4 January 2024 12:50 am Views - 156
By Shabiya Ali Ahlam
Sri Lanka’s exporters are entering the new year with several concerns, National Chamber of Exporters (NCE) President Jayantha Karunaratne said, since given the current status of the local and global economic conditions, it is clear that the challenges are many.
“It’s a challenging year. It will be challenging due to many reasons. As exporters, we find that the local costs have gone up significantly, which has increased our operational costs. Now with the VAT, these costs are going to escalate further. It is going to be tough,” Karunaratne told Mirror Business.
Adding to the uncertainty is not knowing when the VAT paid on certain products can be claimed. This would impact the cash flows, block finances and push entities towards borrowing to meet the working capital requirements, he said.
The key markets grappling with recession, currency depreciation and in some cases sanctions, add to the worries of exporters, as such factors would lead to a drop in demand for products, added Karunaratne.
Meanwhile, the competing markets on the other hand are exploring all options to keep increase their market share and keep export volumes high. According to the NCE president, this is achieved by keeping the product prices low, which is made possible by low operational costs. This is an area Sri Lanka does not fare well. .
In a bid to remain competitive, the tea industry veteran stressed the need to make changes across the board.
“We, exporters, have to understand these situations. If we are to keep our export volumes the same or make them higher, we need to make various changes and look at new approaches. Some of the areas we need to prioritise are keeping costs low, bringing out new products and stepping up our game in innovation,” he said, adding that it is also important for Sri Lanka to look at new approaches in promoting its products in the international market.
So, there is a lot of pressure on exporters. We hope we will be able to manage but it is going to be very tough for us,” reiterated Karunaratne.
As per the latest available data, the export earnings for the first 11 months of 2023 ending in November contracted by 9.64 percent YoY to US $ 10,878.6 million.
The United States, United Kingdom and India remain the largest export markets for Sri Lanka.