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Can e-commerce be the solution to the forex crisis?

10 months ago

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  • Enterprising traders capitalise on selling common local goods to foreign clientele 
BY Sumudu Chamara The Government seems to be taking every possible measure to stabilise the crisis-ridden country with a focus on strengthening the country’s foreign reserves situation, one of the main reasons that has led to the economic collapse.  The country has had to deal with not only dwindling foreign reserves – which, according to Prime Minister Ranil Wickremesinghe, has declined to less than $ 1 million – but also newer challenges faced by the exports sector when exporting Sri Lanka-made goods. However, amidst the prevailing foreign reserves crisis, which many Sri Lankans think is difficult to manage, a small sector of the population is making US dollars without much effort, through lawful means, although in small quantities.  The main method through which they make money in foreign currencies is exporting various goods via electronic commerce (e-commerce) platforms such as eBay, and according to their experiences, that is an easy, lawful, and a highly beneficial way of generating income in foreign currencies, which can help the country stabilise its foreign reserves situation in the long run if planned, implemented, and promoted properly. Exporting low-cost goods According to some who spoke with The Morning, one of the main advantages of selling goods to foreign customers via online platforms is the ability to sell goods that can be found, purchased, or created at a low cost in Sri Lanka, but have a high value or demand in foreign countries. Chamath Kumara, one such seller, described his experience. “I sell even simple and inexpensive things such as coconut shells, dried medicinal plants, and spices via online platforms. Even though they do not have a high value in the domestic market, when it comes to foreign customers, they are ready to pay prices that are up to five times the value in the local market.” He opined that selling goods at such prices cannot be considered unfair, and that it is merely the financial value those goods have been assigned in the international market. Adding that Sri Lanka is yet to understand the true value of a large number of goods that can be easily found or produced in the country, he said that a major attitudinal change is necessary for Sri Lanka to value what it has in abundance but other countries lack. He explained: “Sri Lanka underestimates the value of local goods that can be found for free or produced at a low cost within the country. We tend to believe that they do not have a considerable financial value merely because we can find them easily, or because they are common goods we use in our everyday life. Pepper, betel leaves, coconut shells, ginger, turmeric,and dried leaves of various plants, can be easily found or purchased in Sri Lanka at a low price. If we have two perches of land, we can even plant some of them at an extremely low cost.” Sri Lankans should understand that the market price of a product depends on the demand and also on its availability in the country where the buyer resides, he said, adding that it is crucial to be open to international markets at a small scale because large-scale export businesses are struggling to continue their businesses. He spoke further of which goods should be prioritised in this business, explaining: “It is possible to sell almost anything except what is considered illegal, harmful, or stolen. It is crucial to identify and prioritise what goods can help Sri Lanka make the maximum profit. One of the reasons the export sector has collapsed is the inability to obtain materials that are necessary to produce certain export goods. Therefore, to avoid the same fate, Sri Lanka should pay attention to goods that can be easily produced without any imported material.  “That is why a significant number of those who sell goods via online platforms choose natural goods that can be found for free or obtained at a low cost. Even though we do not think that there is any financial value to goods that can be found from our environment for free, there is a market for even jackfruit leaves and coconut shells.  “Some of these products we can obtain for free and process at a low cost in Sri Lanka can be sold at around $ 15-20. Even though this may seem like a small amount compared to the foreign reserves crisis Sri Lanka is going through, such income can help improve household economies significantly. Proper knowledge, planning, and promotion are what are necessary. Patience is also necessary, because this business takes time.” K.V.A. Haritha, another seller, said that even though this business model can earn a considerable amount of income in foreign currencies, it is essentially a smaller version of large-scale export businesses, since Sri Lanka already exports some of the products that are being sold via online platforms. Therefore, he said, the Government or the people should not be under the impression that Sri Lanka’s economy can be completely saved in a short period of time under this model. “What this business can help Sri Lanka achieve is supporting its economic recovery through improving foreign reserves and improving household economies. This business, if carried out by a considerable number of Sri Lankans, can help keep the foreign reserves situation relatively stable, but not completely resolve the foreign reserves crisis, because we make small sales,” he opined. The Government’s support The lack of Government interventions to promote the sale of locally available goods via online platforms is one of the key challenges that hinder the development of this business, as those who spoke with The Morning pointed out. They lamented the Government’s lethargy in identifying the importance of, and supporting and promoting these businesses, in a context where the country’s economic crisis is largely caused by the lack of foreign reserves, which can be addressed effectively through this business model to some extent. Speaking of this situation, Saranga Pushpakumara (name changed on request), another seller who has been in this business for years, told The Morning: “I do not understand why the Government keeps complaining about the difficulties in increasing Sri Lanka’s foreign reserves, when selling goods via online platforms is one solution to alleviate the impacts of that issue. It will definitely be a gradual process, because Sri Lanka lacks not only support, but also adequate knowledge about this business. However, in the long run, it can become one of the leading foreign currency-earning businesses.” With regard to promoting this business model in Sri Lanka, he added: “All it requires to promote such businesses in the country is some awareness-raising programmes, which can be carried out at a very low cost compared to the efforts the Government is taking in order to earn foreign currency through traditional export businesses.  “The Government has to do only two things. First, it needs to raise awareness among those who are familiar with online platforms about how to start export businesses via online platforms, goods that are easy to find and/or produce in Sri Lanka, markets in which such goods can be sold easily and at the maximum price, and the risks and practical challenges that should be taken into account when engaging in such businesses.  “Secondly, the Government can use its international relations in order to promote Sri Lankan goods that can be sold via online platforms, in collaboration with foreign countries where there is a huge clientele for online platforms that facilitate the sale of goods in small quantities.” He also pointed out the importance of the Government giving more recognition to this business, while also stressing that doing so will encourage those engaged in this business to get their earnings in foreign currencies to Sri Lanka via official money transfer channels. “One of the reasons that prompts those engaged in this business to save their foreign currency earnings in digital wallets without converting them to Sri Lankan rupees is the unstable economic situation prevailing in the country, and also the Government’s decision to forcibly keep US dollar rates against the Sri Lankan rupee at a certain level which was recently revoked. The people are not confident that their US dollar will remain safe in Sri Lanka or that they can use their income in the form of US dollar in the future,” he said, emphasising that therefore, the Government has to take measures to increase confidence in those engaged in this business. Even though selling goods in small quantities via online platforms is still not a widely-practised export business in Sri Lanka, it is gaining popularity, and more and more youth can take part. In fact, there is a considerable number of individuals engaged in this business, and there are even institutes and individuals that teach and promote this business model. However, with more support from the Government, it has the potential to support the country’s foreign reserves situation to some extent, and also keep household economies afloat amidst the ongoing crises. It is high time that the Government looks at newer and innovative methods of strengthening the country’s export sector – and promoting e-commerce is one method that has undeniable potential.

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