"Before china started manufacturing and exporting ceramic products, Sri Lanka has been exporting ceramic products to USA and some companies even exported 85% of their products to USA. After china introduced a low introductory price Sri Lankan Ceramic market was shattered. Also issues such as Exchange rate, inflation, and cost of energy too had a great impact on this regard. Thus at present there is a crisis in the ceramic export sector in Sri Lanka" said Dayasiri Warnakulasooriya, President of Sri Lanka Ceramic Council, Chairman/Managing Director – Midaya Ceraamics Co. Ltd, briefing the media on "The impact of current exchange rates, energy prices and GSP+ on the ceramic industry, recently.

Talking more on the crisis in the ceramic export sector Sunil J Wijesingha Chairman/Managing director – Dankotuwa Porcelain Ltd noted that all export industries are in a highly competitive global market and pricing is highly competitive. Ceramic sector consist of wall and floor tile manufacturers, porcelain table ware manufacturers, Ornamental ware manufacturers, roofing tile manufacturers and other brick and tile manufacturers. Wall and floor tile manufacturers cater mostly to the local market except the Lanka Walltile Balangoda Factory. Porcelain table ware manufacturers are all export oriented. The important fact is that all ceramic exporters of Sri Lanka produce high quality products and cater to high and niche market. They are not volume producers deriving the competitive edge through low price and low input costs. As he further noted today competitiveness is affected by increase in the cost of production due to high inflation and high energy costs, and overvalued rupee.

Talking about the problems caused by inflation, it is not only we who claim that the rupee is overvalued. Most economists have suggested immediate adjustments so that the rupee reflects its real value. Several economists have suggested that the rupee should be allowed to depreciate NOW to save the export sector. A forced depreciation later would be too late.

The ceramic industry is highly energy intensive , especially with regard to LP gas, and rates second, in terms of energy consumption, to the cement industry. Energy costs generally constitute around 50% of the total cost of production in most ceramic factories and has been a cause for concern. Fuel price increase over the recent years has severely threatened the survival of this industry in Sri Lanka. The ceramic industry utilize diesel more than any other energy source. But they were surprised that petrol and furnace oil was reduced but not diesel. He noted that since gas prices are closely following world market prices they will get a further reduction next month. The main competitors in Asia are in Thailand, and Bangladesh and both these countries have natural gas.

Talking of GSP+, if not for GSP+ European importers will have to pay 8% more duty. This would naturally make our products less attractive. Ceramic industry should survive, because it is a high value adding industry. It brings in valuable foreign exchange. It’s an industry that does not depend on low inputs but serves a global niche market and therefore at the second phase of the economy.

Jagath Peries, Chairman /Managing Director – Royal ernwood Porcelain Ltd noted some challenges such as global recession, high fixed costs, high financial costs, inadequate time period to settle term loans etc. He proposed solutions such as term loans to be restructured for longer periods and permission to sell increased qualities in the local market.