Business
Sri Lanka’s principal export markets in the last 10 years

by Kanes
Sri Lanka exports the greater part of its exports to industrial/developed countries. In fact, the share of the industrial countries in Sri Lanka’s exports has increased in the last 10 years. In 1991 Sri Lanka exported two-thirds or 67 per cent of its exports to industrial countries but in 2001 its exports to industrial countries amounted to three-fourths or 76 per cent. The US has been the largest market for Sri Lanka’s exports in the last 10 years and its importance has increased over the years. The US purchased 29 per cent of Sri Lanka’s imports in 1991 and gradually increased it to 41 per cent in 2001. The European Union is the second largest market taking about 29 per cent of its exports in 1991 and a little less (27 per cent) in 2001. In the European Union, the United Kingdom is the largest country market accounting for 6.5 per cent of Sri Lanka’s total exports in 1991 and 12.4 per cent in 2001. The other major industrial country — Japan — provides a sizeable market for Sri Lanka’s exports — 5.3 per cent in 1991 and 4.0 per cent in 2001.

The share of Sri Lanka’s exports going to developing countries has declined in this period while that to developed countries was rising. It has fallen from 32 per cent in 1991 to 21 per cent in 2002. Exports to almost all developing regions — Asia, Africa and Latin America — have fallen relatively as shown in the table. Sri Lanka does not export much to Africa and Latin America; Africa’s share in Sri Lanka’s exports was only 0.7 per cent and Latin America’s 1.5 per cent in 2001, lower than in 1991. The Middle East accounted for 17 per cent of Sri Lanka’s exports in 1991 — the largest regional market among developing countries — but in 2001 its share had fallen to 9 per cent. Developing Asia’s share too declined from 11 per cent to 8 per cent in this period. Sri Lanka’s exports to South Asian countries amounts to slightly over 3 per cent which was less than its exports to East Asia — 4.7 per cent in 2001. A significant development is the emergence of Russia as an important export market. Sri Lanka’s exports to Russia rose from 0.6 per cent in 1991 to 2.5 per cent in 2001.

The Major Markets

Sri Lanka’s main export markets have remained more or less the same in the last 10 years. Figures show that 20 of the 25 leading export markets in 2001 were the leading ones in 1991 too. The five who lost their places in the leading 25 are Jordan, U.A.R., Pakistan, Malaysia and Sweden; they have been replaced by new comers: Russia, Maldives, Turkey, Spain and South Korea. Those who have improved their position and went up the ladder are UK, United Arab Emirates, India, Canada, Syria, Hong Kong and Thailand and those who fell in their rank are Germany, Iran, Singapore, Saudi Arabia, Libya and Mexico. Seven industrial countries have remained in the top 10 export markets in 1991 as well as in 2001 — USA, UK, Germany, Japan, Belgium, France and Netherlands.

The two developing countries in the top 10 in 1991 were Iran and Jordan but in 2001 they were replaced by United Arab Emirates and India. Russia which was not in the leading 25 in 1991 entered the top 10 in 2001. In South Asia, India and Maldives are the most important export markets for Sri Lanka; India rose from No. 25 — the last — in 1991 to No. 10 in 2001, while Maldives which was not in the leading 25 in 1991 reached the rank of 16 in 2001. In South East and East Asia, Singapore, Hong Kong, Thailand and South Korea were the biggest export markets for Sri Lanka in 2001. China-Hong Kong absorbed only about one per cent of Sri Lanka’s exports.

The largest export market for Sri Lanka was the US in both 1991 and 2001. The UK was the second largest in 2001 and Germany third; in 1991 the UK was third and Germany second. Japan remained in fourth position in both years. The fifth in 2001 was United Arab Emirates, the sixth, Belgium, the seventh Russia, the eighth France, the ninth Netherlands and the tenth India. Iran, which was the sixth in 1991, has fallen to the rank of 24, Singapore from No. 7 to No. 13, while Jordan, which was, the 10th has disappeared from the leading 25 in 2001

Changing Exports and Markets

The two main determinants of our export markets are apparel and tea exports. The most significant development in Sri Lanka’s export trade is the rapid rise of textiles and apparel in recent years as the principal export. Thirty years ago in 1971, Sri Lanka’s clothing exports were negligible — only Rs. 7 million — or 0.36 per cent of total exports, but by 1981 they had risen to Rs. 3,021 million or 14.4 per cent of total exports. Tea was the principal export accounting for 30.6 per cent of total exports. By 1991 however, textiles and garments had become the leading export — 39.4 per cent — pushing tea to the second place — 21.2 per cent; since then textiles and garments had increased its share, reaching 52.8 per cent in 2001 while the share of tea had declined to 14.3 per cent.

This transformation on the export front had repercussions on the pattern of markets, for the principal markets in the earlier years were those which purchased our tea but now it is those which buy our apparel. The United States thus became our largest export market, because it is the biggest buyer of our principal export — textiles and garments; in 2001 it accounted for nearly two-thirds of such exports. Its purchase of textiles and garments in 2001 amounted to Rs. 134,047 million whereas its tea purchases were only Rs. 1,047 million.

Perhaps the most conspicuous transformation is in the export market in UK. Since colonial days, UK was the principal export market of Sri Lanka mainly because it was also the biggest export market of tea. In recent years, however, the UK has reduced its tea purchases from Sri Lanka and its rank has dropped from No. 1 to No. 10 in 2001. The UK, however, is the second largest market of Sri Lanka because it has replaced tea with textiles and garments and is the second biggest buyer of textiles and garments after the US. Its purchases of textiles and garments amounting to Rs. 40,078 million in 2001 exceed its purchases of tea amounting to only Rs. 1,571 million. Besides, almost all European Union countries are buying more textiles and garments from Sri Lanka than tea; in 2001, European Union including UK purchased Rs. 63,029 million of textiles and garments from Sri Lanka but only Rs. 5,978 million of tea. European Union accounts for 30 per cent of Sri Lanka’s textile and garments exports, while the US’s share is 64 per cent; thus, both account for 94 per cent by the country’s textiles and garments export. Japan among the industrial countries, does not figure as a major buyer of textiles and garments.

Tea, although less important than textiles and garments, is the main reason for the presence of several other countries as leading buyers of Sri Lanka’s exports — particularly Russia, Turkey and the Middle Eastern countries. Russia is now the largest buyer of Sri Lanka’s tea — 22.2 per cent in 2001, in 1991 it was the 11th largest buyer with a share of 2.4 per cent. Turkey, which was not in the picture in 1991, has now become the 5th largest buyer of the countries in the Middle East, United Arab Emirates, which had an insignificant presence in 1991, has now become the second largest buyer and Iraq too has now returned as a major buyer. Syria and Libya have improved their ranking by increasing their purchases, while Jordan, Iran, Saudi Arabia, Yemen and UAR have reduced their purchases. Pakistan too has ceased to be a major tea buyer. With the entry of Russia, the share of the Middle East in Sri Lanka’s tea exports has fallen from 67.3 per cent to 45.7 per cent in the last decade; though the share has fallen, it still remains the most important region for Sri Lanka’s tea.

The countries in the list of 25 also provide export markets to a variety of exports such as rubber, coconut products, minor exports such as spices, fish and manufactures other than textiles and garments. The European Union is the largest buyer of rubber followed by Pakistan, Bangladesh is the main export market for coconut oil followed by Pakistan while Dubai and Egypt are the largest export markets for desiccated coconut. Spices are bought by several countries, but Mexico is the largest market for cinnamon.


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