Revenue contribution to economy by value-added rubber continues to dip: SLAMERP

• 1Q23 revenue down by 10% YoY
• Says considerable drop in forward order books

Sri Lanka’s value-added rubber export sector has continued to move on a declining revenue generation path since

2022 and shows no signs of recovery, the industry stakeholders said.
The Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) shared that the sector, which saw its revenue contract by 20 percent year-on-year (YoY) to US $ 1 billion in 2022, is still on the decline.

In the 1Q23 period, revenue from the value-added rubber export sector saw a 10 percent decline, compared with the corresponding period of the previous year, as earnings dropped from US $ 251 million to US $ 231 million.
“The forward order books too have dropped considerably and the number of factories have reduced production capacity or are having temporary shutdowns, as both external demand and domestic demand have decreased drastically. Europe has seen a drastic downturn in orders, while the US remained stagnant in the first quarter of 2023. 

“Although the input costs too have gone down, the buyers are continuously asking for price reductions to place new orders,” said SLAMERP Director General Rohan Masakorala. 
The global demand for value-added rubber is declining because of high buyer inventories and economic pressures caused by inflation and interest rate hikes, which are affecting the entire global supply chain.

In a statement to the media, the SLAMERP pointed out that the only positive factor for the sector is the global freight charges, which peaked in the last two years, coming down due to market forces.
However, locally, the Shipping Ministry has taken decisions to artificially inflate rates by allowing unbundling of the freight to avoid market forces by removing a competition gazette that was originally introduced in 2013. 

While the SLAMERP expressed confidence in President Rail Wickremesinghe in ironing out the prevailing issues, its membership called on the government to focus on supporting the export industry to grow, encourage new export diversification and make the national export strategy be implemented along with the Rubber Master Plan, which has been neglected. 
“The country’s economic problems have to be resolved by strengthening the export sector with every possible support extended by all line ministries,” asserted Masakorala.