Seylan Bank, treating export industry as a national obligation

The current macroeconomic context of Sri Lanka has posed many challenges to the export sector, mainly with the forex issues and global supply chain challenges. Seylan Bank PLC Assistant General Manager International Dilan Wijegoonawardena is an industry veteran with 30 years of experience. As a business leader heading one of the most crucial functions of the bank, he shares his insight on the export industry and the national duty to support the sector now more than ever. 

How has the export sector performed in the past few months?
Export businesses saw robust activity in the second half of 2021. Since August (2021) onwards, the monthly exports of the country have been continuously reaching over a billion dollars. The sector flourished overall, with garments and agriculture having done exceptionally well. 

However, as a country, we rely heavily on inward worker remittances, exports and tourism, respectively for foreign exchange. Currently, there is a big dip in the remittance sector. With the pandemic coming in, the tourism industry was hit and then the pandemic cascaded to the remittance sector as well. In 2020, worker remittances brought US $ 8 billion to the country, which was about 8 percent of our GDP. In 2021, it dropped by 22 percent and hovered around US $ 5.4 billion. That itself has paved the way to the current crisis we are facing. 

Usually, the majority of our tourists are from Russia, Ukraine, India and China. There was no income from tourism last year but tourism started picking up in January. However, there were no Chinese tourists, as they don’t have permission to move around yet. And unfortunately, due to the war, the arrival of Ukraine tourists has halted. So, we don’t know what will happen to Russian and Ukrainian tourism going forward and that will dent our tourism income. As a result, an improvement in remittances is doubtful in the near future.

Therefore, as a country, we will have to solely rely on the exports. And, as a bank, we see supporting exports as a national obligation. Not only do we facilitate exports but we facilitate the imports of these exporters too. For example, apparel exporters are importers as well, as much of their material such as yarn and buttons are imported. We also lend to the indirect export sector that has gone largely unnoticed. They import materials needed for exporters and we try to facilitate all their requirements as well since they are part and parcel of the export industry. So, as you can see, we facilitate the export process as a whole, to keep the machinery running.

How does Seylan Bank’s international division facilitate exports?
Facilitating trade operations is our core area of work. Functionally, we are the bridging factor between the branches and credit units. Customers request various trade facilities at branches, which reach the Credit unit for evaluation and confirmation of suitability of the request. That is where we come in as the international division. We facilitate the trade request, dispense our know-how, arrange international correspondent banking relationships, give background details of the buyers for the exporters, assist them in how best to structure the payments and documentation.

At Seylan Bank, how do SMEs fit into the overall picture in exports? 
Seylan Bank predominantly supports the small and medium enterprises (SME) sector. While our customer base is a combination of large corporates and SMEs, our strength is the SME sector. Our islandwide branch network, our accessibility and our credit hubs all over the country support and fuel the momentum for SMEs. 

We have several ways of facilitating export businesses. For example, we provide pre-shipment loans for exporters based on confirmed orders, which is tantamount to working capital for them to run their business. Once they ship their goods, we also provide post-shipment facilities, such as discounted payment on their bills, with the bank taking the risk and allowing the SMEs to fuel their working capital, as they get cash payment immediately. Seylan Bank works with over 500 international correspondent banks all over the world to facilitate international trade with any sector and receive export proceeds in time and as such are able to support SMEs comprehensively with their exports.

We are also working on a new product, a dedicated credit line for exporters, supporting direct and indirect exporters to get more working capital. We are hoping to make it available soon to support national exports even further.

A healthy number of new businesses regularly enter the export market with unique products. How can these start-ups benefit from Seylan Bank’s products and services?
Based on the current macroeconomic status, exporters face a lot of challenges such as rising freight costs and rising insurance costs. Costs of borrowing have also now increased following recent policy announcements and that will in turn affect their working capital cycle. Until recently, they were also affected by the exchange rate anomalies between the formal and informal sectors too. As we consider supporting exports a national obligation, we have ensured we give exporters the best possible rates to ensure they can remain competitive.

We also extend information services to exporters who want to do a risk assessment on potential buyers. Our relationship with information providers in various international markets enables us to get detailed status reports on buyers, which we then share with exporters enabling them to make informed decisions at the most granular level, understanding the opportunities and threats of possible ventures.

Finally, as a bank that has always worked with SMEs, what do exporters and start-ups in the sector need to know about working with Seylan?
The Bank with a Heart is our golden theme. Any start-up client should feel very comfortable to walk into any of our branches spread around the island or in to the Seylan head office. You will get the same award-winning service from all of our branches from our committed team members. You may not have the required working capital or the know-how. Just the initiative you have is enough for us to support you and bring you up to a good exporter’s level. That is the responsibility we will take as the Bank with a Heart. 

We will fund them, give them technical know-how and arrange and facilitate trade so that they could come up to an established exporter’s level.