Solving macroeconomic problems to boost exports – Experts
Macroeconomic issues urgently need to be addressed for exports to return to pre-pandemic levels, said Dr Ganeshan Wignaraja, international development expert, policy advisor and researcher.
Recording an export turnover of US $ 1 billion for five months this year is to be commended, but the country cannot afford to stop there because the export earnings per month before the pandemic were much better than that, he said.
Export earnings broke the US $ 1 billion mark for the fifth month of the year, while reaching the highest monthly export value in October.
Addressing macroeconomic issues such as an unstable exchange rate, reduced imports that stifle export growth, restrictions on opening letters of credit, and a limited export basket should take priority over peripheral issues. of trade promotion, said Dr Wignaraja.
Former National Chamber of Exporters (NCE) President Ramal Jasinghe said exporters have performed rather well this year despite huge challenges averaging US $ 1 billion per month.
The high cost of freight and the shortage of containers have hurt exporters while the fertilizer import ban has had a negative impact although it now appears to have eased due to the authorities’ decision to import fertilizers. fertilizer for export crops.
The unavailability of US $ to purchase raw materials is a major problem facing exporters. Failure to issue dollars to traders to import consumables essential to the manufacturing process has put pressure on the sector and on value-added activity for exporters as exporters must import these items directly.
The cost of production has skyrocketed due to low-volume imports by companies. Exporters do not have sufficient funds in their USD A / c for this purpose.
The NCE wrote to the finance ministry asking for 10 rupees above the going bank rates to induce exporters to import US dollars into the country as an incentive for exporters, Jasinghe said, adding that the budget had failed. not provided incentives to exporters. .
While the country is so focused on exporters, there should have been incentives for exporters to motivate them, he said.
Exporters do not like the 2.5% tax while other Asian countries in the region offer incentives to exporters.
The rubber industry hits the $ 1 billion mark in export earnings. We hope to see a few other industries reach a higher level of export income soon, he said.
An official from the National Chamber of Exporters said the export sector is the fastest sector to rebound compared to tourism, remittances and FDI.
Reaching $ 1 billion against a backdrop of higher freight costs, lack of containers and rising production costs is remarkable, he said.
He said that the level of use of EU GSP and US GSP remains low. The chamber has undertaken capacity building initiatives in this regard.
According to data compiled by CBSL, Sri Lanka’s total merchandise exports under preferential trade agreements are only 41%. The effectiveness of trade agreements is questionable as a significant percentage of exports are made without any preferential trade agreement.
Non-tariff barriers have become the major problem for exporters.
âWe also need to focus more on service exports. Besides the ICT sector, there are many service sectors that we can focus on, such as the creative industries. RCE is aware of rising energy costs and other macroeconomic challenges. Maintaining the GSP is a crucial factor for the export sector. Another review is scheduled for early next year, âhe said.