US wants to bridge ‘huge’ trade deficit favouring SL
September 29, 2011, 8:52 pm
*Sri Lanka on its top priority list to boost exports
*Below expectation investment: It takes time for country’s image to change
*US Ambassor highlights sensitive issues
By Mario Andree
Nursing an ailing economy, the US government has set up a five year plan to boost its exports and Sri Lanka has been identified among several countries as key destinations for this purpose.
"The United States has a huge trade deficit with Sri Lanka, since we import over US$1.7 billion in Sri Lankan goods, and we only exported US$180 million in goods to Sri Lanka in 2010. That’s a big deficit, over US$1.5 billion, and we would like trade to be more balanced by increasing U.S. exports," US Ambassador to Sri Lanka Ms. Patricia Butenis said speaking at the 19th AGM of the American Chamber of Commerce (Amcham) yesterday.
"President Obama launched the National Export Initiative to double US exports in the next five years, and Sri Lanka is on the special list of countries where the ambassador is supposed to deliver," she said.
Butenis said that each year the US and Sri Lanka met to iron out trade issues in talks within the Trade and Investment Framework Agreement (TIFA). "We are supposed to alternate hosting the talks but the last two sessions have been in Sri Lanka," she said.
"After the TIFA talks last year partnered with the Amcham and Sri Lanka’s Export Development Board to give business presentations in Colombo, Galle, Kandy and Trincomalee to encourage Sri Lankan companies to buy US goods and services."
The ambassador said US exports had increased by 40 percent so far this year.
"Of course, we want to help US exports, but what’s in it for Sri Lanka? We believe that the US is very competitive in many different sectors, and you can buy superior American goods to increase the efficiency of your businesses," Ms. Butenis said.
She went on to say Sri Lanka had a golden opportunity to build a robust economy, with the county making significant macroeconomic gains since the conflict ended in mid-2009, but the country had much to do. Attracting foreign direct investment continues to be a challenge and she said many US investors were holding back for several reasons.
"I know that many business leaders are concerned about giving candid advice to the government on sensitive issues. That is where the Amcham comes in. The Amcham represents a group of companies, so the Amcham can make suggestions to improve the business climate and help the government achieve its own goals. The Amcham can leverage this strength to determine what problems affect business throughout the country, things like land title, complicated and conflicting rules, lengthy processes to get licenses, and labour productivity. You can make progress if you privately lobby the government on these issues, making it clear that these are the positions of the Amcham membership, not just individual companies.
"The Government agrees that private investment must increase by 8% of GDP for the Sri Lankan economy to achieve high levels of growth. So far investment hasn’t been as strong as we would hope. Why hasn’t there been more domestic and foreign investment? That is a great question, and we get asked that by government officials and private sector leaders alike. In my opinion, there are a couple of reasons. One is time. It takes time for Sri Lanka’s image to change and for investors, especially international investors, to realize and find the tremendous opportunities here in Sri Lanka.
"The second is more difficult. According to international surveys, Sri Lanka needs to improve the climate for investment and business.) Attracting international investment is a tough game, and investors don’t put their money into a country because they are nice or because the country is emerging from a war. They invest where they can make money.
"The World Bank conducts an annual survey on the ease of doing business, and in 2010 Sri Lanka ranked 102th, behind most of its regional competitors. Similarly, Sri Lanka ranks 91’ worldwide in the Transparency International index of corruption, and this issue inhibits foreign investment, particularly from the United States.
"Sri Lanka is behind regional competitors in other key indicators such as international tourist arrivals, exports as a percentage of GDP, and new business registrations. I know that Sri Lanka did improve its ranking in the Global Competitiveness Report, but most business people we talk to say that there is still more work to be done. The Government of Sri Lanka understands that, and senior policymakers have said that Sri Lanka will raise its game, moving ahead on areas such as infrastructure and tax reform. President Rajapaksa even set the high goal that Sri Lanka would become "one of the top 30 countries for doing business by 2014.
"There is another sensitive issue, and I think that most would agree that in Sri Lanka economic development and political reconciliation must go hand in hand. A great deal has been done to resettle the IDPs, reintegrate the economies of the north and east, and agricultural production and fish catch in the north and east have risen sharply. But I think about what more could be achieved with full political reconciliation, where every Sri Lankan feels that they have a full stake in the country and where potential foreign investors have confidence in the continued political stability of the country.
"The overseas Diaspora has a tremendous reservoir of skills and financial resources that could contribute so much to rebuilding Sri Lanka. I know that the Government of Sri Lanka meets with Diaspora groups to promote investment and encourage people to come back to Sri Lanka. I applaud those efforts. It is not just the money, it’s also the people. Their skills and overseas connections are just as important, and they can help propel Sri Lanka to the new level of development we all want.
"Sri Lanka has a once in a generation opportunity to break free of the old constraints and get back to where it should be," the US Ambassador said.
Amcham Board of Directors for 2011/2012:
Vijaya Ratnayake – President (CEO/MD Zodiac Medicals); Prasath Nanayakkara – Vice President (Global Head of Enterprise Automation, Virtusa); Glen Rase – Treasurer (CEO Citi Bank); Nimal cooke – Secretary (Executive Director, Maharaja Organisation); Directors - Nikhil Hirdaramani (Director Hirdaramani Group); Asanka Ratnayake (Director, Moutain Hawk); Talib Sanoon (Leader Corporate Affairs and People Resources, North Manufacturing); James Yamanaka (MD/CEO Ceylon Tobacco Company); Suren Rajanathan (Vice President, 3M Lanka); Manjula Dissanayake (Vice President, Zone 24X7); Rajendra Theagarajah (MD/CEO Hatton National Bank); Aslam Omar (MD, American & Efrid Lanka); H H A Rodrigo (Director, R-Pac Lanka); Rudolf Troestler (General Manager Hilton Colombo) and Charles Fowler (US Embassy Representative)
What’s Sri Lanka’s best overseas Test win?
Last Updated May 18 2013 | 05:06 pm