Exporters’ Association8. Seafood Exporters Association of Sri Lanka 9. Sri Lanka Diamond Manufacturers Association 10. Sri Lanka Association of Software and Service Companies 11

Exporters’ Association Of

Sri Lanka

Annual Report &

Accounts

2018-2019

EASL Annual Report 2018/2019 Page 1

OFFICE BEARERS 2018/ 2019

CHAIRMAN Mr. Harin De Silva Eastern Merchants Plc

1st VICE CHAIRMAN Mr. Chrisso De Mel Hayleys Plc

2nd VICE CHAIRMAN Mr. Imdadh Marikar

Expolanka (Pvt) Ltd

SECRETARIAT THE CEYLON CHAMBER OF COMMERCE

50, Nawam Mawatha, Colombo 2

TEL : +94 11 5588871

FAX : +94 11 2449352

EMAIL : [email protected]

WEBSITE : www.exporterssrilanka.net

mailto:[email protected]

http://www.exporterssrilanka.net/


MANAGING COMMITTEE 2018/2019

MEMBER COMPANIES

Company Name Main Representative Alternate Representative

A S Agri Exports (Pvt) Ltd Dr. A S Sabaratnam

Ceylon Biscuits Ltd Mr. Jude Rubera Mr. Priyantha Bandara

Eastern Merchants PLC Mr. Harin De Silva

Expolanka (Pvt) Ltd Mr. Imdadh Marikar Mr. Mohamed Farzan

Greenfield Bio Plantations Ltd Mr. Fazal Mushin

Ms. Koushalya

Radhakrishnan

Hatton National Bank PLC Mr. Janath Illangantileke Mr. Niluka Amarasinghe

Hayleys PLC Mr. Chrisso De Mel Mr. Nalaka Ratnayake

Lion Brewery Ceylon PLC Mr.Ranil Goonetilleke Mr.Sharlene Adams

Imperial Teas (Pvt) Ltd Mr. Wasantha Alutwela Mr. Sunith Caldera

Adamjee Lukmanjee (Pvt) Ltd

Mr. Hemantha Fernando

Mr.Minosh Devapura

K I K Lanka (Pvt) Ltd

Mr. Lakshan Algama Perera

Mrs. Nadie Kahatapitiya

Algama

Link Natural Products (Pvt) Ltd Mr. Thakshila Gamage Mr. Chanaka Gunathilake

Meezan & Co. (Pvt) Ltd Mr. S Abdul Cader Mr. Umar Azwer

Consolidated Business Systems

Ltd

Mr. Shanthi Wijesinghe Mr. Asela Wijayabandara

Nidro Supply (Pvt) Ltd Mrs. Dawn Austin

Saboor Chatoor (Pvt) Ltd Mr. Gulam Chatoor Mr. Ejaz Chatoor

Shums & Company Pvt Ltd Mr. M H Talal Shums Mr. M Saheed Jiffry

Sri Lanka Export Credit

Insurance Corporation Mr. D H J Ranasinghe Mr. S M T Silva

Tea Tang (Pvt) Ltd Mr. Rohan P Daluwatte



MEMBER PRODUCT ASSOCIATIONS

PRODUCT ASSOCIATION REPRESENTED BY

1. Colombo Tea Traders‟ Association Mr. H D Hemaratne

2. Seafood Exporters Association of Sri Lanka Mr. Channa Weeratunga

Mr. Dilan Fernando

3. Spices & Allied Products Producers Association Mr. Vernon Abeyratne

Mr. P Gunasekara

4. Sri Lanka Association of Manufacturers & Mr. Justin Seneviratne

Exporters of Rubber Products Mr. Sisira Ranatunga

5. Sri Lanka Gem & Jewellery Association Mr. Ajward Deen

Mr. Rizwan Nayeem

6. Sri Lanka Diamond Manufacturers Association Mr. Sanjaya Baid

Mr. R D Samaranayake

7. Lanka Fruit & Vegetable Producers, Mr. S. Gnanaskandan

Processors & Exporters Association Mr. Zuraish Hashim

8. Sri Lanka Apparel Exporters Association Mr. Aziz Rumy

Mr. Athula Jayasundera

9. Colombo Rubber Traders Association Mr. Keshara Subasinghe

10. Sri Lanka Association of Software Services Companies (SLASSCOM)

Mr. Rifdy Fahmy

Mr. Druvinda Jayamanne

11. Tea Exporters Association Mr. Dai Pathmanathan

Mr. Ranjith Abeykoon



PAST CHAIRPERSONS

Mr. Fazal Mushin Greenfield Bio Plantations Ltd

(Immediate Past Chairperson)

Mrs. Dawn Austin Nidro Supply (Pvt) Ltd

Mrs. Nirmali Samaratunga Mackwoods Ltd

Mr. Deepal Chandrasekera Imperial Teas (Pvt) Ltd

Mr. A. S. M. Muzzamil Ceylon Foods (Pvt) Ltd


THE EXPORTERS’ ASSOCIATION OF SRI LANKA

MANAGING COMMITTEE 2018-2019

Standing from Left to right

Mr. Vernon Abeyratne (SAPPTA), Mr. S M T Silva (Sri Lanka Export Credit Insurance

Corporation), Mr. Janath Illangantileke (Hatton National Bank PLC), Mr. Priyantha Bandara

(Ceylon Biscuits Ltd), Mr. S Gnanaskandan (Lanka Fruit & Vegetable Producers

Processors & Exporters Association), Mr. Thakshila Gamage (Link Natural Products (Pvt) Ltd)

Seated from Left to Right

Ms. Manori Dissanayaka (Ceylon Chamber of Commerce / EASL Secretariat), Mr. Jude Rubera

(Ceylon Biscuits Ltd), Mr. Talal Shums (Shums & Company Pvt Ltd), Mrs. Nirmali Samaratunga

(Past Chairperson), Mr. Rohan P. Daluwatte (Tea Tang Pvt Ltd/Past Chairman), Mr. Chrisso De Mel

(1st Vice Chairman), Mr. Harin De Silva (Chairman), Mr. Fazal Mushin (Immediate Past Chairman),

Mrs. Dawn Austin (Past Chairperson/Nidro Supply (Pvt) Ltd), Mr. Lakshan Algama (K.I.K. Lanka

(Pvt) Ltd), Mr. Justin Seneviratne (Sri Lanka Association of Manufacturers & Exporters of Rubber

Products)Ms. Ushani Dassanayake (Ceylon Chamber of Commerce / EASL Secretariat)

Not Present: Mr. Imdadh Marikar (2nd Vice Chairman), Mr. Gulam Chatoor (Past Chairman/

Saboor Chatoor (Pvt) Ltd), Mr. Deepal Chandrasekera (Past Chairman), Mr. A S M Muzammil

(Past Chairman), Dr. A S Sabaratnam (A S Agri Exports (Pvt) Ltd), Ms. Koushalya Radhakrishnan

(Greenfield Bio Plantations Ltd), Mr. Niluka Amarasinghe (Hatton National Bank PLC),

Mr. Wasantha Alutwela (Imperial Teas (Pvt) Ltd), Mr. Suneth Caldera (Imperial Teas (Pvt) Ltd),

Mr. S Abdul Cader (Meezan & Co (Pvt) Ltd), Mr. Umar Azwer (Meezan & Co. (Pvt) Ltd),

Mr. D H J Ranasinghe (Sri Lanka Export Credit Insurance Corporation), Mr. M Saheed Jiffry

(Shums & Company (Pvt) Ltd), Mr. Ejaz Chatoor (Saboor Chatoor (Pvt) Ltd), Mr. Ranil

Goonetilleke (Lion Brewery Ceylon PLC), Mr. Sharlene Adams (Lion Brewery Ceylon PLC),


Mr. Hemantha Fernando (Adamjee Lukmanjee (Pvt) Ltd), Mr. Minosh Devapura (Adamjee

Lukmanjee (Pvt) Ltd), Mr. Shanthi Wijesinghe (Consolidated Business Systems Ltd) , Mr. Asela

Wijayabandara (Consolidated Business Systems Ltd) , Mr. Aziz Rumy (Sri Lanka Apparel

Exporters’ Association), Mr. Keshara Subasinghe (Colombo Rubber Traders’ Association), Mr. H

D Hemaratne (Colombo Tea Traders’ Association), Mr. Ajward Deen (Sri Lanka Gem & Jewellery

Association),Mr. Rizwan Nayeem , (Sri Lanka Gem & Jewellery Association) Mr. Channa

Weeratunga (Seafood Exporters’ Association of Sri Lanka), Mr. Rifdy Fahmy (Sri Lanka

Association of Software Services Companies (SLASSCOM), Mr. Sanjaya Baid (Sri Lanka

Diamond Manufacturers Association), Mr. Dai Pathmanathan (Tea Exporters Association) , Mr.

Ranjith Abeykoon (Tea Exporters Association)

Highlights of Post Business Session

Chief Guest: Chairman, The Ceylon Chamber of Commerce

Mr. Rajendra Theagarajah

Participants

Handing over the National Export Development Strategy (NEDVS 3)

Document to the Chief Guest


LIST OF MEMBER COMPANIES AS

AT 31ST MARCH 2018

A

A BAUR & COMPANY (PRIVATE) LIMITED

A F JONES (EXPORTERS) CEYLON LTD

A S AGRI EXPORTS (PVT) LTD

ADAMEXPO

AGSTAR EXPORTS (PVT) LTD

AITKEN SPENCE EXPORTS LTD

AKBAR BROTHERS (PVT) LTD

ANSELL LANKA (PVT) LTD

B

BANK OF CEYLON

BEIRA BRUSH LTD

BOGALA GRAPHITE LANKA PLC

C CEYLON BISCUITS LTD

CEYLON TEA MARKETING (PVT) LTD

CHAS P. HAYLEY & CO. LTD

CHEMANEX PLC

CIC HOLDINGS PLC

COCOTANA COCONUT PRODUCTS

COLOMBO RUBBER TRADERS' ASSCOCIATION COLOMBO RUBBER TRADERS'

COLOMBO TEA TRADERS ASSOCIATION COLOMBO TEA TRADERS ASSOCIATION

CONSOLIDATED BUSINESS SYSTEMS (PVT) LTD


D

DANKOTUWA PORCELAIN PLC

DELMEGE FORSYTH & CO. LTD

DIPPED PRODUCTS PLC

E

E B CREASY & CO. PLC

EASTERN MERCHANTS PLC

EDINBOROUGH PRODUCTS (PVT) LTD

ESWARAN BROTHERS EXPORTS (PVT) LTD

EURO-SCAN EXPORTS (PVT) LTD

EXPACK CORRUGATED CARTON (PVT) LTD

EXPOLANKA (PVT) LIMITED

EXPOLANKA FREIGHT (PVT) LTD

EXPORTERS ASSOCIATION OF COCONUT BASED SUBSTRATES

F FINLAYS COLOMBO PLC

G

GEORGE STEUART & CO. LTD

GLOBAL RUBBER INDUSTRIES PVT LTD

GORDON FRAZER & CO LTD

GREENFIELD BIO PLANTATIONS (PVT) LTD


H HAMEED BROTHERS COLOMBO (PVT) LTD

HARRISONS (COLOMBO) LTD

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HELA CLOTHING (PVT) LTD

HELLMANN WORLDWIDE LOGISTICS (PVT) LTD

HEMACHANDRAS (KANDY) LTD

HIRDARAMANI INTERNATIONAL EXPORTS (PVT) LTD

I

IMPERIAL TEAS (PVT) LTD

INDUSTRIAL CLOTHINGS LTD

ISHANA SPICE EXPORTS

J

JAFFERJEE BROTHERS

JIFFY PRODUCTS S.L. (PVT) LTD

K K. I. K . LANKA (PVT) LTD


L LANKA BRUSH EXPORTS (PVT) LTD.

LANKA WALLTILES PLC

LANKEM CEYLON PLC

LINEA AQUA (PVT) LTD

LINK NATURAL PRODUCTS (PRIVATE) LTD

LION BREWERY (CEYLON) PLC

M

MABROC TEAS (PVT) LTD

MASCONS (PVT) LIMITED

MEEZAN & CO (PVT) LTD

MIAMI EXPORTS (PVT) LTD

MICROCELLS (PRIVATE) LTD

MONA PLASTICS (PVT) LTD

MORISON PLC J L

N NATIONS TRUST BANK PLC

NIDRO SUPPLY (PVT) LTD


P PATTAKANNUS (PVT) LTD

PREMIER NATURAL TEAS (PVT) LTD

PRINTCARE PLC

R

RANFER TEAS (PVT) LTD

RENUKA HOLDINGS PLC

RICHARD PEIRIS NATURAL FOAMS LTD

RILEYS (PVT) LTD

S

SABOOR CHATOOR (PRIVATE) LTD

SAMPATH BANK PLC

SEAFOOD EXPORTERS ASSC OF SRI LANKA

SHUMS & CO. LTD

SL ASSO.OF MANUFACTURURES & EXP OF RUBB PRDS SL ASSO.O

SL FRUITS & VEG. PRODS, PROCS, & EXP AS. SLFRUITS & VEGPRODSPROCS

SMITHKLINE BEECHAM (PVT) LTD

SPICE & ALLIED PRODUCTS, PRODUCERS' ASSC SPICE & ALLIED PRODUCTS,

SRI LANKA APPAREL EXPORTERS ASSOCIATION

SRI LANKA ASSOCIATION OF SOFTWARE AND SERVICE COMP

SRI LANKA DIAMOND MANUFACTURERS' ASSOCIATION

SRI LANKA EXPORT CREDIT INSURANCE CORPORATION

SRI LANKA GEM & JEWELLERY ASSOCIATION SL

STASSEN EXPORTS (PVT) LTD


T

TEA EXPORTERS ASSOCIATION OF SRI LANKA

TEA TANG (PVT) LTD

THE SWADESHI INDUSTRIAL WORKS PLC

TRELLEBORG LANKA (PVT) LTD

U

UNION COMMODITIES (PVT) LTD

V

VAN REES CEYLON LTD


LIST OF MEMBER PRODUCT ASSOCIATIONS AS AT 31ST MARCH 2018

1. Sri Lanka Fruit & Vegetable Producers, Processors & Exporters Association

2. Sri Lanka Apparel Exporters Association

3. Colombo Rubber Traders’ Association

4. Spices & Allied Products Producers Association

5. Colombo Tea Traders’ Association

6. Sri Lanka Association of Manufacturers & Exporters of Rubber Products

7. Sri Lanka Gem & Jewellery Association

8. Seafood Exporters Association of Sri Lanka

9. Sri Lanka Diamond Manufacturers Association

10. Sri Lanka Association of Software and Service Companies

11. Tea Exporters Association of Sri Lanka

PAST CHAIRPERSONS OF THE EXPORTERS’ ASSOCIATION OF SRI LANKA

Year

From 1993 to 1997 August - Mr Lyn Fernando

Chairman of the Export Section of the Ceylon Chamber of Commerce

- Mr. Gulam Chatoor

Chairman of the Federation of Exporters Association of Sri Lanka

August, 1997 The Export Section of the Ceylon Chamber of Commerce & the Federation of Exporters Association of Sri

Lanka merged to form EASL and the inaugural meeting of the Exporters' Association of Sri Lanka held on

August 22nd 1997, This meeting was chaired by Mr Gulam Chatoor as Chairman of Federation of

Exporters’ Association of Sri Lanka. Mr Lyn Fernando was elected as the Chairman of EASL.

Chairpersons from 1997 onwards;

1997-2000 - Mr. Lyn Fernando

2000-2003 - Mr. A S M Muzzammil

2003-2005 - Mr. Gratian Gunawardhana

2005-2007 - Mr. Mohan Mendis

2007-2008 - Mr. Deepal Chandrasekara

2008-2011 - Mrs. Nirmali Samaratunga

2011-2013 - Mrs. Dawn Austin

2013-2015 - Mr. Rohan P. Daluwatte

2015-2017 (February) - Mr. Fazal Mushin


THE EXPORTERS’ ASSOCIATION OF SRI LANKA

The formation of the Exporters Association of Sri Lanka brought a wide spectrum of exporters, under

one umbrella, and a strong platform was built to discuss and make representations on issues affecting

the Export Trade, with one voice. The Association now represents around 1000 Exporters through

direct and indirect membership, and contributes to over 80% of the total exports of the country.

History:

In 1973, Chamber Members who engaged in individual export trade initiated the formation of the

“Export Section of the Ceylon Chamber of Commerce”.

In 1987, the Export Development Board initiated the formation of the Federation of Exporters’

Associations of Sri Lanka (FEA), which was an umbrella organization of major export product specific

Associations.

It was observed that there was a duplication of activities of these individual Organizations and that

there would be more usefulness served if the two were merged to promote and protect the common

interests of Members, whilst making a significant contribution to the growth of the Export Industry of

Sri Lankan exporter.

In August 1997, Export Section of the Ceylon Chamber of Commerce (CCC) and the Federation of

Exporters’ Association (FEA) passed resolutions at specially convened General Meetings by the two

Institutions that the Institutions merge into one Association to be called the EXPORTERS

ASSOCIATION OF SRI LANKA.

The first Chairperson elected after the merger, was Mr. Lyn Fernando, with Mr. Gulam Chatoor

proposing his name from the chair. Mr. Lyn Fernando and Mr. Gulam Chatoor had both served as

Chairpersons of the Export Section of the Ceylon Chamber of Commerce and as the Chairpersons of

the FEA.

All members of both the Institutions took the membership of the EASL.

Membership The EASL now proudly represents practically the entire Export Sector of Sri Lanka through the

Membership of Companies and Exporter Associations. Eligibility to join the EASL being made up of

the following:

1. Any member of the Ceylon Chamber of Commerce engaged in or interested in export

2. Any properly constituted and functioning Association representing exporters of products and

services

3. Any individual member of such an Association referred to in (2) above

4. Any Company or Individual engaged in exports of goods and services who are registered with

Sri Lanka Export Development Board (SLEDB) or any respective Association duly constituted

and functional.

The EASL’s single platform representation structure is acknowledged by all authorities in both the

public and private sectors to be a responsible and credible voice of Exporters in Sri Lanka.


REVIEW OF ACTIVITIES 2018/2019

ANNUAL GENERAL MEETING

The Exporters' Association of Sri Lanka which is an approved Association of the Ceylon Chamber of

Commerce held its 21st AGM on 10th July, 2018 at 2.00 p.m. at the Board Room of The Ceylon

Chamber of Commerce. The Post Business Session and Cocktails held at the Atrium, Cinnamon Grand

Hotel, Colombo. Mr. Rajendra Theagarajah, Chairman of The Ceylon Chamber of Commerce, graced

this occasion as the Chief Guest and the keynote speaker.

Mr. Harin De Silva of Eastern Merchants Plc was re-elected as the Chairman for EASL whilst Mr.

Chrisso De Mel and Mr. Imdadh Marikar were re-elected as 1st Vice Chairman and the 2nd Vice

Chairman respectively.

The EASL's mission is to promote and protect the interests of the Exporter Community at large and

this has brought together a wide spectrum of Exporters under a strong single platform aimed at

exchanging views and making representation on Macro issues relevant to the country's Exports.

The EASL has constantly engaged with Government agencies, representing and lobbying Exporter

concerns for consideration, with a view to facilitating a dialogue with regard to national policy

direction, whilst taking into account the shared goal of achieving strong national economic

development through the combined endeavours of the Export Sector and the Government.

Delivering the keynote address Mr. Rajendra Theagarajah stated that the Ceylon Chamber of

Commerce wants the country’s private sector to up their game and the government to expedite crucial

policy initiatives such as removing trade barriers and facilitation of skilled migration to the country to

improve export competitiveness.

Mr. Rajendra Theagarajah further said that the private sector should back the courageous policy

initiatives such as removal of para-tariffs and other tariffs, which are withholding the competiveness of

Sri Lankan exports, while also stressing the importance of relaxing immigration laws to attract skilled

workers to face the shortage of skilled workers.

He emphasized that Sri Lankan exporters should capitalize on opportunities arising from a depreciating

currency, rather than calling for more protection.

He noted that a complete review of Sri Lanka’s tariff and para-tariff structure is needed to harmonize

tariffs with the rest of the region to remain competitive, and hence urged the private sector to back the

government to fully implement the initiative.

Mr. Theagarajah stressed that the value-added exports have become equally important when growing

exports.

“It’s not just about growing exports. We need imports to improve connectivity and competitiveness of

our exports,” he stressed.


Theagarajah expressed dissatisfaction over private sector investments in research and development

(R&D), while urging the private sector to link up with local universities for R&D initiatives.

“Exporters need to do some soul searching. Ask yourselves, whether you are engaging with start-ups

and investing in the future. Do you plough back at least half a percentage to invest in innovation?

“Are you investing and collaborating with universities to develop new products and solutions? Or are

you waiting for someone else like the government to do that for you?” he questioned.

Referring to a recent survey conducted by ACCA and KPMG, he said that less than one-in-five

business executives knew about China’s Belt and Road Initiative which is a US $4 trillion trade

initiative that includes Sri Lanka.

Mr. Theagarajah noted that Malta might be a better example for Sri Lanka to draw lessons, which is

located in Europe in a similar strategic location to Sri Lanka as it does in South Asia.

He pointed out that Malta, which doesn’t have any natural resources, has been successful in boosting

exports, which makes up about 60 percent of its GDP now through open immigration policies,

developing its free port and allowing anybody who wants to go into Europe to come and add value

through their country.

“We have the greatest window to South Asia, but are we doing enough to encourage those who should

be coming here and add value,” he questioned.

Mr. Theagarajah also noted that Sri Lanka hasn’t been successful in attracting the diaspora community

and their investments back into the country.

He pointed out that lack of quality education and healthcare acts as the main barrier in attracting them

back to the country. Hence, he urged the private sector to invest in these sectors.

Exporters’ Association of Sri Lanka, Chairman Harin de Silva stated that the exporters blamed the

absence of a “strong and positive political will and vision,” as the reason behind Sri Lanka’s failure to

achieve full export potential, and urged the government to focus on providing greater transparency,

accountability and speedy implementation of policy initiatives.

Mr. Silva further stated that “Sri Lanka’s export fraternities’ ambition of working with a government,

that was focused on bringing about good governance and ushering in a new era for Sri Lankan exports,

has not panned out as we hoped,”

“Time and again the EASL has stressed the importance and need for a strong and positive political will

and vision to drive the export sector of our country in order to reach its full potential. But sadly it

seems that our pleas have gone in vain,” he added.


De Silva drew his attention to the prevailing political uncertainty in the country, pointing out that it has

put many things on hold.

“The country as a whole seems to be in a political limbo with a wait and see mindset.

“Communal unrest seems to be making its presence felt yet again with the communal violence that

erupted in Teldeniya in March this year. Daily demonstrations on the streets of Colombo continue to

cause great inconveniences to the daily life of the people and businesses,” he emphasized.

Speaking on transparency, De Silva placed emphasis on getting more export sector stakeholders

involved in the ongoing FTA negotiations, by obtaining their feedback on a timely manner. He

proposed the government to set up a structured mechanism with a robust communication strategy to

achieve this objective.

With regard to research and development (R&D), he called the government to expedite the

implementation of converting the current Coordinating Secretariat for Science, Technology and

Innovation (COSTI) to National Science Technology and Innovation Coordinating Authority

(NASTICA), where the focus will be on commercial ventures.

The Cabinet of Ministers has approved the proposal in this regard early last year, which was also

included in last year’s budget proposals. However, there was no significant progress made in the

implementation of the proposal to-date.

“The implementation of this strategy needs to be dynamic with strong institutional framework for

effective public and private sector coordination. The success of the strategy will be the re-orientation

of the present mindset on research institutions,” De Silva stressed.

Meanwhile, presenting the third version of EASL’s recommendation to the National Export Strategy

(NES), he also proposed the government to introduce a scheme similar to the Export Development and

Investment Scheme (EDISS) that was introduced in the 1980s, taking into account the current

developments and the tax framework.

“This is for the promotion and development of both traditional and non-traditional exports with a focus

on both value addition and service-oriented exports.”

Speaking on removing the current constraints on exporters in terms of market access, he made

suggestions to develop an export promotional portal leveraging on the existing institutional setup of the

government and private sector to provide up-to-date market information on the opportunities available

in strategic export markets for Sri Lanka.


Furthermore, De Silva pointed out that the country branding initiatives should be coordinated and

complimented with a supportive trade finance regime.

Speaking of the investment climate, De Silva stressed that the digitization of the country’s land bank

remains crucial for both local and foreign investors, to make sound investment decisions.

MANAGEMENT COMMITTEE MEETINGS & SUMMARY OF ITS ACTIVITIES

During the period under review (2018/2019) the Committee met on twelve (12) occasions.

EASL REPRESENTATION ON OTHER BODIES/PARTICIPATION AT OTHER FORUMS

Committee of the Ceylon Chamber of Commerce

- Chairman, Mr. Harin de Silva (Main representative)

& Mr. Chrisso de Mel (Alternate)

Steering Committee on Trade Liberalization of the Ceylon Chamber of Commerce

- Mr. Harin de Silva, Chairman & Mr. Chrisso de Mel,

VC1

National Agenda Committee (NAC) on Export Development - CCC

- Mr. Harin de Silva, Chairman, & Mr. Chrisso de Mel,

VC1

Monitoring Committee on Benefits of GSP+ and Labour Matters by Ministry of Labour, Trade

Union Relations and Sabaragamu Development

– Mr. Rohan P. Daluwatte

Exporters Forum, Sri Lanka Export Development Board

- Mr. Talal Shums

National Export Strategy (NES) Core Team and Working Group, International Trade Centre

and Sri Lanka Export Development Board

– Mr. Harin de Silva, Chairman, Mr. Fazal Mushin,

Mr. Talal Shums

Working group for GAP spices, Sri Lanka Standards Institute

- Mr. G S Chatoor

Evaluation committee on Market Access Programme under Sri Lanka Export Development

Board. - Mr. Lakshan Algama

Employers Federation of Ceylon - Mrs. Dawn Austin

Advisory Commission Constitute Under the Intellectual Property Act No. 36 of 2003, Ministry

of Industry & Commerce – Mr. Lakshan Algama Perera


EU - Sri Lanka Trade related assistance project - Geographical Indication (GI) Ceylon

Cinnamon, Ministry of Industry and Commerce – Mr. Lakshan Algama

The Association has maintained a closer dialogue with the following Institutions, on export related

matters:

Ministry of Development Strategies and International Trade

Ministry of Industry and Commerce

Ministry of Finance

Ministry of Foreign Affairs

Sri Lanka Export Development Board

Department of Inland Revenue (VAT Dept)

Sri Lanka Customs

Board of Investment

The Central Bank of Sri Lanka

Sri Lanka Ports Authority

Department of Commerce

Department of Exchange Control

Joint Apparel Associations Forum

Sri Lanka Standards Institute

MAIN AREAS ADDRESSED DURING THE YEAR UNDER REVIEW

As the apex body representing over 100 Exporters through direct & indirect membership, who

contribute over 80% to the total exports of the country, the EASL activities during the year under

review, were primarily aimed at facilitating an environment for the Exporters with a focus on global

competitiveness and achieving strong growth of the Sector.

In the year under review the EASL has forged ahead to capitalize on the Government’s declaration that

all imperatives required to encourage the growth of Export will be addressed and resolved. Consistent

and frequent representation has been made by the EASL to every related agency connected with

Exports, drawing attention to aspects that constrain Export businesses from being able to achieve the

targets which each sector has set for itself.

The Association’s representation for a stakeholder discussion with Project Director of National Single

Window (NSW) & Trade information Portal (TIP) Project, PM Group to discuss options and approaches on

the Revenue & Fee Model task within the NSW blueprint organized by the Ceylon Chamber of Commerce.

Recommendations for the National Export Strategy (NEDEVS 3)

Over the past 2 years the EASL on its own have developed 2 documents under the title

“Recommendations for a National Export Strategy”. Subsequent committees set about identifying

cross cutting issues at a macro level via extensive consultations with our membership & stake holder in

the export fraternity along with economist who specialize in the field of exports. This year is no

different and the committee has proceeded to develop the 3rd document. This document was shared


with policy makers in the current government. Taking a step further this year, this document was also

shared with all political and interested parties who are concerned with the developments of exports out

of Sri Lanka which was something that EASL did not do with the first two documents.

Each of these 3 documents address the most critical issues challenging the export fraternity in Sri

Lanka that need to be addressed at the highest levels of government.

Third document focuses on 5 main points that are currently essential in formulating the foundations for

the growth of Sri Lankan exports.

1. Driving the National Exports Strategy

The government must ensure that a predictable and transparent policy and regulatory

framework is in place to promote trade competitiveness. This will go a long way in achieving

the five-year detailed plan of action and implementation of the management framework

proposed by NES.

The establishment of an institutional framework for effective public and private sector

coordination for the execution of these plans of action and pro–business orientation of

Government agencies.

Updating regulatory framework by the way of incorporating amendments to outdated

legislation and bringing in new regulations to suit the requirements of modern trading practices.

2. Improving the investment climate for exports

Digitising the Land Bank in Sri Lanka - a key difficulty for both foreign and local investors is

the availability of data concerning the availability of land for investment purposes. While steps

are being taken to implement the digitisation of the land bank, it will need to be expedited to

ensure that this does not continue to be a key drawback for investment.

Improve Sri Lanka’s ranking on the Ease of Doing Business index

Introduction of a scheme similar to the Export Development and Investment Support Scheme

(EDISS) that was introduced in the 1980s taking into account the current developments and the

tax framework. This is for the promotion and development of both traditional and non-

traditional exports with a focus on both value addition and the service oriented exports.

Policy initiatives should be driven to encourage investments by addressing the increasing

labour shortages for many industries.

3. Addressing Constraints for Market Access and Promotion

Develop an export promotion portal by leveraging on existing institutional set up of the

Government and the private sectors to provide up to date market information on opportunities

available in strategic export markets for Sri Lanka.

Addressing quality infrastructure deficiencies to resolve compliance issues and promote market

access potential of exports.

Country branding initiatives to be coordinated and complimented with a supportive trade

finance regime.


4. Proactive Engagement in Trade Liberalisation

Develop a structured mechanism with a robust communication strategy for obtaining timely

feedback from the export sector stakeholders concerning ongoing FTA negotiations, especially

on offensive interests.

Develop a trade adjustment package in consultation with the relevant stakeholders.

Prioritize the establishment of a National Single Window (NSW), under Sri Lanka’s TFA

commitments to gain trade facilitation efficiencies which has the potential to bring substantial

cost savings and predictability for traders.

5. Fostering Innovation to drive exports

Convert the current Coordinating Secretariat for Science, Technology and Innovation (COSTI)

to the National Science Technology and Innovation Coordinating Authority (NASTICA) where

the focus will be on commercial ventures.

The implementation of this strategy will need to be dynamic with a strong institutional

framework for effective public and private sector coordination. The success of the strategy will

be on re-orienting the present mind set in research institutions.

NEDEVS 3 was formulated by Economic Intelligence Unit (EIU) of the Ceylon Chamber of

Commerce (CCC)

The final document was shared among main government and private sector stakeholders. (Around 50 key

stakeholders). There was a good press coverage highlighting the key aspects of the document after the

AGM.

To be the focus of the Committee during the year, Improve the quality and standards of export

products; build capacity within Institutions responsible ensuring the ability to achieve international

standards in a cost effective manner; Create encouragement to increase Production and Productivity;

Setting up of an EXIM bank to support Exporters looking at new markets, NTBS, Sanitary and

Phytosanitary Measures and Technical Barriers to Trade relevant to FTAs with India, China and

Pakistan were taken up at the various sub committees appointed by the Ministry of Development

Strategies and International Trade (MoDSIT).

The Office-bearers worked tirelessly on lobbying on Tax, Fiscal, and other issues related to the new

Foreign Exchange Act, the New Inland Revenue Act, Budget Proposals for 2018 and the Sri Lanka

Singapore Treaty for prevention of Double Taxation which has a bearing on the Free Trade Agreement

(FTA) which was signed by the Government of Sri Lanka and Singapore recently which impacts on,

and benefits International Trade particularly in regard to exports

We have also been very vocal in the media and have released article on Easter Sunday terror attacks

and acknowledging the colossal impact the attacks have had on human life, livelihoods, and the

economy, the EASL is committed to do their part to help Sri Lanka recover.


KEY EXPORT RELATED MATTERS ADDRESSED AND RESOLVED THROUGH EASL

INTERVENTIONS AT MEETINGS WITH GOVERNMENT OFFICIALS AND OTHER

EXPORT RELATED ORGANIZATIONS:

i) EASL Submissions for 2018 National Budget

Submissions of the different Sectors were consolidated and presented by EASL to the Ceylon

Chamber of Commerce.

ii) Department of Inland Revenue (IRD)

Representations were made to IRD stating that there should not be a hiatus in the transition

from SVAT to RAMIS and that the current SVAT system must remain operational until

RAMIS is in place as projected.

iii) Sri Lanka Customs

Meetings with Director General Customs

Export Statistics to be available monthly for the benefit of the exporters to understand the

competitiveness in the market

Operational Issues relating to Sri Lanka Customs Export Facilitation Centre

iv) Export Development Board

Ongoing interaction with the EDB and members of the Managing Committee being

included on the respective EDB Advisory Committees.

Submissions for Exporters’ Forum

The Chairman of the EASL was appointed to serve on the core team and working Group

of National Export Strategy (NES)

v) Foreign Exchange Department of the Central Bank of Sri Lanka (CBSL)

Proposed New Mechanism for Tracking Export Proceeds by Sri Lanka Customs

EASL was invited to participate discussions to set up a mechanism for tracking repatriation of

export proceeds, organized by Central Bank and Sri Lanka Export Development Board. The

current rule for repatriation of export proceeds stands at 120 days with a grace period of 30

days (as per the provisions of the Foreign Exchange Act No 12 of 2017). EASL has opposed

implementing the new mechanism proposed by Sri Lanka Customs which is a cumbersome

procedure adding extra cost to the exporters.

SRI LANKA NATIONAL EXPORT STRATEGY (NES)

The Government of Sri Lanka unveiled the National Export Strategy (NES) on 19th July 2019, a

blueprint for achieving increased exports, enhanced regional cooperation and job creation.

Alongside other national initiatives such as Enterprise Sri Lanka and Vision 2025, the Strategy

is an important addition to the country’s development agenda and its goal of becoming a

leading Asian export hub driven by innovation and investment. Technical assistance for

developing the NES was provided through the EU-Sri Lanka Trade Related Assistance project

funded by the European Union.


The five-year Strategy aims to enable Sri Lanka to reach its goal of $28 billion in exports by

2022. It benefits from the input of more than 600 public and private-sector stakeholders across

Sri Lanka to reflect their export ambitions.

The Strategy sets out specific priority actions and investments to address competitiveness

constraints, modernise regulatory systems for improved efficiency, and boost Sri Lankan

industries in order to increase exports. It also sets targets to improve opportunities for Sri

Lanka’s micro, small and medium-sized enterprises (MSMEs) and exporters in regional and

global trade.

Advisory Committees were set up by the Hon. Minister, Malik Samarawickrema, Minister of

Development Strategies and International Trade under the provision of the SLEDB’s Act No.

40 of 1979. These export “Advisory Committees” were rapidly reactivated for effective

implementation and monitoring of the NES. These committees were set up for 3 year period.

Members of the EASL committee have been invited to serve on these advisory committees.

The successful implementation of Sri Lanka’s National Export Strategy depends on the

capacity and willingness of all public and private sector stakeholders to contribute, collaborate,

own and drive towards a common national objective. Priorities need to be implemented at the

earliest possible opportunity and the frequency of regular and structured public-private

dialogues will be critical to maintain the momentum needed.

vi) Sri Lanka Standards Institute

Issues faced by Exporters when exporting fast moving consumer goods to India

Request for MRA to be established between SLSI and the Exporters and other statutory

bodies in order to have reciprocity between Authorising Agencies.

Import Inspection Scheme

EASL suggested that Import and Export Control Department and Sri Lanka Standards

Institution shall take into consideration to include products such as Chili powder, Curry

Powder under the Import Inspection Scheme of SLSI.

vii) Department of Commerce

Addressing Non-Tariff Barriers (NTBs) faced by Sri Lankan exporters when exporting to

India in the form of standards, testing and inspection requirements.

viii) Board of Investment of Sri Lanka

Request to extend the tax and other incentives given for new foreign investors to the

existing local companies who want to add value, expand and upgrade their operations.


EASL’S AFFILIATION WITH OTHER ORGANIZATIONS ON EXPORT RELATED

MATTERS

i) The Ceylon Chamber of Commerce

Participation in monthly Chamber Committee meetings:

ii) Employers Federation of Ceylon

As an Affiliated Association of the EFC, EASL participated in EFC regular meetings, where

employee related matters were discussed.

AWARENESS BUILDING ACTIVITIES

A) Dissemination of Information

The membership was alerted on various issues affecting exporters, as well as matters of interest, by

way of Circulars issued by EASL as well as the Ceylon Chamber of Commerce and various other

affiliated bodies of the relevant local Chamber. This included information on matters of business

interest to members, notices of topical seminars/workshops organized by the Ceylon Chamber of

Commerce and affiliated Associations/Councils.

B) Seminars/Interactive forum

During the year under review, there was no seminars organized by EASL.

C) Website

The site has proved to be an extremely useful information tool. http://www.exporterssrilanka.net.

D) Publicity

Several Press releases and interviews were given by EASL to create awareness of developments and

issues in the Sector, and the future outlook.

E) Membership

The Membership as at 31st March 2019 consisted of 93 individual Exporter members and 11

Product Associations.

F) Auditors and Annual Accounts

The Auditors of the Exporters Association of Sri Lanka for the period 2018/2019 were Messrs. HLB

Edirisinghe & Co. The Audited Accounts of the Association is attached.

G) Secretariat

The Ceylon Chamber of Commerce continued to provide Secretarial Services to the Association

during the period under review.

http://www.exporterssrilanka.net/


BY ORDER OF THE COMMITTEE

Sgd.

Ushani Dassanayake

For Secretary


EXPORT SECTOR PERFORMANCE IN 2018/2019

AND FUTURE EXPORT CHALLENGES

OVERVIEW OF THE ECONOMY

The vulnerability of the Sri Lankan economy to

global and domestic disturbances became

increasingly visible in 2018, with a modest

expansion in real economic activity amidst a

low inflation environment during the year. Real

GDP growth was recorded at 3.2 per cent in

2018, compared to 3.4 per cent in the previous

year. This growth was largely supported by

services activities that expanded by 4.7 per cent

and the recovery in agriculture activities, which

recorded a growth of 4.8 per cent. Industry

activities slowed down significantly to 0.9 per

cent during the year, mainly as a result of the

contraction in construction. According to the

expenditure approach, both consumption and

investment expenditure supported growth.

Investment as a percentage of GDP stood at

28.6 per cent in 2018 compared to 28.8 per cent

in the previous year, while the savings-

investment gap widened during the year

indicating increased dependence on external

resources to fill the shortfall. The total size of

the Sri Lankan economy was estimated at US

dollars 88.9 billion, while the per capita GDP

was recorded at US dollars 4,102 in 2018,

which was marginally lower than in the

previous year. Amidst the moderate growth in

economic activity, a marginal increase in the

unemployment rate and a decline in the labour

force participation rate were observed during

the year. The external sector of the economy

was volatile during the year due to both global

and domestic factors. Globally, monetary

policy normalisation, particularly in the United

States of America (USA), resulted in global

financial conditions tightening, thus causing

capital outflows from emerging market

economies and increased pressure on exchange

rates of twin deficit economies, in particular.

Sri Lanka also experienced these headwinds,

particularly from mid-April 2018, which were

exacerbated following the political

uncertainties and the downgrade of the

country’s Sovereign rating in the fourth quarter

of the year. Domestically, the trade deficit

surpassed US dollars 10 billion for the first

time in history with higher growth in import

expenditure outpacing the growth in export

earnings, which were at a record level in

nominal terms. Although services exports are

estimated to have grown substantially, the

deficit in the merchandise trade balance,

stagnant workers’ remittances and rising

foreign interest payments resulted in a widened

current account deficit of 3.2 per cent of GDP

during the year. The financial account

benefitted from increased foreign direct

investment (FDI) inflows which recorded its

historically highest level in 2018, as well as

borrowing from abroad, particularly through

the issuance of International Sovereign Bonds

(ISBs). The combined result of these

developments was a deficit in the overall

balance in the balance of payments (BOP). In

2018, the Central Bank followed a market

based exchange rate policy and allowed a

sharper depreciation of the rupee, but

intervened in the domestic foreign exchange

market, particularly at times when large capital

outflows and undue speculation caused

excessive volatility in the market. In order to

address the widening trade deficit, the Central

Bank and the government implemented a series

of measures to curb non-essential imports by

increasing tariffs, imposing margin

requirements, tightening loanto-value ratios on

selected types of lending, and suspending the

issuance of letters of credit (LCs) on

concessionary permits for vehicle imports. In

response to these measures and the global

financial markets becoming less unfavourable,

the pressure on the BOP and the exchange rate

subsided during late 2018 and early 2019, and


the Sri Lankan rupee appreciated against major

currencies during the first quarter of 2019, thus

correcting the overshooting of the exchange

rate observed in the previous year to some

extent. The resumption of discussions and the

achievement of staff level agreement with the

International Monetary Fund (IMF) on the

programme under the Extended Fund Facility

(EFF) arrangement in February 2019 also

helped improve investment sentiments. In spite

of the sharp depreciation of the rupee and the

introduction of the pricing formula for

domestic petroleum price adjustments, headline

and core inflation remained well anchored in

low single digit levels during the year,

supported by proactive monetary policy

measures, improved domestic supply

conditions, and also due to subdued aggregate

demand conditions. Headline inflation

fluctuated largely in line with the price

movements of the food category, where food

prices declined mostly during 2018 owing to

favourable weather conditions that prevailed

during the year. Inflation is expected to remain

well within mid single digit levels in the

medium term, particularly under the envisaged

flexible inflation targeting (FIT) regime.

Subdued inflation and inflation expectations

and lower than potential growth in real

economic activity prompted the Central Bank

to signal an end to the monetary tightening

cycle in April 2018 by reducing the Standing

Lending Facility Rate (SLFR) by 25 basis

points. Thereafter, the Central Bank maintained

a neutral monetary policy stance throughout the

year, in view of the continued pressure on the

external sector amidst the subpar performance

in the domestic economy. Nevertheless, the

large and persistent liquidity deficit in the

domestic money market, particularly since

September 2018, compelled the Central Bank

to inject liquidity on a permanent basis in

November 2018, by way of reducing the

Statutory Reserve Ratio (SRR) applicable on

all rupee deposit liabilities of commercial

banks by 1.50 percentage points. However, at

the same time, to neutralise the impact of the

SRR reduction and maintain its neutral policy

stance, the Central Bank increased the Standing

Deposit Facility Rate (SDFR) by 75 basis

points and SLFR by 50 basis points, further

narrowing the policy rate corridor to 100 basis

points. Accordingly, by end 2018, SDFR and

SLFR stood at 8.00 per cent and 9.00 per cent,

respectively. As the shortage in rupee liquidity

persisted into early 2019, the Central Bank

reduced the SRR by a further 1.00 percentage

point to 5.00 per cent effective 01 March 2019.

Meanwhile, the year-on-year growth of broad

money (M2b) decelerated in 2018 driven by the

contraction in net foreign assets (NFA) of the

banking sector. However, within broad money

growth, the overall expansion of credit granted

to the private sector by commercial banks in

2018 was higher than expected, in spite of tight

liquidity conditions and high nominal and real

market interest rates. In the meantime, fiscal

operations during 2018 demonstrated some

improvements with a higher primary surplus

and a lower budget deficit, notwithstanding the

decline in revenue mobilisation. The

government revenue declined to 13.3 per cent

of GDP in 2018 while expenditure and net

lending declined, particularly due to lower

public investment, which was affected by

political tensions that prevailed towards the end

of the year resulting in delays in the

implementation of budgetary operations.

Reduced capital expenditure also contributed to

a dampening of economic activity. The current

account deficit increased in 2018 as a

percentage of GDP reflecting dissavings of the

government. The primary balance, which

mirrors the difference between the government

revenue and non-interest expenditure,

registered a surplus of 0.6 per cent of GDP in

2018 compared to the surplus of 0.02 per cent

of GDP in 2017. The budget deficit declined to

5.3 per cent of GDP in 2018 from 5.5 per cent

of GDP in 2017 as a result of the substantial

reduction in capital expenditure, but a deviation

from the target level of 4.8 per cent of GDP

envisaged in the Budget 2018 was also

observed. The outstanding central government


debt increased to 82.9 per cent of GDP at end

2018 from 76.9 per cent at end 2017, which is

attributed to the depreciation of the rupee that

affected the rupee value of foreign debt,

relatively low nominal GDP and higher net

borrowings during the period. Rollover risks

can be contained through the implementation of

the provisions of the Active Liability

Management Act (ALMA) and the introduction

of the Medium Term Debt Management

Strategy (MTDS), which would help manage

the government’s debt obligations in the period

ahead, with the support of continued

commitment towards revenue based fiscal

consolidation. The financial sector continued to

expand in 2018, supported by the moderate but

stable growth of the banking sector. However,

the profitability of the banking sector declined

during the year mainly due to some

deterioration in the asset quality, a rise in

operating costs and higher taxes. The Central

Bank strengthened the prudential policy

measures, including the implementation of

Basel III requirements and the adoption of Sri

Lanka Accounting Standard - SLFRS 9 during

the year. Meanwhile, the Licensed Finance

Companies (LFCs) and Specialised Leasing

Companies (SLCs) sector also recorded

moderate growth amidst a challenging

environment, and the Central Bank took

measures to resolve distressed finance

companies and to address the lingering

concerns in the sector. The Colombo Stock

Exchange (CSE) recorded yet another year of

poor performance due to adverse developments

on domestic and global fronts, which affected

investor sentiments. While Sri Lanka has made

significant progress in maintaining price

stability in the past decade, progress in terms of

real economic performance has fallen below

expectations in recent years impacted by the

continued delays in the implementation of the

required structural reforms and inconsistent and

unpredictable policies introduced from time to

time. These irregularities have crippled the

growth momentum of the economy, thus

preventing the country from progressing into a

higher income economy. In this background, it

is vital that all stakeholders make concerted

efforts to expedite the reform agenda that is

already in place, which includes the National

Export Strategy (NES) and New Trade Policy

(NTP) to improve earnings from merchandise

and service exports, the fiscal consolidation

programme to improve fiscal discipline and

debt sustainability, and the Central Bank’s

move towards adopting FIT by 2020 to ensure

sustained price stability. The timely

implementation of these reforms will not only

improve Sri Lanka’s economic outlook and its

prospects as a highly sought after destination

for investments given the country’s strategic

location in the Indian Ocean, but also would be

essential to uplift the overall standard of living

and quality of life of its people.

Global Economic Environment and Outlook

As per the January 2019 update of the World

Economic Outlook (WEO) of the IMF, a

moderation in the expansion of global

economic activity was observed in 2018, on

account of mounting economic and political

headwinds internationally. Compared to 2017,

global growth was increasingly unsynchronized

during 2018, as most economies, apart from the

US, experienced a slowdown in economic

activity. In spite of the notable growth in

economic activity in the US, growth among

advanced economies grew modestly during


2018, with a larger than expected moderation in

economic activity in the UK, Euro area and

Japan. Meanwhile, emerging market and

developing economies continued to grow

strongly, albeit at a slower pace than in the

previous year, underpinned by improved

domestic demand and higher oil prices

favouring oil-exporting economies, amidst a

challenging global macroeconomic

environment driven by rising trade tensions and

tighter financial conditions. Further, the

uncertainty surrounding the Brexit and

mounting tensions from the Sino-American

trade war led to a moderation in global trade

during 2018. Meanwhile, oil prices, which were

on an increasing trend during the first nine

months of 2018, caused some acceleration in

inflation in both advanced economies and

emerging market and developing economies

during the year. Amidst mounting uncertainties

in the global economic environment, a gradual

approach of monetary policy normalisation was

undertaken by most advanced economies

during 2018, citing favourable developments in

domestic market conditions, necessitating

emerging market economies to respond with

the view of containing the adverse spillover

effects of such normalisation. The US Federal

Reserve, which commenced tightening

monetary policy in late 2015, tightened its

stance further by increasing the Federal Funds

target rate in four instances during 2018,

responding to improved domestic demand and

strengthening labour markets. However,

considering the signals that the US economy is

slowing down while inflationary pressures

remain subdued, the Federal Reserve adopted a

more cautious approach from January 2019.

Meanwhile, the Bank of England (BOE)

increased its policy rates in August 2018, with

domestic economic activity gathering

momentum and inflation hovering above the

targeted levels. However, the intensification of

tensions surrounding Brexit along with subdued

domestic and global growth caused the BOE to

remain increasingly dovish. With inflation

gaining momentum and risks to the growth

outlook remaining broadly balanced, the

European Central Bank (ECB) announced the

gradual winding down of quantitative easing

(QE). Accordingly, by end 2018, the net asset

purchases concluded, although Brexit woes and

rising global risks resulting from escalating

trade tensions led the ECB to continue its

accommodative stance on monetary policy.

Having little success on the achievement of the

inflation target, the Bank of Japan (BOJ)

continued with its accommodative monetary

policy stance during 2018. Meanwhile,

emerging market economies were impacted by

monetary policy normalisation measures in key

advanced economies and the ensuing capital

outflows as well as rising trade tensions. In

response to these economic headwinds, a

number of central banks in emerging market

economies raised interest rates. The Reserve

Bank of India (RBI) raised its interest rates

twice during 2018, which was later reversed

with a policy rate cut in early 2019. The

lacklustre growth and investor confidence, and

rising risks to financial stability required China

to ease fiscal and monetary policies during

2018. As a result of global economic and

financial market developments and domestic

vulnerabilities, currencies of several emerging

market economies depreciated considerably

against the US dollar during 2018. The balance

of risks to global growth, as highlighted in the

January 2019 update of WEO, is tilted to the

downside indicating the possibility of some

slowdown in the global economy going

forward. Central banks in most advanced, and

emerging market and developing economies

have taken measures to tighten monetary policy

during 2018 in view of containing undue

inflationary pressures arising from the

favourable economic outlook, stronger labour

markets and subsequent firming up of demand.

However, with increased uncertainty

surrounding global and domestic

macroeconomic developments and inflationary

pressures remaining somewhat muted, the

policy stance of major central banks turned

more accommodative commencing early 2019.


Nonetheless, several risks remain that could

weigh down on global growth prospects. The

continuation of the US-China trade tensions

could bring in greater policy uncertainties

among economies and could restrain global

trade, thereby weakening global growth

prospects. Also, a further slowdown in the

Chinese economy will require continued fiscal

and monetary stimulus, failing which the

economy could be increasingly vulnerable to a

prolonged downturn. This could wane demand

for commodities leading to a drop in prices,

severely affecting commodity-exporting

economies and global growth at large. The

ongoing uncertainties surrounding Brexit

would impede growth prospects in the UK,

Eurozone as well as in other partner economies.

In the meantime, oil prices are expected to

remain subdued, particularly with a possible

supply glut due to US shale production and

lack of cooperation among OPEC economies.

Although moderate oil prices are expected to

reduce global inflationary pressures, oil

exporting economies are expected to be

negatively impacted while oil producing

corporates are likely to experience a thinning of

their margins. Mounting uncertainties in the

global political and economic environment

pose significant challenges to Sri Lanka,

necessitating the implementation of timely and

prudent policy measures to support domestic

growth initiatives while maintaining stability.

The weaker economic outlook reflecting

subdued global demand could impact Sri

Lanka’s trade during 2019. Moreover,

escalating trade tensions between the US and

China, as well as the UK and the Eurozone

could exacerbate this impact affecting the

country’s BOP. However, this impact could

ease somewhat with key economies

increasingly adopting accommodative

monetary policies to stimulate domestic

demand. Nevertheless, any rise in global

market interest rates could increase debt

servicing costs of the government and

corporates, leading to greater financial fragility

and weaker risk profile of the country.

Therefore, prudent accumulation of foreign

exchange reserves and careful management of

external debt are essential in the period ahead.

As global oil prices are expected to remain at

current subdued levels, its impact on domestic

inflation is expected to remain minimal during

2019.

Direction of Trade

Sri Lanka’s major trading partners broadly

remained unchanged in 2018, in comparison to

2017. India remained Sri Lanka’s major trading

partner, in 2018, followed by China and the

USA. As in 2017, total trade with India

exceeded US dollars 5 billion, while trade with

China and the USA exceeded US dollars 4

billion and US dollars 3 billion, respectively, in

2018, with a share of 14.7 per cent, 12.8 per

cent and 10.6 per cent. In addition, the United

Arab Emirates (UAE), Japan, Singapore, the

UK and Germany were the other major trading

partners accounting for trade to the value of

more than US dollars 1 billion each in 2018.

However, trade with India declined in 2018 due

to a reduction in imports from India, while total

trade with Singapore dropped owing to a

significant decline in exports to Singapore.

Contrastingly, trade with China, the USA, the

UAE, Japan, the UK and Germany increased

during the year in comparison to the previous

year. Among Sri Lanka’s export destinations,

advanced countries, mainly the USA and the

UK, continued to account for the largest share,

while among Sri Lanka’s sources of imports,

Asia, mainly India and China, accounted for a

major share. The USA retained its position as

the major export destination, accounting for

25.9 per cent of Sri Lanka’s exports, followed

by the UK (8.2 per cent) and India (6.5 per


cent). Export earnings from the USA increased

by 6.0 per cent, year-on-year, to US dollars

3,085 million in 2018, mainly due to garments,

rubber products and machinery and mechanical

appliances exports, which accounted for about

85 per cent of total exports to the USA. The

USA continued to be the largest single garment

export destination for Sri Lanka, accounting for

about 46 per cent of total garment exports in

2018. Exports of garments, rubber products,

machinery and mechanical appliances, food,

beverages and tobacco, tea and chemical

products to the USA increased during the year,

while exports of seafood, spices and coconut

kernel products declined. Export earnings from

the UK, the second largest export destination,

recorded a decline of 5.4 per cent, in 2018, due

to a reduction in the export of garments, rubber

products, leather, travel goods and footwear

and tea. However, textiles and other made up

textile articles, food, beverages and tobacco,

machinery and mechanical appliances, and

coconut non-kernel product exports to the UK

increased in 2018. Of the total exports to the

UK market, garments comprised 75 per cent,

which was about 15 per cent of Sri Lanka’s

total garment exports in 2018. Total exports to

India, which is the third largest buyer of Sri

Lanka’s exports, increased to US dollars 777

million in 2018 from US dollars 691 million in

2017, due to the increase in export earnings

from animal fodder, textiles and garments, base

metals and articles, machinery and mechanical

appliances, and food beverages and tobacco.

However, spices, wood and paper products,

transport equipment and minor agricultural

product exports to India declined in 2018.

Meanwhile, exports to Germany, which

accounted for 5.2 per cent of total exports,

increased by 13.7 per cent in 2018. Garments,

rubber products and machinery and mechanical

appliances, which accounted for around 66 per

cent of total exports to Germany, largely

contributed to increase export earnings from

Germany in 2018. Exports to Italy increased by

9.1 per cent in 2018, mainly due to a rise in

garment, rubber products and seafood exports,

which accounted for about 92 per cent of total

exports to Italy. The EU region, the most

dominant regional market for Sri Lankan

exports, which accounted for about 29 per cent

of total exports, increased by 5.3 per cent to US

dollars 3,474 million in 2018. Higher export

earnings from garments, rubber products, food,

beverages and tobacco, and sea food, which

accounted for 76 per cent of total exports to

EU, largely contributed to this increase,

reflecting the positive impact of the restoration

of the EU GSP+ facility and the removal of the

ban on exports of fisheries products to the EU.

In 2018, the Middle East and Russia were the

main export destinations for Sri Lanka’s tea

exports. They contributed 43.7 per cent and

10.8 per cent, respectively, of total tea exports,

despite a decline registered in tea exports to

these countries. India continued to be the

largest source of imports although there was a

reduction in its share to 19.0 per cent of total

imports in 2018 from 21.6 per cent in 2017.

Import expenditure from India declined by 6.5

per cent to US dollars 4,231 million in 2018

mainly due to lower imports of petroleum

products, building materials, vehicles,

machinery and equipment and transport

equipment, which contributed to around 44 per

cent of total

imports from India. China and the UAE were

the second and third largest import origins,

accounting for 18.5 per cent and 8.3 per cent of


total imports, respectively. Main imports from

China comprised textiles and textile articles,

machinery and equipment, and building

materials, which accounted for 61 per cent of

total imports, while major imports from the

UAE were petroleum products and diamonds,

precious stones and metals, accounting for 87

per cent of total imports from the UAE. Japan

and Singapore were the fourth and fifth largest

import sourcing countries, accounting for 7.1

per cent and 6.2 per cent of total imports,

respectively. Expenditure on imports from

Japan rose significantly by 52.6 per cent to US

dollars 1,585 million in 2018, while increasing

its share of total imports to 7.1 per cent from

4.9 per cent in 2017, mainly due to the

considerable growth registered in vehicle

imports. Import expenditure on Japanese

vehicles accounted for around 62 per cent of

total imports from Japan and 62.4 per cent of

vehicles imported to Sri Lanka in 2018.

Meanwhile, import expenditure from Singapore

increased marginally by 1.5 per cent in 2018

mainly due to higher imports of petroleum

products. Diamonds, precious stones and

metals, machinery and equipment and chemical

products were the other main items imported

from Singapore in 2018. However, imports of

diamonds, precious stones and metals,

machinery and equipment, and chemical

products from Singapore declined during the

year.

Export Performance

Earnings from merchandise exports, which

rebounded strongly in 2017, continued to

maintain its growth momentum in 2018. The

restoration of the EU GSP+ facility, conducive

external trade policies together with strong

institutional support and the flexible exchange

rate policy maintained by the Central Bank

underpinned the performance of export

earnings. Accordingly, earnings from exports

increased by 4.7 per cent to US dollars 11,890

million in 2018, from US dollars 11,360

million in 2017. Earnings from industrial

exports contributed to the expansion in export

earnings in 2018, while earnings from

agricultural and mineral exports declined.

Earnings from industrial exports increased in

2018, mainly with the support of the restoration

of the EU GSP+ facility. Industrial exports,

which accounted for around 78 per cent of total

exports, increased by 8.4 per cent to US dollars

9,258 million, in 2018, in comparison to the

previous year. Higher performance registered

in earnings from textiles and garments,

petroleum products, rubber products, food,

beverages and tobacco, and machinery and

mechanical appliances mainly contributed to

this increase. Reflecting the positive impact of

the restoration of the EU GSP+ facility, since

May 2017, export earnings from textiles and

garments increased by 5.7 per cent, on a year-

on-year basis, to US dollars 5,318 million in

2018. Despite a decline in demand from the

UK, which was the largest market in the EU

region, earnings from garment exports to the

EU market increased by 3.6 per cent to US

dollars 2,053 million during the year, owing to

the higher demand from Germany, Italy,

Netherlands and Sweden. Further, earnings

from garment exports to the USA increased by

6.0 per cent, while earnings from non-

traditional markets such as India, Japan,

Australia and Mexico increased by 3.5 per cent

in


2018. Due to increased demand for textiles and

made up textile articles from the EU market,

the USA, India, Vietnam and Turkey, export

earnings from those categories also increased

by 26.6 per cent and 10.9 per cent, respectively,

in 2018. Export earnings from petroleum

products increased significantly by 43.2 per

cent in 2018, due to the combined impact of

higher export volumes and prices of bunker and

aviation fuel. Export prices of bunker and

aviation fuel increased considerably by 29.4 per

cent, in line with the higher oil prices that

prevailed in the international market during the

year. Earnings from exports of rubber products

increased by 4.8 per cent to US dollars 875

million during the year, compared to the

previous year, mainly due to the improved

performance in rubber tyre exports. Further,

export earnings from food, beverages and

tobacco rose by 17.7 per cent to US dollars 462

million in 2018, owing to the improved

performance of all sub categories except cereal

preparations. Also, export earnings from

machinery and mechanical appliances

increased by 17.3 per cent, on a year-on-year

basis, in 2018 due to increased performance

registered in almost all sub categories,

particularly in electronic equipment and

insulated wires, cables and conductors. In

addition, earnings from gems, diamonds and

jewellery, base metals and articles, chemical

products and animal fodder contributed to

boost industrial exports during the year.

However, earnings from transport equipment

declined by 25.9 per cent to US dollars 120

million, in 2018, mainly due to the base effect,

as three ships were exported to Singapore in

2017. Further, export earnings from leather,

travel goods and footwear declined by 6.8 per

cent, while earnings from printing industry

products and ceramic products declined by 35.2

per cent and 7.3 per cent, respectively, during

the year, in comparison to the previous year.

Performance of agricultural exports

deteriorated in 2018. Agricultural exports,

which accounted for about 22 per cent of total

exports, declined by 6.8 per cent, year-on-year,

to US dollars 2,579 million in 2018 due to poor

performance in almost all sub categories except

seafood. Earnings from tea exports, which grew

significantly in the previous year with the

support of favourable international tea prices,

declined by 6.6 per cent to US dollars 1,428

million in 2018, due to the combined impact of

lower average export prices and reduced

exported volumes of tea. Although the higher

volume of black tea production and exports,

particularly from Africa, resulted in a decline in

the international tea prices at the Mombasa and

Kolkata auctions, prices of Sri Lankan

Orthodox tea remained relatively strong due to

the limited supply. However, despite an

increase observed in the first quarter of 2018,

the average export price of one kilogram of tea

declined during the year to US dollars 5.06, in

comparison to US dollars 5.29 in 2017, due to

restricted trade with Iran and Russia following

the imposition of sanctions on these countries.

The volume of tea exported declined by 2.3 per

cent in 2018, compared to the previous year,

with the lower production owing to work

stoppage due to wage negotiations as well as

adverse weather conditions that prevailed in

some months. In 2018, Turkey continued to be

the number one importer of Sri Lankan tea, in

value terms, followed by Russia, Iraq and Iran,

jointly contributing for about 41 per cent of

earnings from tea exports. Despite an increase

observed in export earnings from non-kernel

coconut products, earnings from coconut

exports declined by 10.6 per cent to US dollars

311 million in 2018, due to the significant

decline in export earnings from coconut kernel

products. In 2018, export earnings from

coconut kernel products decreased by 21.3 per

cent mainly due to lower exported volumes of

desiccated coconut and coconut oil with the

reduced production of coconut during the first

half of 2018, owing to the lagged effect of

adverse weather conditions. Export earnings

from coconut non-kernel products increased by

2.3 per cent owing to higher performance in

fibre exports. Further, export earnings from

spices reduced by 11.3 per cent to US dollars


360 million in 2018, compared to the previous

year, led by the poor performance in almost all

categories of spices, except cinnamon. While

earnings from most of the spices such as

cloves, pepper and nutmeg and mace declined

with the reduction in exported volumes due to

poor harvest, earnings from cinnamon exports

increased with high export volumes. Further,

export earnings from minor agricultural

products declined by 14.7 per cent to US

dollars 118 million during the year due to the

lower performance of most categories

particularly arecanut, betel leaves and fruit. In

addition, export earnings from rubber,

vegetables and unmanufactured tobacco also

declined in 2018. However, earnings from

seafood exports continued to rise by 10.5 per

cent, to US dollars 266 million in 2018,

benefitting from the removal of the ban on the

exports of fisheries products to the EU and the

restoration of GSP+ facility. Accordingly,

seafood exports to the EU market increased

significantly by 37.5 per cent to US dollars 92

million during the year, due to the higher

demand from France, Italy, Germany, Spain

and Netherlands. Earnings from mineral

exports declined marginally by 0.4 per cent,

year-on-year, to US dollars 34 million in 2018.

Despite an increase in export earnings from

ores, slag and ash, earnings from mineral

exports decreased during the year due to

reductions in earnings from earths and stones,

and precious metals.

SECTORAL EXPORT PERFORMANCE 2018/2019

Tea

Unfavourable weather conditions in tea

growing areas, particularly during the months

of May and June 2018, and wage related trade

union action in the plantation sector affected

the total tea production during the year.

Accordingly, total tea production decreased by

1.0 per cent to 303.8 million kilogrammes in

2018 from 307.1 million kilogrammes in 2017.

Low grown tea production, which accounts for

63.2 per cent of the total production, decreased

by 2.7 per cent to 192.0 million kilogrammes,

while the production of high grown tea and

medium grown tea increased by 1.3 per cent to

64.8 million kilogrammes and 3.0 per cent to

47.0 million kilogrammes, respectively. In the

meantime, the tea smallholder sector recorded a

decline in the average yield of made tea to

1,958 kilogrammes per hectare from 1,995

kilogrammes per hectare in 2017. Orthodox tea

and value added tea production recorded a

decline of 1.9 per cent and 1.7 per cent,

respectively, while CTC tea production

increased by 9.6 per cent during 2018. A

declining trend in tea prices was recorded from

early 2018 and continued till the end of the

year. Average auction prices of high, medium

and low grown teas at the Colombo Tea

Auction (CTA) were significantly lower than

the corresponding prices that were observed in

2017. During 2018, the average price of tea

decreased to Rs. 581.58 per kilogramme from

Rs. 620.44 per kilogrammes in 2017. The

highest year-on-year decrease in tea prices at

the CTA was observed for medium grown tea

(8.0 per cent), followed by high grown tea (6.3

per cent) and low grown tea (5.9 per cent). The

average export price (FOB) recorded a decrease

of 4.4 per cent to US dollars 5.06 per

kilogramme in 2018, compared with US dollars

5.29 per kilogramme in 2017. Meanwhile, Iraq

was price (Rs./kg) Quantity (MT '000) the

major importer of Sri Lankan tea, followed by

Turkey and Russia. Comparatively low demand

during 2018 from exporters adversely affected

tea exports. Accordingly, total tea exports

decreased by 2.3 per cent to 282.4 million

kilogrammes in 2018, compared to 289.0

million kilogrammes in the previous year.


Rubber

Rubber production declined by 0.6 per cent to

82.6 million kilogrammes in 2018 from 83.1

million kilogrammes produced in 2017.

Continuous rain in plantation areas that

prevailed during tapping days along with the

high cost of production and poor management

of plantations contributed to the drop in total

rubber production in 2018. During the first half

of 2018, rubber production showed a declining

trend, while rubber production improved

considerably thereafter, supported by

favourable weather conditions in major rubber

growing areas. The production of sheet rubber,

which accounts for about 50.0 per cent share of

total rubber production, declined by 0.5 per

cent to 41.3 million kilogrammes from 41.5

million kilogrammes in 2017. Crepe rubber

production recorded a considerable growth of

26.2 per cent to 14.5 million kilogrammes.

Production of other categories of rubber, which

accounts for 32.4 per cent of total rubber

production, declined by 11.1 per cent to 26.8

million kilogrammes, in comparison to the

previous year’s production of 30.1 million

kilogrammes. Domestic usage of rubber for

local industries increased by 5.6 per cent to

135.2 million kilogrammes in 2018.

Meanwhile, exports of raw rubber recorded a

decline of 18.9 per cent to 14.0 million

kilogrammes during 2018. Reflecting the drop

in international market prices in 2018, rubber

prices in the domestic market also showed a

declining trend during 2018. At the Colombo

Rubber Auction, the average price of Ribbed

Smoked Sheet No.1 (RSS1) declined by 8.2 per

cent to Rs. 309.09 per kilogramme, while

prices of latex crepe declined by 8.5 per cent to

Rs. 321.70 per kilogramme. Low rubber prices

in the international market and lower domestic

production resulted in an increase of raw rubber

imports from 61.8 million kilogrammes in 2017

to 65.8 million kilogrammes during 2018 to

meet the requirements on rubber based

industries in the country.

Coconut

Coconut production recovered from its

declining trend in 2018, due to the lagged effect

of favourable rainfall experienced in major

coconut growing areas in 2017. Although

coconut production that remained subdued

during the first quarter of the year, recorded an

expansion thereafter resulting in an overall

growth of 7.1 per cent to 2,623 million nuts

during 2018. Due to low supplies during the

first half of the year, production volumes of

many coconut based products decreased in

2018, compared to 2017. Accordingly,

desiccated coconut (DC) production decreased

significantly by 16.7 per cent in 2018.

Similarly, coconut oil production also declined

by 14.6 per cent in 2018, largely due to the

reduction in coconut oil production by small

and medium scale mills owing to high cost of

production. Meanwhile, palm oil imports, a

close substitute for coconut oil, increased by

11.5 per cent in 2018, induced by lower

domestic coconut oil production and the

decline in global palm oil prices. Meanwhile,

production of coconut cream, coconut milk

powder and coconut milk grew by 13.4 per cent

in 2018, reflecting high export demand for

these products. Further, production of virgin

coconut oil was also affected by limited

availability of nuts, resulting in a 13.1 per cent

decline in its production. Reflecting higher

demand from domestic manufacturers for

coconut products and increased export demand

amidst supply shortages in the world market,

coconut prices increased, particularly during

the first nine months of 2018. However, with

increased supplies in the last quarter of 2018,


the average wholesale price of coconut

declined marginally to Rs. 60.68 per nut in

2018, from Rs. 62.71 per nut in 2017. High

farmgate prices of coconut, mostly reported in

the first nine months, resulted in increasing the

retail price of coconut as well as the cost of

production of coconut based products. The

average retail price of a coconut increased to

Rs. 69.71 per nut in 2018 from Rs. 67.40 per

nut in 2017, while the average price of coconut

oil remained broadly unchanged. The average

FOB price of desiccated coconut increased to

Rs. 430.84 per kilogramme in 2018 from Rs.

387.35 per kilogramme in 2017. Meanwhile,

DC exporters were unable to harness the full

benefit of increased prices due to low domestic

production, as reflected by the decline of

around 28 per cent in DC exports during 2018.

Minor Export Crops

The performance of minor export crops

continued to weaken in 2018 as in the previous

year. Although the production of cinnamon,

cocoa, arecanut, citronella and turmeric

recorded a growth, the production of pepper,

clove, cardamom, coffee, nutmeg, betel and

ginger declined considerably during 2018,

compared to 2017. Despite the increase in

extent under minor export crops by 1.9 per

cent, total production decreased by 14.3 per

cent to 101,718 metric tons during 2018. This

decline in production was mainly due to dry

weather and the unusual shift in the rainfall

pattern in growing areas. Accordingly, pepper

production decreased by 31.9 per cent to

20,135 metric tons mainly due to unfavourable

weather conditions in major pepper growing

areas during the flowering and fruiting period.

Meanwhile, both farmgate and auction prices of

pepper dropped significantly by around 30 per

cent due to the declining trend in world market

prices and the issue due to the importation of

low quality pepper that was then re-exported

under trade agreements. However, cocoa

production improved significantly by 38.9 per

cent to 654 metric tons and cinnamon

production grew by 3.0 per cent to 23,019

metric tons during the year, supported by the

increase in the cultivation extent in recent

years. The total export volume of minor export

crops dropped by 19.6 per cent, along with an

11.3 per cent reduction in earnings to US

dollars 360.2 million during 2018, compared to

the previous year. Despite exports of many

crops such as pepper, clove, cardamom, cocoa,

betel and arecanut recording a decline in 2018,

cinnamon exports showed a continuous growth

and reached 17,537 metric tons with 5.5 per

cent increase over the previous year.

Meanwhile, the importation of minor export

crops including pepper, cocoa, turmeric and

ginger increased by 12.0 per cent and import

expenditure increased by around 8.9 per cent in

2018.

Vegetables

According to the estimates of the Department

of Census and Statistics, vegetable production

increased to 1.7 million metric tons in 2018,

registering a growth of 13.3 per cent amidst

weather related disturbances during some

periods of the year. This was supported by an

increase of 20.6 per cent in the 2017/18 Maha

season and a 4.6 per cent growth during the

2018 Yala season. Meanwhile, there were wide

fluctuations in vegetable prices throughout the

year owing to both drought and flood

conditions that prevailed in some parts of the


country. Weather related setbacks experienced

during the second quarter of 2018 resulted in

crop damages, reducing the market supply and

elevating prices of many vegetable varieties.

Meanwhile, during the third quarter of 2018,

prices increased displaying the regular seasonal

pattern, while rainy weather conditions

substantially disturbed harvesting and

transporting of vegetables during the end of the

fourth quarter of the year. However, amidst

these weather related disturbances, the supply

of vegetables increased during the peak

harvesting period of the Maha season as well as

the Yala season, thus lowering prices. During

2018, 25.8 million kilogrammes of vegetables

worth Rs. 4.6 billion were exported, while

738.2 million kilogrammes of vegetables worth

Rs. 49.1 billion were imported. Meanwhile,

pest attacks became a major issue in vegetable

cultivation, and measures are required to

address this issue in order to protect the farmers

and the consumers, as well as to increase the

sustainability of the sector

Fruits

The production of fruits increased in 2018, with

significant contributions from avocado, orange,

guava, rambutan and lime. Fruit production

recorded a significant growth of 28.8 per cent

in 2018, compared to the growth of 9.5 per cent

in the previous year. During the year, 37.3

million kilogrammes of fruits worth Rs. 6.3

billion were exported, while 78.7 million

kilogrammes of fresh fruits, including apples,

mandarins, oranges and grapes valued at Rs.

14.2 billion were imported. Fruit cultivation in

Sri Lanka is spread over 150,000 hectares,

while a large share of this extent is cultivated in

home gardens. Due to poor planning in

cultivation of fruits and lack of awareness,

contribution to national development by fruit

production still remains low. Increasing

effectiveness of fruit cultivation, ensuring

quality of products and meeting market demand

for fruits with better awareness among farmers

on ground conditions are key issues that need

to be addressed in developing this sector

Textiles & Apparel

Manufacturing of textiles, wearing apparel and

leather related products also grew by 3.6 per

cent during the year compared to 3.8 per cent

growth recorded in 2017, largely supporting the

overall growth in manufacturing activities. The

manufacture of wearing apparel, the second

largest subsector in the IIP, recorded a growth

of 3.9 per cent in 2018, compared to the growth

of 4.7 per cent registered in 2017. This growth

was partially supported by the favourable

impact of the reinstatement of the GSP+

scheme in 2017. Meanwhile, manufacturing of

textiles registered a growth of 3.6 per cent

during 2018, compared to the growth of 2.3 per

cent recorded in the previous year. Both the

wearing apparel and textiles subsectors together

contributed around 78 per cent of the overall

growth in the manufacturing sector in 2018.

Although the local apparel and textile

industries have the potential to expand further,

the lack of economies of scale, infrastructure

constraints, and high input costs are adversely

affecting the competitive strength of the

industry. Moreover, the emergence of relatively

new textile manufacturing hubs in the region

has continuously challenged Sri Lanka’s

position in a dynamic global market. Although

the reinstatement of the GSP+ scheme has

supported export demand in the recent past, the

garment industry needs to undertake

constructive measures to minimise continued

dependence on such schemes, enabling


improved resilience towards external vulnerabilities.

Fisheries

The fisheries sector witnessed a marginal

setback in 2018. Total fish production showed

a decline of 0.8 per cent to 527,060 metric tons

during 2018, compared to the marginal

expansion of 0.1 per cent recorded in 2017. The

contraction in fish production was mainly

attributed to the decline in marine fish

production. Marine fish production, which

accounts for around 83 per cent of total fish

production, witnessed a decline of 2.2 per cent

to 439,370 metric tons in 2018, largely due to

the drop in coastal and lagoon fish production.

Meanwhile, offshore fish production increased

marginally. Adverse weather conditions that

prevailed during the second quarter of 2018 in

the Western and Southern coastal areas

adversely affected the operations of the day

boats and thereby, affected marine fish

production. However, inland fish production

that contributed around 17 per cent to the total

fish production showed an increase of 7.1 per

cent to 87,690 metric tons in 2018 compared to

the previous year. The increased release of

fingerlings to tanks that was supported by the

recovery in water levels in major reservoirs in

the early part of 2018, better management of

aquaculture resources and proper monitoring

largely contributed to the improvements in the

inland fisheries sector. In 2018, around 112

million of fingerlings were produced, which is

an increase of around 35 per cent, compared to

the previous year. Meanwhile, the production

in the shrimp farms subcategory also increased

considerably during the period under review,

while the aquaculture category witnessed a

decline of 2.9 per cent to 8,490 metric tons. In

response to the decline in production, prices of

large fish varieties registered a marginal

increase of 0.7 per cent, while small fish

varieties recorded an increase of 15.2 per cent

during 2018, in comparison to the previous

year. In the meantime, export earnings from

fish products in terms of value, witnessed an

increase of 10.5 per cent to US dollars 265.8

million and 6.6 per cent in terms of volume to

25,949 metric tons during 2018, reflecting the

continued positive impact of the removal of the

ban on fish exports to the EU market.

Meanwhile, fish imports witnessed a decline of

20.4 per cent to 84,206 metric tons in 2018

from 105,745 metric tons recorded in 2017.

from 382,421 in 2017 to 428,108 in 2018,

while local production of broiler parents

increased to 1.1 million during 2018, compared

to 1.0 million in 2017. Meanwhile, pork

production increased by 32.2 per cent to 10,430

metric tons, while mutton production increased

by 14.8 per cent to 1,630 metric tons in 2018.

However, beef production decreased by 5.7 per

cent to 28,420 metric tons in 2018 from 30,130

metric tons recorded in 2017.


EXPORTERS’ ASSOCIATION OF SRI LANKA

FINANCE STATEMENTS

FOR THE YEAR ENDED

31 MARCH 2019

Documents

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