Export DCA improves

Despite a decline of 6% in exports due to global turmoil, Sri Lanka’s exports diversification has strongly improved for the better. According to the latest research findings by the EDB, the apparel sector faces new challenges in its exports leadership status.

“The steady improvement in Sri Lanka exports’ Destinational Concentration Analysis (DCA) is welcome news for us. We also need to focus on expanding our supply capacities next,” Minister of Industry and Commerce Rishad Bathiudeen stated on 7 May.

Bathiudeen was speaking in the aftermath of a special presentation session on ‘Suitable Strategies for Export Sector’ made by the Export Development Board to him at the Industry and Commerce Ministry premises on 26 April. Also present during the session were top officials of the EDB, including the EDB’s Acting Chairman Yousuf Maraikkar, and EDB Director General Sujatha Weerakoone, ministry officials Secretary Anura Siriwardene and the Director General of the Department of Commerce P.D. Fernando.

The DCA index, developed by the EDB, is a statistical parameter which serves as a measure of how dispersed a country’s exports are. The higher the index value, the less distributed are the export markets, and the lower the index, the more widely distributed are the markets.

The DCA of Sri Lanka’s export markets revealed that over the years Sri Lanka has diversified its markets ‘gradually’. The DCA index which was at a high of 40.9 in 2002 fell to 34.1 by 2006, then 29.6 in 2009 and its improvement steadily continued to rest at 26.8 levels in both Y2010 and Y2011.

The 26 April EDB research also showed that the total number of regular Lankan exporters in 2008 fell by 27% in 2012 thus becoming a crucial domestic factor for export slackness (apart from international market turmoil).

Among the actions initiated by the EDB to promote exports and increase the numbers of the country’s exporters were the setting up of Advisory Committees, formulation of the National Export Policy [NEP], various budget proposals (Technology Upgrading Scheme, Cinnamon Training Academy, Quarantine Scheme for Ornamental Fish Sector etc), Geographical Indicator for Ceylon Cinnamon, Product System Certification for Tea Branding, and expand supply base through the Divi Neguma Programme.

A virtual flip in traditional and non-traditional exports from Sri Lanka since the 1980s became apparent, in that traditional exports that were 73% of total exports in 1980 fell to 22% in 2012, so that 78% of total exports in 2012 were non-traditional exports. In its mapping exercise, the EDB also identified an unlikely winner in Lanka’s future exports strategy; ships, boats and floating structures. This segment has become “a Sri Lankan export winner in a growing global market for them”, EDB officials added.

The board also warned that when it comes to future projections of world markets and Sri Lankan product supply, the apparels and garment accessory segment is faced with the challenge of becoming a ‘loser in a declining market’.

Similarly, vegetables, fruits, plastics and electric and electronic items too emerged as potential ‘losers in a declining market’. On the other hand, there is surging global demand for coffee, tea, tobacco, seafood and rubber which Sri Lanka is unable to fully match but offers strong promise in global markets and also for Sri Lanka’s keen export diversification efforts.

“These export products need to be well supported and promoted” EDB officials stressed.