HNB paves the way for Sri Lanka’s road to recovery with focused export promotion campaign

HNB Deputy General Manager Wholesale Banking Group Damith Pallewatte

Sri Lanka’s leading private sector bank, HNB PLC, made progressive success in its efforts to accelerate economic revival through a concerted focus on export promotion and development of new export enterprises. 

HNB’s Wholesale Banking Group curated and launched a program engaging all stakeholders, forging new partnerships, building up domestic capacity and offering advisory services for local exporters in a strong wave of support towards local industry. This initiative complements HNB’s ISO certified comprehensive suite of advanced, streamlined and reliable trade finance services proposition in Sri Lanka.

“Even prior to the pandemic, access to finance, and the burden of complex documentation and regulatory procedures were among the biggest obstacles faced by local exporters seeking to break into international markets. Given the unprecedented volatility that they now face as a result of pandemic-related disruptions, facilitation of international trade has become one of the most vital functions in the bank’s service delivery proposition,” HNB Deputy General Manager Wholesale Banking Group Damith Pallewatte stated.

While the Sri Lankan economy was hit hard by successive waves of COVID-19, GDP growth for the second quarter of 2021 has increased by 12.3% Year-on-Year (YoY) – albeit off of a low base in 2020. Despite on-going restrictions, Sri Lanka’s imports, for the first eight months of 2021 grew by a substantial 30.7% YoY to $ 13.4 b, outpacing growth in exports which increased by 22.6% YoY to $ 6.8 b. As a result, the trade deficit between January 2021 and August 2021 has widened by 44.5% YoY to $ 5.5 b.

“The need of the hour is to urgently seek out all possible avenues for Sri Lanka to unlock its export potential. Given the keystone role that HNB plays in the Sri Lankan economy, being a Domestic Systemically Important Bank (D-SIB), we believe that the current climate could serve as the catalyst for Sri Lanka to start shifting from bulk to more niche, value added exports. If we succeed, it could be a turning point in Sri Lanka’s export economy. 

“Many Sri Lankan enterprises already produce products that have the capacity to capture small but extremely valuable niches in international markets. From HNB we hope to offer our clients the opportunity to elevate themselves into regional and even globally renowned brands. Such brand expansion beyond borders will no doubt attract foreign direct investment in to the country which in turn will immensely help the country managing its foreign reserves,” Pallewatte stated. 

In order to help local companies carve out a place in such international markets, he explained how HNB offers comprehensive- end-to-end support to exporters – from complete structuring of trade financing facilities, issuing of letters of credit and negotiation of export documents to issuing of shipping guarantees and the facilitation of entrepôt trade business – while also liaising closely with export facilitation agencies such as National Chamber of Exporters of Sri Lanka to clear every possible obstacle for local companies to enter global markets. 

In that regard, Pallewatte also anticipated that parallel to the expansion of domestic export-focused production, a rapid expansion in related businesses and export facilitation services would also take place, particularly in the spaces of logistics, insurance, and supply chain optimisation and digitalisation, through investments in advanced new Enterprise Resource Planning (ERP) systems.  

“This will eventually see the creation of a much more vibrant ecosystem of products and services all geared towards supporting Sri Lanka’s next leap in export development. Our goal is to create exponential benefits for local enterprises to become export powerhouses, and build new opportunities for diversification of Sri Lanka’s exports and export destinations,” Pallewatte stated. 

In particular, HNB will drive key export sectors such as tea, rubber, cinnamon, apparel, and processed foods, together with promotion of coir and coir based products, vegetables/fruits with a special emphasis on local value addition, as well as service exports related to IT/BPO industries.

Addressing challenges on the ground 

“Access to finance for exporters has been a continuous challenge, and the situation was further aggravated with the current volatility in exchange rates, even though the low interest rate regime helped to reduce finance costs notably. On the other hand, with severe logistical disruptions which have increased the price of shipping many local exporters are facing significant challenges paying to get their products to customers,” Pallewatte noted.  

While there are alternative options for financing, they tend to be at rates that are not feasible for the likes of emerging corporates and SME companies.  Banks too tend to offer collateral backed lending to such enterprises, whereas adopting cash flow based credit analysis models portrays a more accurate representation of a company’s potential debt service capabilities.  He further stated that HNB’s focused vision of grooming emerging corporates to become the next big corporate in the country has been improvised by the strategic focus on disproportionate export facilitation. 

The systematic upgrade of business ventures in terms of their capabilities in human capital, technical skills, leadership skills and encompassed by proper organisation structures ensure sustainability of businesses at elevated levels where challenges to the businesses are different than at lower levels. “We believe this initiative will get much more traction in the coming years when emerging corporates see real value in this when bracing themselves to meet challenges of the next league of business.”

“Facilitating trade related financing is a highly skilled and specialised area which required in-depth technical knowledge and skills to effectively structure an appropriate scheme of credit facilities. We have often seen customers facing difficulties due to inferior solutions they have been pushed in to. In addition to that it should also support efficiently dealing with global supply chains and their financiers at the other end. Our global connectivity through the 900+ correspondent banking relationships, that include top tier banks in the world, coupled with the expert team who reads the pulse on the ground, provides us the edge to be a true partner in progress in all our customers’ international trade requirements,” Pallewatte stated 

Notably, a key ingredient in HNB’s advanced capabilities is its team of highly experienced and qualified professionals that drive its International Trade Services Department. HNB has the largest pool of certified documentary credit specialists among banks in Sri Lanka.  These highly skilled individuals combine innovative technology with unmatched technical expertise in order to provide simple, user-friendly solutions even for complex transactions with suitable, risk mitigants encapsulating the end-to-end process of a trade transaction, leading to greater confidence amongst customers.   

HNB’s Centralised International Trade Services Department is located at Janadhipathi Mawatha in close proximity to the Central Bank of Sri Lanka, the Import and Export Control Department, Sri Lanka Customs, shipping and logistics providers and other regulatory and statutory authorities. This access provides the utmost in convenience to customers seeking to complete import or export documentation within the shortest possible time-frame.

Aggressive promotion in support of local exporters 

HNB is focusing on multiple initiatives to kick Sri Lanka’s export performance into high gear. One such initiative is partnering with the National Chamber of Exporters of Sri Lanka (NCE) as the exclusive banking partner to the Sri Lanka Export Brand Exhibition organised by the NCE taking place in Dubai, United Arab Emirates. This will help Sri Lankan exporters showcasing their brands to source and prospect more clients and break into new markets.

A strong tech infrastructure underlies many of HNB’s competitive strengths. The bank is always looking to leverage their expertise in a more visible, customer centric way. In collaboration with an emerging e-commerce platform, Cord360, HNB has partnered the first B2B digital platform to enable Sri Lankan exporters to bridge the gap between themselves and potential customers in overseas markets digitally, for domestically manufactured products. 

The partnership with Cord360.com offers exporters a new digital path that has broken all traditional barriers to market entry. As an international online B2B platform created to connect to buyers and sellers of export goods, for the first time in Sri Lanka exporters can advertise in 10 different languages and post 40 plus industry products across six global regions.

Additionally, the bank is also in the process of establishing the HNB Export Centre – an exclusive help desk and hotline especially for HNB export customers and discerning clients seeking assistance on any matters related to exports. This includes free access to business-critical information including rates on facilities as well as in-depth technical expertise and advisory services. 

These initiatives are also complemented by HNB’s forging of partnerships with integral industry forums like the National Chamber of Exporters, Ceylon Chamber of Commerce, other association among the export communities, and overseas missions/embassies in Sri Lanka, etc. to leverage its own capacities, as well as launching promotional schemes for export customers who route incremental export volumes through HNB. 

With 254 customer centres across the country, HNB is one of Sri Lanka's largest, most technologically innovative banks. It has won local and global recognition for its efforts to drive forward a new paradigm in digital banking. HNB is rated AA-(LKA) by Fitch Ratings and was recently ranked among the Top 1000 Banks in the World for the fourth successive year by the acclaimed ‘The Banker Magazine’ UK. HNB is ranked amongst the top three companies in Sri Lanka by Business Today.

As a bank with a 132-year-old history fully aligned with the Sri Lankan economy and its development and one that has partnered the progress of several generations of Sri Lankans, we look forward to the opportunities in a sustainable manner as a responsible corporate citizen.  HNB whilst embracing its journey to be future ready to become the beacon in Sri Lanka’s financial services industry.  profoundly envisions a domestic manufacturing led export economy that will bring an inclusive economic growth