Commerce Evolution
Bingumal Thewarathanthri requires area of interest positioning and regional integration
Sri Lanka’s producers are being pressured to compete in a worldwide market that’s altering sooner than ever earlier than. Conventional export playbooks are being rewritten as geopolitical tensions, provide chain disruptions and shifting shopper demand reshape how and the place enterprise is executed.
“Survival and progress now rely much less on long-term forecasting, and extra on the power to establish rapid alternatives and reposition rapidly. The main target is extra on day-to-day actions and making certain companies are figuring out alternatives,” says the Vice-Chairperson of the Ceylon Chamber of Commerce Bingumal Thewarathanthri, mentioning how volatility has compressed planning horizons throughout industries.
NICHE OPPORTUNITIES Amid international dislocation, Sri Lankan companies are starting to find niches the place regionally manufactured merchandise can compete extra successfully, whether or not by leveraging logistics strengths, tapping regional tourism flows, integrating into Asian provide chains or increasing worth added exports.
“Sri Lanka’s port volumes are anticipated to exceed 10 million twenty-foot equal models (TEUs) this yr, reaching near 11 million TEUs. This positions the nation at roughly 1 / 4 of the dimensions of Singapore’s throughput, underscoring its strategic relevance in regional transport networks,” he notes.
“Logistics accounts for over seven p.c of GDP in Singapore whereas Sri Lanka’s contribution is lower than three p.c, reflecting structural gaps in ecosystem growth. Singapore has constructed large bunkering, warehousing and storage amenities across the port, whereas right here the main focus is proscribed to floor cargo and minimal bunkering exercise,” he explains.
VALUE CHAINS Thewarathanthri opines that strengthening this worth chain is essential if regionally manufactured merchandise are to grow to be globally aggressive. He believes that “environment friendly logistics, built-in provide chains, and expanded worth added companies can notably enhance export margins and market responsiveness.”
Tourism supplies one other lens by means of which international competitiveness could be understood. Financial pressures in sure Western markets are anticipated to dampen customer arrivals; nevertheless, regional demand notably from India presents a major alternative.
As he factors out, “India’s outbound tourism market is estimated at round US$ 40 billion with about 30 million travellers yearly. Regardless of its proximity, Sri Lanka attracts solely about half one million Indian guests, suggesting appreciable room for progress.”
The nation’s impartial geopolitical stance can also be attracting new types of curiosity. Early discussions emerged in March about leasing the Mattala Rajapaksa Worldwide Airport (MRIA) to Center Japanese airways as a contingency technique whereas inquiries to ascertain knowledge centres in Sri Lanka spotlight its potential as a safe digital backup hub.
“We’re immediately seeing the placement benefit of Sri Lanka, particularly as a result of we’re a impartial nation. The world order has modified and powers are gravitating in direction of the East,” he observes.
STRUCTURAL CONSTRAINTS But, competitiveness stays constrained by persistent structural challenges. Sri Lanka’s efficiency on the world’s enterprise facilitation benchmarks stays modest with rankings near 100 in sure indices.
A more moderen international measure – the Enterprise Prepared (B-READY) Index – now adopted by over 50 nations locations an emphasis on digital authorities companies and regulatory effectivity. “There’s a big weightage on how straightforward authorities companies are. Sri Lanka ought to urgently transfer in direction of such frameworks,” he urges.
Thewarathanthri recommends reforms akin to digital identification methods and a single window commerce platform, alongside customs modernisation and a public-private partnership (PPP) regulation to draw sustainable funding whereas bettering commerce facilitation.
Export oriented producers are already responding to international shifts by means of diversification methods. Companies are exploring new product strains, increasing to different markets, and reassessing provider and purchaser relationships.
“The mantra now’s diversification from the attitude of merchandise, markets, patrons and suppliers,” he emphasises.
ASIA FOCUS This development is especially related as Sri Lanka recalibrates its export focus from conventional markets in direction of Asia. Commerce engagement with India and ASEAN economies, in addition to participation in regional and free commerce agreements, is considered as important to future progress.
Current export traits mirror this transition: whereas conventional sectors stay necessary, there was a notable enhance in coconut primarily based exports, demonstrating how worth addition and area of interest positioning can improve competitiveness.
Nonetheless, he cautions that Sri Lanka can not realistically compete with massive economies in mass manufacturing.
One promising pathway lies in integrating extra deeply into India’s industrial ecosystem. With substantial Japanese and South Korean funding underpinning India’s automotive sector, Sri Lankan companies might place themselves as specialised suppliers.
“Can we grow to be a part of India’s provide chain, producing sensors, airbags and different parts?” he asks, noting that native corporations already manufacture components for the automotive and plane industries.
Small and medium-size enterprises (SMEs) are central to this transformation: the sector accounts for near 50 p.c of the labour drive, using roughly 4 million staff. But, they proceed to face challenges associated to know-how adoption, market entry, governance requirements and financing.
Though digitalisation is reshaping industrial practices, notably in banking and transactions, the sizeable money economic system presents governance and tax compliance with quite a few challenges.
He explains: “Foreign money in circulation is estimated at round Rs. 1.5 trillion in comparison with roughly Rs. 300 billion within the interbank liquidity market, illustrating the size of casual financial exercise.”
“Regardless of these challenges, the long-term outlook for commerce and funding local weather stays optimistic. The nation’s historical past of resilience – navigating many years of battle, financial crises and a worldwide pandemic – suggests a capability to adapt to altering international realities,” Thewarathanthri affirms.
– Compiled by Yamini Sequeira
Island Jewels
Chairman
Careem Jewellers
Q: How does the gems and jewelry trade contribute to strengthening the Made in Sri Lanka model?
A: The trade has a heritage spanning over 2,500 years. The fantastic thing about our gems has been recognised all through historical past – from the accounts of Marco Polo within the 13th century to trendy icons akin to Princess Diana and the Princess of Wales, who wears her well-known engagement ring that includes a Ceylon blue sapphire.
Over the many years, the trade has constructed on this legacy by creating distinctive experience in sourcing a number of the world’s best sapphires and all kinds of colored gems, minimize and polished to excessive requirements. Sri Lankan jewellers mix these with expert craftsmanship and chic designs, to create items that mirror each custom and up to date fashion.
Providing these uncommon gems and beautiful jewelry to a worldwide clientele elevates the Made in Sri Lanka model, positioning the island as a vacation spot for luxurious and artistry.
Q: Retail purchases by worldwide guests characterize an necessary income stream for the trade. How important are these gross sales to abroad shoppers visiting Sri Lanka?
A: This can be very important to each the gems and jewelry trade, and to the broader economic system.
With over 2.3 million vacationers visiting the nation final yr, gross sales to overseas shoppers have been a invaluable supply of overseas forex earnings. Rising vacationer arrivals and better common spending per customer current sturdy alternatives for future progress.
These purchases additionally maximise worth addition: relatively than exporting gems, retailers promote completed jewelry on to worldwide clients, supporting livelihoods throughout the worth chain – i.e. from miners and cutters to designers, goldsmiths and retail professionals.
Q: Many vacationers view jewelry as a significant and lasting buy. What elements affect shopping for choices when deciding on gems and jewelry?
A: Most vacationers are drawn to Sri Lanka’s historic lore and popularity as a premier supply of sapphires and quite a lot of colored gems. As a supply vacation spot, patrons can entry a wider collection of fantastic gems and well-crafted jewelry at glorious worth.
Immediately’s travellers are additionally properly knowledgeable with the power to analysis on-line. They typically go to established Sri Lankan jewellers and depend on educated specialists to information them in making the right buy.
Q: The jewelry sector combines pure gemstone sources with expert craftsmanship. How necessary is design and craftsmanship in creating items that attraction globally?
A: Design and craftsmanship are important to transferring up the worth chain. Each the non-public and public sectors recognise that overseas alternate earnings could be elevated by maximising worth addition.
This requires sustaining the very best requirements in gem reducing and ‘goldsmithing’ whereas creating revolutionary, up to date designs for the worldwide luxurious market.
Given Sri Lanka’s entry to a number of the world’s best gems, its jewelry ought to be positioned as a premium providing. Robust design functionality and distinctive craftsmanship are key to reaching this.
Q: Trying forward, what steps ought to trade stakeholders take to additional place Sri Lanka as a worldwide vacation spot for gemstone and jewelry retail?
A: The non-public sector continues to have interaction with the federal government to place Sri Lanka as a number one jewelry hub. Current measures akin to VAT refunds for vacationers and decreased taxes on tough gemstone imports are constructive steps.
Additional liberalisation of imports for uncooked supplies, equipment and packaging would improve international competitiveness.
Equally necessary is human capital growth: establishing internationally accredited goldsmith coaching institutes and jewelry design faculties will strengthen the expertise pipeline.
And at last, higher funding in worldwide branding and advertising is important to advertise Sri Lanka as a premier vacation spot for fantastic gems and jewelry – and appeal to discerning international customers.
Attire Engine
Chairman
Joint Attire Affiliation Discussion board (JAAF)
Q: The attire trade has lengthy been the nation’s largest export phase. What function does the trade proceed to play in strengthening the ‘Made in Sri Lanka’ proposition globally?
A: Sri Lanka’s attire trade has been a cornerstone of exports for the reason that late Nineteen Eighties, now contributing round 40 p.c of whole exports of products.
In contrast to merchandise akin to Ceylon Tea or cinnamon, attire shouldn’t be origin branded. As a substitute, Sri Lanka has constructed its popularity as a trusted manufacturing associate for main international manufacturers.
Whereas the absence of sturdy native labels is famous at occasions, the trade has efficiently built-in into international worth chains, producing for lots of the world’s high attire names.
Made in Sri Lanka is synonymous with high quality and reliability, constructed on constant supply, excessive requirements and robust purchaser relationships. This popularity continues to drive international demand.
The onus ought to be on increasing markets, enhancing high quality and innovation, and strengthening Sri Lanka’s positioning as a supply of excessive worth attire.
Q: World attire provide chains are evolving quickly with an elevated emphasis on pace, sustainability and resilience. How is Sri Lanka positioning itself on this altering panorama?
A: Internationally, the competitors has intensified, which in flip has contributed to Sri Lanka’s slower progress in comparison with nations akin to Bangladesh.
Nonetheless, in areas akin to sustainability and resilience, we carry out strongly and sometimes outpace our opponents. Pace stays a problem resulting from reliance on imported uncooked supplies.
With restricted native material manufacturing, assembly solely a part of home demand, sourcing delays can have an effect on time to market in comparison with nations like Vietnam. That stated, the trade has demonstrated sturdy resilience, notably through the COVID-19 pandemic and financial disaster, sustaining operations and purchaser confidence.
On sustainability, Sri Lanka has made stable progress, although rising international necessities – particularly from the EU – will demand additional enhancements.
Whereas bigger exporters are adapting, smaller gamers will want higher help to satisfy these requirements. Regardless of pace constraints, we stay properly positioned to strengthen competitiveness by means of sustainability and resilience.
Q: How is Sri Lanka’s attire trade transferring past conventional manufacturing to supply greater worth options akin to design, innovation and product growth?
A: Sri Lanka’s attire trade has moved past its conventional minimize, make and trim (CMT) mannequin, with bigger producers including worth by means of design, product growth and innovation.
Corporations more and more current their very own seasonal collections, reflecting a extra proactive strategy with patrons.
Whereas worldwide design capabilities are nonetheless evolving, attire producers are investing in innovation and strengthening backward integration, to enhance effectivity and worth addition. The trade can also be shifting in direction of greater worth, technically complicated clothes that supply higher returns.
Future progress will rely upon strengthening these capabilities, addressing labour constraints and adopting hybrid fashions that mix native worth addition with regional scale.
Q: What commerce coverage priorities and collective actions are wanted to strengthen market entry and make sure the continued progress of Sri Lanka’s attire exports?
A: Commerce coverage and market entry are important to Sri Lanka’s attire exports, particularly amid rising international competitors and new US tariffs. Rivals akin to Bangladesh and Vietnam profit from broader commerce agreements, which give them responsibility benefits in key markets.
Whereas Sri Lanka has Generalised System of Preferences Plus (GSP+) entry to the EU, its use is proscribed by strict guidelines of origin, making different sourcing typically less expensive. This locations the nation at a relative drawback.
To stay aggressive, Sri Lanka should pursue new commerce agreements (for instance, with Japan, Australia, South Korea, Canada and China), strengthen current preparations (e.g. with India) and diversify past conventional markets.
On the similar time, a steady coverage setting, environment friendly laws and improved funding situations are important to gaining manufacturing progress. Equally necessary is adopting an export pushed mindset, encouraging extra companies to enter world markets. Strengthening infrastructure, logistics and digitalisation will even improve competitiveness, and help the trade’s continued progress.
