competitor countries.

Easing the cash flow issues of exporters has also been a cause for concern, she said. At present exporters also have to face a complex tax system with a multitude of taxes. A simplification of the tax system and reducing some of the many taxes and charges would greatly ease the burden of the exporters, whilst saving time and cost for the company and the authorities, she said.

Another key area is trade facilitation and reduction of transaction costs. These need to be minimized by computerizing and introducing e-commerce to Government departments. We have advocated an inter- ministerial task force for the purpose and fast track the adoption of these changes, she said.

She said that steps are being taken to address the trade facilitation issue. The recommendation is to work towards reducing the number of days for exports from the present 21 days to half that number and for paper submissions and the administrative burden to be reduced and red tape checked. What is particularly needed is the ease of cargo clearance that needs to be automated, thereby reducing time and transaction costs, she said.