Amunugama says exports and related investments remain linchpin for economic revival

•  Participates at first Exporter’s Forum after taking office
•  Acknowledges exporters’ resilience amidst tough times 
•  Identifies rising manufacturing costs as a challenge for export expansion, attracting new investments
•  Outlines plans for policy shifts, new investment law, restructuring of EDB, IDB and BOI

By Charumini de Silva

Investment Promotion State Minister Dilum Amunugama – Pic by Lasantha Kumara

State Minister for Investment Promotion Dilum Amunugama said yesterday that exports and export-related investments remain the silver lining for Sri Lanka in overcoming the fiscal crisis and realising sustained economic growth.

 Speaking at the 23rd Exporters’ Forum organised by the Export Development Board (EDB) yesterday, he stressed that exports and investments focused on exports stand as the linchpin behind Sri Lanka’s ongoing economic recovery efforts. 

Acknowledging that it was his debut speech at the Exporters’ Forum after taking office, Amunugama outlined that the Government was exploring beyond its borders to find markets and initiate several projects to boost exports.  “Given the circumstances locally and internationally, it is not the rosiest time for exporters. However, on behalf of the Government, I salute the exporters for their resilience to navigate through tough waters. Exports were the single largest foreign exchange generator amid multiple crises ensuring the country remains afloat,” he acknowledged. 

He also admitted that the rising cost of manufacturing was a major stumbling block for the country to expand exports and attract new investments.

“With 30% income tax and skyrocketing electricity tariffs, we are faced with new challenges to retain the existing exporters,” he added. 

Exports in September had dipped below the $ 1 billion mark to the lowest in five months, as per data released by the EDB reinforcing private sector concerns on mounting challenges. September’s performance was $ 951.5 million, down by 12% from a year ago. It is also the lowest since April’s haul of $ 849 million. September’s performance also missed the $ 1 billion monthly mark sustained between May and August. 

Despite the marginal improvements seen in the economic fundamentals post-IMF program, he said a tangible benefit was not felt by the exporters so far. 

“We can restructure our debts and obtain new loans. The problem however is how we repay those amounts. The only way Sri Lanka can do it is via exports,” he pointed out. 

The State Minister noted that Sri Lanka has lived beyond its means for decades and that the vicious cycle of maintaining higher budget deficits and handouts exacerbated successive Governments’ public debt management. 

“The administrations were immune to higher Budget deficits and even during the 30-year civil war they continued the incentives for the public without re-investing the foreign exchange earned via exports,” he added.  

However, Amunugama expressed optimism for a gradual economic recovery in fundamentals, paving the way for the retention and attraction of new investments in the export sector starting in 2024.

The State Minister also outlined plans for significant policy shifts in the coming year, including the introduction of a new investment law and the restructuring of key entities such as the EDB, Industrial Development Board (IDB) and Board of Investment (BOI). 

He said the Government has shifted its focus towards boosting service exports from critical sectors such as tourism, and ICT. “Although commendable strides were made in these areas, it is evident that there remains a substantial distance to traverse in fully harnessing their potential,” he added. 

The EDB has set a forecast performance of $ 18.51 billion in merchandise and service exports in 2023. This comprises $ 15.93 billion from merchandise exports up from $ 13.01 billion achieved in 2022 and $ 2.58 billion from services exports.