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Export target of industries for 2021

13 Feb 2021

From the business sector’s perspective, Covid-19 has had either an adverse or beneficial impact on each and every sector of the industry. Right now, everyone is trying their best, to their utmost capacity, to rise up again after the second wave of Covid-19 which hit in October 2020. In this backdrop, let's discuss how the export industry of Sri Lanka will perform in the year 2021 while competing with international competitors.  Commenting on the export industry of Sri Lanka, the Sri Lanka Export Development Board (EDB) said that Sri Lanka’s abundance of natural resources, our historical position as a global trading centre, and the availability of knowledge and technology, place Sri Lankan exporters in an enviable and unrivalled position in comparison to other manufacturers, suppliers, and exporters in the region.  “The sustained market for local agricultural exports including Ceylon Tea, natural rubber, and coconut-based products, and rising demand for Sri Lankan apparel, knowledge services, and engineering services, provide Sri Lankan exporters with new potential to conquer new markets and explore new horizons,” the EDB added.  Let’s discuss how the export sectors of Sri Lanka have planned their export targets for the upcoming year 2021.   Tea industry   According to the EDB, Sri Lanka continues to remain among the top five tea-producing countries in the world because Ceylon Tea is celebrated for its unique flavour, variety, and quality. “The country’s tea exports are governed by black tea and are yet to exploit the rising global demand for green tea, organic tea versions, and herbal and fruit infusions to the fullest; although China, India, and Kenya are the largest tea exporters based on volume, Sri Lanka is the third largest tea exporter by USD (US dollar) value, exporting $ 1.4 billion worth of Ceylon Tea to the world,” the EDB noted. Speaking to The Sunday Morning Business, Sri Lanka Tea Board (SLTB) Director – Promotion (Overseas and Local) Pavithri Peiris stated that the expected target for the year 2021 is a total volume of 295 million.  Inquired about the possible challenges that could be faced by the tea industry, Peiris stated that at the moment, the challengers will depend on the economic environment in international countries. However, the prevailing Covid-19 situation can be another problem, she stated. “For example, if a  few workers at one or two/three companies get infected with Covid-19, we would have to halt their operations, and that type of decline is possible.” In relation to this, Peiris said the SLTB has advised the exporters to not take a large number of the workforce at once for an operation. “We advised to operate them on a roaster basis by separating the segments and calling that particular segment at the individual level. We have already discussed this type of strategy with the exporters and they are practising it,” Peiris added.  Adding further, Peiris said that another challenge could be “climate effect”, which could affect production. “At the moment, we don’t have that type of forecast. However, last year, there was a huge drought, which was why we couldn’t produce the expected volume.” Meanwhile, while comparing 2020 and 2021, Peiris said that in 2020, due to the Covid-19 pandemic, most advertising campaigns highlighted that drinking hot tea was a precautionary measure, which is why we got a good demand for Ceylon Tea during the pandemic.  “We implemented social media campaigns in 12 countries promoting Ceylon Tea last December 2020 – that’s why we are expecting more demand and more exports during this year,” Peiris concluded. Meanwhile, speaking to The Sunday Morning Business, a senior official of Jafferjee Brothers (JB) who wished to remain anonymous, stated that the export target for the year 2021 will depend on the market to which JB exports to. “70-80% of our tea goes to the Middle East and to Russia, which have a lot of problems right now, from the oil price factor to experiencing economic and political uncertainty,” the official said.  Elaborating further, the official said: “The exports will all depend on how the global economy develops. Many countries that import Ceylon Tea are mainly oil exporters, so if the global economy improves, the price of oil potentially can go up; then, their economies can get stronger. A great deal of Sri Lanka fortunes of tea is based on prices of oil. Second of all, it depends on their political situation. For instance, issues of sanctions in the US, the civil war in Syria, the Libyan civil war, etc.”  When inquired regarding the obstacles, the official said that “the only obstacle is the economy”. Adding further, the official noted that the export industry was not adversely impacted in the year 2020: “It was pretty much okay; it was slightly behind 2019, and in terms of value, Sri Lanka’s export tea value was higher. We actually did better than most tea-exporting countries. Our prices of tea went up – our quantity didn’t go up – and I don’t think the plantation industry did badly in the year 2020. We had challenges, but it was okay,” the official concluded.    Apparel and textile industry   Joint Apparel Association Forum (JAAF) Secretary General Tuli Cooray said that due to the current problems faced by the industry to meet the delivery quotes, the target for the year 2021 has not been set.  “We have not done those calculations yet, as our deliveries have come down.”  Adding to this, Cooray stated: “We are hoping to hear from the Government, as we have requested for them to give us priority in terms of vaccinating our labour force.”  Meanwhile, speaking at the webinar held by the Institute of Policy Studies of Sri Lanka (IPS), JAAF Chairman A. Sukumaran had said that the demand for global apparel has dropped by 25-30%, and even before the pandemic, Sri Lanka was in a situation where there was an excess supply. “We are starting this year with demand going down by 30% on an already oversupplied market, which means the situation is going to be very difficult for us, and on top of that, what's happening right now is that we are taking orders from abroad three to four months prior, in which we are required to deliver by four months’ time. However, due to various situations of closure, lockdown, etc., we are unable to fulfil our customer requirement,” Sukumaran said. “Sri Lanka is built on a pillar of a very reliable supplier. Right now, what's happening is that this is under threat, so unless something different happens right now, we see more challenges in 2021. Give us our priority. We are 47% of Sri Lanka's total exports; if exports do not function, if our buyers start pulling out, and if we start losing our orders, the impact is tremendous, for the company and the country,” Sukumaran concluded. According to the EDB, despite changing trade trends and fashion demands, Sri Lankan apparel manufacturers have continued to sustain the global interest in the industry, and reinvented Sri Lanka as an ethical, sustainable, and high-end sourcing destination for apparel sourcing. Although the lack of a high-quality fabric manufacturing industry has hindered the potential of the industry’s rapid expansion, the Sri Lanka apparel industry is slowly moving towards the manufacturing and processing industry of textiles and fabrics.   Spice industry    Spices had been Sri Lanka’s trump card since the 15th Century. The country has the global monopoly for True Cinnamon (Cinnamomum zealanicum) widely known under the geographical indication of Ceylon Cinnamon, which contains smaller amounts of coumarin compared to cassia cinnamon. In this light, speaking to The Sunday Morning Business, Impex Corporation Director of Exports Yamuna Perera said that Impex Corporation is expected to increase turnover by 20% more than last year. Commenting on the obstacles which could be faced in 2021 in terms of exporting spice, Perera stated that presently, it is only the Covid-19 pandemic, adding: “This is due to our factories, warehouses, and everything being situated in Colombo city, and sometimes we are short of workers.”  Adding further, Perera noted that there is a big demand globally for cinnamon because only Sri Lanka has “True Cinnamon”, and other countries only export cassia. “Cinnamon is mainly used in terms of getting health benefits such as to manage cholesterol, in pharmaceuticals, and it is also used for drinking in the form of cinnamon powder.”  Concluding, she noted that Impex Corporation is trying to expand its portfolio to products like cinnamon powder and coriander, cinnamon powder and tea leaves, and also cinnamon powder and ginger. “These are the new adventures which we are hoping to embark on this year.”    Coconut and coconut-based industry    The Adamjee Lukmanjee Group of Companies is a prominent export firm in Sri Lanka with a heritage of over 150 years as a manufacturer and processor, and is one of the largest exporters of desiccated coconut, coconut oil, coconut by-products, and spices. Speaking to The Sunday Morning Business, Adamjee Lukmanjee & Sons (Pvt.) Ltd. Managing Director Murtaza Lukmanjee said that due to a shortage in storage facilities of raw materials, the raw material prices have risen significantly, from almost 70-80%, which has adversely impacted the export industry.  “During the last four months, from October 2020, we have lost valuable foreign markets; we have lost buyers who have opted out of Sri Lankan-origin coconut products and switched to Philippines and Indonesia, as they offer cheaper alternatives,” Lukmanjee said. Elaborating further, Lukmanjee explained that coconut, which used to be around Rs. 70-80/kg, has now gone up to Rs. 135/kg in Sri Lanka, whereas the major competitors – namely Philippines and Indonesia – sell at Rs. 60-70/kg in their region. “Raw material is generally 75% of total cost, so you can imagine the impact that it has had on the final product we produce for exports.”  Due to this concern, Lukmanjee noted that the company has held relevant discussions with the Coconut Growers Association, and that they have come to understand that when the prices of coconuts rise above Rs. 80-85/kg, Sri Lanka becomes uncompetitive in the world market. “For us to maintain a healthy and sustainable export industry, the yield of coconut has to substantially improve, and in the meantime, the Government must have a policy where if the coconut prices go above a reasonable amount, then the importing of such raw materials should be approved, which could serve as a re-export policy,” he added. He concluded that, based on the performance in the financial year 2020/2021, Sri Lanka will not even achieve 50% of its export target for coconut-based products, whereas last year (2019/2020), the country achieved over 100% of its target. “Either crops have to improve, or the Government has to allow raw material imports for processing, value-addition, and re-export.”    IT industry    Speaking to The Sunday Morning Business, 3ITeam International Partner Parakrama Weerasinghe said that the target set by the company for this year is around $ 100,000 to $ 1 million. When inquired about the obstacles the IT (information technology) export industry could face this year, Weerasinghe said that there is an obstacle for reaching the market posed by the prevailing Covid-19 pandemic. However, competing in the International market is not impossible. “We have to compete with India because that is the biggest market. It is not possible to compete on size, but we can compete on quality. This is the point on which we need to reach out to the market because we have to show them the value of the quality. The quality of the Indian product is not very good. Hence, we have to market our potential – high-quality products, the way we approach the customers, things like that,” Weerasinghe added.    Rubber   Speaking to The Sunday Morning Business, Rubber Research Institute of Sri Lanka Additional Director Dr. V.H.L. Rodrigo said that the export target for the year 2021 is above 90,000 metric tonnes (MT) of rubber, produced in Sri Lanka. “Last year, it was about 74-78,000, and by next year (2022), we are thinking of achieving the target of 100,000 MT of rubber production in the country.” With regard to the challengers that they may face in the year 2021, Rodrigo said that at the moment, the main issue is the overall productivity in the rubber land. “In Sri Lanka, the productivity is very much below par in comparison to other countries. Hence, we are taking several steps to improve the productivity of the existing land.”  If the export industries of Sri Lanka and the Government implement medium and short-term measures and address the fundamental issues in the sectors, the export revenue for the entire economy may rise in comparison to 2020. 

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Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!


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