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Improving forex from export revenue is wishful thinking: Subhashini Abeysinghe

06 Jan 2022

  • Subhashini Abeysinghe says exports won’t grow without substantial planning
By Imsha Iqbal Despite the fundamental belief that export earnings would contribute in improving foreign reserves, economist Subhashini Abeysinghe Tweeted that it would not be upto the expectation at this juncture due to the challenges exporters face along with Sri Lanka paying its debt. Speaking to The Morning Business, Verité Research Research Director Subhashini Abeysinghe stated: “Basically, that (increasing exports) is visual thinking because you can’t increase exports like that as the records clearly show that exports will not grow without substantial planning and improving business and investment environment which requires time.” The anticipated revenue from the exports, as per the Export Development Board of Sri Lanka (EDB), was $ 20 billion by the year 2020, which was $ 8.6 billion in 2010. On the contrary, Sri Lanka could earn a revenue of $ 10.1 billion while having a slower export increase of 1.4 times, according to United Nations Conference on Trade and Development (UNCTAD) trade statistics. Therefore, Abeysinghe stressed that having an export target alone becomes futile when there is no research and planning. Further explaining the increase of exports, she said that export improvement encountered challenges even before 2020 and currently, exports are facing even more challenges. “We are in a situation where there are many local and global challenges. In terms of local challenges, for example, agriculture exports in 2020 had to face two challenges: One is shortages and higher prices, which affect the competitiveness in the global market. When local prices are high, the buyers will not be able to meet the buyer prices and the buyer needs. Therefore, buyers stick to other destinations where they can offer more competitive prices.” When it comes to the shortages, Abeysinghe added that before the fertiliser policy, one of the critical challenges that most agriculture exporters faced was that farmers were unable to produce sufficient quantities of vegetables and spices in exportable quality. Then the fertiliser shortage and agrochemicals further reduces the quality of these products, which means the exporters will struggle to find not only the required quantity, but also the export quality according to each importing country’s requirements. As such, she reiterated, 2022 would be a challenge to the agriculture export sector. She noted that above all of these challenges, the dollar crunch will also affect the manufacturing sector due to the fact that the sector is dependent on imported raw materials. When it comes to global challenges, the energy prices would be increased, along with supply chain bottlenecks due to container movements, given the shortage of containers and the skyrocketing shipping costs, Abeysinghe stressed. “I heard in the media that politicians say that increasing exports would improve export income and it would somehow help to pay the debt, whereas the export sector is facing many obstacles,” she stressed. Abeysinghe noted that Sri Lankans need to be happy that the export sector is sustaining to the margin of the pre-pandemic situation. However, expecting to enable sufficient growth in order to enable reserve possessions from export income is “wishful thinking” in the next two to three years while there is no plan to assist the export sector.


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