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The number of deaths due to terrorist activities has been the lower than ever before and the world is growing at a higher economic growth, at about 4% per annum. In terms of life expectancy the situation has improved drastically where it has gone up to an average of 70 years from 60. The combination of the stated factors has led the poverty reduction.
“It is good to be in this attractive period. The good and the best is yet to come, certainly for Asia where is growing to become the driver of growth for the world economy. Asia contributes to about 50% of the words GDP and is on the rise. As a part of that growth we need to find out how much as a country are we contributing to this? With the world becoming a global village, the opportunities are higher than before,” he said while delivering his keynote on the topic ‘Rise of Asia as a Trading Bloc, An Opportunity for Sri Lanka’ at the Sri Lanka Economic Summit 2014 organised by the Ceylon Chamber of Commerce (CCC).
Shah added that while previous it was about local production and consumption the world has seen a shift to global production and consumption.
Asia currently contributes 30% to the global exports and in that about 50% is intraregional trading. “As remarkable as it can be, this shows the regions potential to become a significant trading block.”
Exploring how Sri Lanka is making use of the opportunity, according to Shah it is presented with many. In the past decade it has witnessed the fastest economic growth rate where it was growing at 4.5% which later increased to 6.5%, and is expected to grow in the coming years by 7%.
Exploring how the situation can be in the future, Shah presented a number of opportunities for Sri Lanka which are also its key strengths.
The first he said is in the textile trade where Sri Lanka already contributes to the global industry. However, despite its excellence it contributes to the global trade less than 1%. It could aspire to contribute about 8%, but will it be able to get there is a question yet to be explored.
The second opportunity he said is in tea where the global industry is about $ 6.5 billion, and in that Sri Lanka is the fourth largest exporter. He said Sri Lanka should aim in making its tea the next wine, an area which France has managed to brand well.
“How do we make sure that we can grow the business to become the top tea exporter in the world that is a billion dollars’ worth? The extent of it is remarkable,” said Shah.
Noting tourism is an another area of potential, while by 2020 a total on 120 million of tourists are expected from India and China, he questioned Sri Lanka’s capability in attracting just 1% from this base. “It is not one single institution that will help achieve this. There needs to be a collective focus. If we get this right it will be worth a couple of million dollars,” he said.
With IT/BPO being identified as an upcoming industry in the country as in place are good IT infrastructure, English speaking workforce and high literacy rate, he said the industry can be a major growth contributor if minds are put together.
Sri Lanka having opportunities in tea, tourism, textile, IT/BOP and many more, he questioned what it will take to become the brand of excellence.
Q&A sessionQ: How can Sri Lanka improve further in the tea industry? Fernando: Asia can be important but the tragedy in of tea is that we are largely involved in trading and supplying, that too for few countries. If we can refocus Asia and increase the value added exports from 10% to 80%, we can earn much more than we are doing now. However, this required branding and marketing.
Q: Is Sri Lanka late in capturing global market share in certain industries?
Shah: The simple answer is no. We have not missed the bus. The trade in Asia is multiplying by many folds. Nearly 60% is sent to other Asian countries and this is happening for the last 15 years or so.
Q: You recently sold your business. Was it part of capturing Asia’s growth?
Yusoof: I pruned the business, I didn’t sell it. When I look back, we have been a transaction based business. When looking at top 50 freight forwarding businesses in the world, only seven are Asian. So I took the whole concept and wanted to contribute to that. For that purpose I went with a Japanese company so my business can be better positioned in Asia.
Q: It is also noted the Modi government will have to increase investments to keep with their ambitions. Are there any opportunities for Sri Lanka to become a development partner?
Shah: I think government identifies that investment is a driver for growth. He would treat every potential person as an investor. He speaks like CEO. He uses vocabulary no politician in India has used in the past. If you are going after investment you need to make sure it is attractive. There are different regions going after the same money so we need to look at how we can manage to make a proposition to help attract investments.
Q: By 2020 there will be a large number of middle income earners form India and China. We as a country will have to capture those earnings. Do we have the infrastructure?
Fernando: When I meet high end travel agents they say thank god Sri Lanka are not Bali or Phuket. We need to be high end and premium in anything we do. Be it apparel, tea, or tourist. We should not go to the mass. The East can bring numbers but it will not be high value adding to the economy. Sri Lanka is not aspirational for them. We need to look at bringing tourist from the West, which will be value adding.
Q: Coming back to third party logistics, what are the challenges in this regard?
Yusoof: The greatest business we can do is the intermediate business. Sri Lanka can look and learn from Thailand who supplies a number of products for China. Sri Lanka can do the same but do we have the capabilities? The opportunity is to bring those components and assemble them in the country. Infrastructure wise we have done well, but to promote intermediate trade this alone is not enough. We need to build the IT infrastructure. |
