The impact of the recent second wave of Covid-19 on the economy, and more specifically on the country’s exports sector, has been far less damaging than the impact of the first outbreak of the virus, The Sunday Morning learnt.
The most recent spread of the virus originated from the leading garment factory in Minuwangoda, resulting in rampant speculation that Sri Lanka’s exports would come to a standstill, or diminish significantly at the least.
Nevertheless, Export Development Board (EDB) Chairman Prabhash Subasinghe told The Sunday Morning that this time round, the Government has been able to curtail the damage done to the exports sector.
He said the Government had taken measures to ensure that export factories, as well as the supply chain, were allowed to operate despite the curfews.
“The good news is that the Government is taking steps to ensure all factories are operational. It has given clear instructions to the military, the Police, and the Ministry of Health to support the Board of Investments (BOI) and the EDB to ensure factory operations continue,” he explained.
“The Government is very keen to ensure that exports are a priority and that factories are operational. I don’t have a prediction right now, but we are hoping that the disruption would be minimal,” Subasinghe added.
A lesser impact
Subasinghe explained that opting for local curfews, instead of an islandwide lockdown similar to what followed the first outbreak in March, has mitigated the negative impact on the economy.
“There has been a much smaller impact than last time, simply because there are only a few areas which are closed. The second thing is that even in the areas that are closed or under quarantine curfew, the Government is allowing businesses and export factories to operate. Last time, it was the entire country that was under lockdown; also, it took awhile for us to get the export factories, supply chain, etc. to operate,” he said.
Economically speaking, the methodology has indeed been better for the economy and the export economy in particular. He said that during the previous lockdown, the entire country was closed, whereas this time round, quarantine curfew is imposed on a city-by-city or district-by-district basis.
Moreover, he said the Government had adopted a policy of encouraging the expansion of Sri Lanka’s exports into new fields.
“We are continuously telling our exporters that they need to look for new opportunities; we are continuously saying that we have to diversify our export basket – so this is fixed priority. At the end of the day, the Government can only create an enabling environment, but it is the private enterprises that should look at opportunities and find opportunities,” Subasinghe highlighted.
Remaining a friendly nation
Meanwhile, veteran economist and former Central Bank of Sri Lanka (CBSL) Deputy Governor Dr. W.A. Wijewardena said that Sri Lanka must look for investments from all possible prospects and could not afford to pick one nation over the other in favour, as the entire region is looking to attract investments from a handful of economically powerful nations.
“Sri Lanka has to be friendly with all the countries in the world, not necessarily with just China and India. Now the US Secretary of State visited Sri Lanka and it must be used as an opportunity rather than considering the visit a threat, because most of the investments come from all these three countries to the rest of the countries in the region. Therefore, we’ll have to try and attract as many investments as possible from China, India, and the US,” he pointed out.
He said that Sri Lanka must also begin to look for new forms of investments while simultaneously developing the nation by seeking high-tech investments in the future, According to him, high-tech investments is a key area Sri Lanka is lacking, which as a result hinders economic growth domestically.
“In the past three to five years’ time, foreign investments were mainly in the hospitality sector which has been very badly affected by the prohibition of movement of people from one country to another. China, India, and the US are much more advanced in technology than Sri Lanka. So what Sri Lanka should do is to get their support to introduce a high-tech industry in Sri Lanka,” he said.
Given that the apparel sector is a significant component of the country’s economy, Dr. Wijewardena also said that the apparel sector must be diversified while progressively branching out into new export markets.
“Presently, a majority of our exports are apparels. Out of the $ 10 billion worth of exports, $ 5 billion comes from the apparel sector. So we cannot ignore the apparel sector right now. What we can do is, in the next two to three years, we must concentrate on the apparel sector and expand it further into areas such as personal protective equipment (PPE) while gradually diversifying into other sectors such as high-tech sectors and pharmaceuticals,” he noted.
Nevertheless, the senior economist acknowledged the tough conditions countries were facing due to the prevailing Covid-19 pandemic.
“The current conditions are not favourable for either investments or exports. So we have to understand the situation; the situation is very fragile not only for Sri Lanka, but for the entire world. We have to wait until the situation improves, if we are to expect any significant positive changes to investments and exports,” he concluded.
He said the Government had taken measures to ensure that export factories, as well as the supply chain, were allowed to operate despite the curfews.
“The good news is that the Government is taking steps to ensure all factories are operational. It has given clear instructions to the military, the Police, and the Ministry of Health to support the Board of Investments (BOI) and the EDB to ensure factory operations continue,” he explained.
“The Government is very keen to ensure that exports are a priority and that factories are operational. I don’t have a prediction right now, but we are hoping that the disruption would be minimal,” Subasinghe added.
A lesser impact
Subasinghe explained that opting for local curfews, instead of an islandwide lockdown similar to what followed the first outbreak in March, has mitigated the negative impact on the economy.
“There has been a much smaller impact than last time, simply because there are only a few areas which are closed. The second thing is that even in the areas that are closed or under quarantine curfew, the Government is allowing businesses and export factories to operate. Last time, it was the entire country that was under lockdown; also, it took awhile for us to get the export factories, supply chain, etc. to operate,” he said.
Economically speaking, the methodology has indeed been better for the economy and the export economy in particular. He said that during the previous lockdown, the entire country was closed, whereas this time round, quarantine curfew is imposed on a city-by-city or district-by-district basis.
Moreover, he said the Government had adopted a policy of encouraging the expansion of Sri Lanka’s exports into new fields.
“We are continuously telling our exporters that they need to look for new opportunities; we are continuously saying that we have to diversify our export basket – so this is fixed priority. At the end of the day, the Government can only create an enabling environment, but it is the private enterprises that should look at opportunities and find opportunities,” Subasinghe highlighted.
Remaining a friendly nation
Meanwhile, veteran economist and former Central Bank of Sri Lanka (CBSL) Deputy Governor Dr. W.A. Wijewardena said that Sri Lanka must look for investments from all possible prospects and could not afford to pick one nation over the other in favour, as the entire region is looking to attract investments from a handful of economically powerful nations.
“Sri Lanka has to be friendly with all the countries in the world, not necessarily with just China and India. Now the US Secretary of State visited Sri Lanka and it must be used as an opportunity rather than considering the visit a threat, because most of the investments come from all these three countries to the rest of the countries in the region. Therefore, we’ll have to try and attract as many investments as possible from China, India, and the US,” he pointed out.
He said that Sri Lanka must also begin to look for new forms of investments while simultaneously developing the nation by seeking high-tech investments in the future, According to him, high-tech investments is a key area Sri Lanka is lacking, which as a result hinders economic growth domestically.
“In the past three to five years’ time, foreign investments were mainly in the hospitality sector which has been very badly affected by the prohibition of movement of people from one country to another. China, India, and the US are much more advanced in technology than Sri Lanka. So what Sri Lanka should do is to get their support to introduce a high-tech industry in Sri Lanka,” he said.
Given that the apparel sector is a significant component of the country’s economy, Dr. Wijewardena also said that the apparel sector must be diversified while progressively branching out into new export markets.
“Presently, a majority of our exports are apparels. Out of the $ 10 billion worth of exports, $ 5 billion comes from the apparel sector. So we cannot ignore the apparel sector right now. What we can do is, in the next two to three years, we must concentrate on the apparel sector and expand it further into areas such as personal protective equipment (PPE) while gradually diversifying into other sectors such as high-tech sectors and pharmaceuticals,” he noted.
Nevertheless, the senior economist acknowledged the tough conditions countries were facing due to the prevailing Covid-19 pandemic.
“The current conditions are not favourable for either investments or exports. So we have to understand the situation; the situation is very fragile not only for Sri Lanka, but for the entire world. We have to wait until the situation improves, if we are to expect any significant positive changes to investments and exports,” he concluded.