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21August2017

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TRADE & INVESTMENT

Sri Lanka has been the pioneering country in Asia, liberalising its economy since 1977, facilitating free flow of imports and exports. Consistent approach exercised by the government of Sri Lanka on liberalising trade, have paved the way to improve its competitiveness in the world market for its range of export offers in terms of price, quality and delivery. Stable macroeconomic environment coupled with stable exchange rate regime have facilitated further competitiveness. Sri Lanka is working towards becoming Asia’s naval, aviation, commercial, knowledge and energy hub.

Sri Lanka’s strategic location as a connecting point of sea and air transport between east and west has been complimentary to the free trade policies. The trade agreements entered in with India (year 2000) and with Pakistan (year 2005) have provided manufacturers and investors in Sri Lanka access to a sub-regional market which consists of over 1.4 billion in population.

Sri Lanka – EU Trade

European Union (EU) which includes 27 member countries has emerged as the number one market for Sri Lanka’s exports since 2007. The total value of has reached US$ 4.9 billion recording an impressive growth of 54% during the period of 2005-2012. Sri Lanka’s exports to EU have increased from US$ 1.9 billion in 2005 to US$ 3.1 billion in 2012. The increase of exports during the corresponding period is 65%, although there is slight downward trend observed during the year 2012, due volatile market situation in the EU, resulting from the debt crisis.

The EU continues to remain as the third major supplier to Sri Lanka following India and China. In 2012, Sri Lanka’s total imports from the EU stood at US$ 1.9 billion, registering a remarkable growth of 24% over 2011.

The following table summarizes the current trends in the trade between Sri Lanka and the EU.

 

Sri Lanka’s trade with EU 2004-2012

(Values US $ Mn.)

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  Source: Department of Customs, Sri Lanka

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As depicted in the following diagram, the United Kingdom, Italy, Belgium, Germany, France and the Netherlands continue to be the major export destinations for Sri Lanka accounting for 33.6%, 16.1%, 14.7%, 14.3%, 5.6% and 5% respectively in 2012.

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The two following diagrams illustrate the changes in the Sri Lanka market (Export) share in the major EU member countries, although the ranking does not show any major shift.

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Major Exports (2012)

Apparel products and clothing have been Sri Lanka’s major export items to EU which constitute around 59% of total export in 2012. Other major exports are Rubber products (8%), processed diamonds and Gems (8%), tea (4%), Gloves, mittens & mitts (2%), solid rubber tires (2%) and tobacco products (1.9%).

The trends in export products to the EU market for the period 2008 to 2012 are shown in the following table.

4

Source: Department of Commerce of Sri Lanka

The Major Exports to European Union in 2012 from the previous table are shown in the following diagram.

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The Other Miscellaneous products section of 15% indicated on the previous graph is detailed on the following diagram that shows the performance on non-traditional exports.

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Sri Lanka’s Major Imports from EU (2012)

Rough Diamonds (16.8%),knitted or crocheted fabrics (5.9%), Iron or steel & its articles (3.6%), optical and cinematic products (3.1%) are the major imports from the EU during the year 2012.

The trends in import products from the EU market for the period 2008 to 2012 are shown in the following table.

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Source: Department of Commerce, Sri Lanka

The Major Imports from European Union in 2012 from the previous table are shown in the following diagram.

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The Other imports of 51% indicated on the previous graph, is detailed on the following diagram.

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Major Sources of Supplies from EU

Belgium continues to be the major supplier to Sri Lanka followed by Germany, United Kingdom, Italy and France during the period 2008-2012.

The following bar graph illustrates the supply trends of major EU suppliers to Sri Lanka

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The following diagrams show the market share of Major EU Supplier to Sri Lanka

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EU-Investments in Sri Lanka

The UK, Germany, Italy, Belgium, France and Sweden are the main EU member countries which have invested in Sri Lanka.  These countries have invested in diverse sectors such as apparels, hosiery, knitwear, surf sails, textile, electronic products, light engineering, rubber based products, (e.g. tyres), coir based products, gem and jewellery, diamond processing, tourism and recreational products, security printing, infrastructure development, activated carbon, food processing, computer software, IT  etc.

 

Trade between Belgium and Sri Lanka

 Sri Lanka and Belgium has been enjoying a cordial trade relation for many years. This relationship has been instrumental in attracting many Belgian investors to Sri Lanka since the 1970’s. The government has relaxed and simplified foreign exchange regulations to attract more foreign investments while expanding opportunities for both local and foreign entrepreneurs and business establishments to invest in Sri Lanka.

As far as trade with Belgium is concerned, Belgium has become the 5th largest destination of Sri Lanka’s exports to the world, while Belgium has been the 13th largest supplier to Sri Lanka in 2012 showing an upward trend in its positioning.

The total trade turnover that was recorded at US$ 501 Mn in 2005 has increased up to US$ 826 Mn in the year 2012 depicting a growth of 65% during the last 7 year period. Sri Lanka’s exports to the Belgian market more or less remained in a similar pattern although items such as rubber products and coconut products have found niche market opportunities. In the year 2011 exports grew to over US$ 546 Mn. However, it dropped to US$ 464 Mn in 2012 due to the effect of the financial crisis experienced by many countries in the Euro Zone.

The value of imports from Belgium that remained between US$240 to US$358MIL from 2005 to 2010 has grown to US$ 405 Mn in 2011, although it has dropped to US$ 362 Mn in 2012.

The following chart I illustrates imports and exports, total trade and balance of trade beyond the two countries during the period of 2005 -2012.

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As stated, during the period 2005 to 2012 Sri Lanka’s major export commodities to the Belgian market has remained more or less the same. However, export share of these commodities have shown slight fluctuations.

In 2005, the following are the major products exported by Sri Lanka:

  • diamonds, and precious stones (69%)
  • knitted and woven garments (16%)
  • rubber products (6%)
  • manufactured tobacco products (2%)
  • broom & bristles (1%)
  • bicycles and vehicular parts (1%)
  • other miscellaneous products (5%)

Sri Lanka’s exports increased from US$258 Mn in 2005 to US$464 Mn in 2012 and have shown signs of modification of the export share during the period, with upward trends in apparels, rubber products, tobacco products and tea.

  • diamonds & precious stones (52%)
  • Apparel (25%)
  • rubber products (7%)
  • manufactured tobacco products (6%)
  • tea (2%)
  • Gloves, mittens & mitts (2%)

The following diagram 1 & 2 and 2a illustrates these changes in the commodities package of Sri Lanka’s exports to the Belgian market.

Diagram 1              

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Diagram 2

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The other export of products at 6% indicated on the previous graph is detailed on the following diagram.

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With regard to commodities imported from Belgium during the last seven years, supply of diamonds has been the dominant product, followed by unmanufactured tobacco, medicaments, plastic products, other rubber products etc.

Diagram 3 and 4(4a) illustrates the current trends in this section.

Diagram 3       

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Diagram 4

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The Other Import Products which represents 17% the previous graph are detailed on the following diagram.

Diagram 4a

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One could observe that trade between the two countries has been dominated by the diamond trade which has accounted for more than 65% of the average trade. The main factor that contributed towards this trend is the expertise developed in the craftsmanship of the Sri Lankan diamond cutters for decades. Sri Lanka as a signatory to the Kimberly certification process of the diamond trade, it has earned the reputation in the world for its expertise in the diamond trade.

Exports of apparel products have been the second largest export to Belgium followed by rubber products, manufactured tobacco products, fish and fish products.

 

Recent Business Engagements

 

  • With the effective interaction facilitated by the Sri Lankan Embassy in Brussels, the Embassy of Belgium in New Delhi and its Consulate in Colombo, the two countries identified many more potential areas for business. This has resulted in the expansion of the Belgian trade to IT products, coconut products, solid rubber tires, activated carbon, tableware, and food products.

Following the initiative taken by Sri Lanka Embassy in Brussels, the BelgoLux Business Council (BLSBC) was re-launched in 2009. The Council’s operations were formalised in 2011 by its registration as a legal non-profit organisation. The Council currently represents 26 leading businesses in Belgium. BLSBC plays a productive role in further strengthening trade and economic relationship between the two countries. Further information is available at;

www.belgoluxsrilankabc.be/

  • A Belgian business delegation which included over 50 representatives from 40 companies visited Sri Lanka in November 2010. The objective of the mission was to explore trade, economic and investment possibilities. Participants have expressed optimism on the country’s business climate and the prospect of their doing business in Sri Lanka. The mission was organized as a collaborative effort by the Embassy of Sri Lanka in Belgium, the Embassy of Belgium in New Delhi and the Consulate of Belgium in Colombo.

The business representatives were from a range of sectors including agro-food, machinery, construction, interior, energy, fisheries, gems, information technology, infrastructure, water supply, financial services, textile, tobacco, tourism investments and various trading companies. Most of the companies were exploring opportunities in Sri Lanka for the first time. Besides high level interactions with the Hon. Ministers of External Affairs, Economic Development, Industry & Commerce, International Economic Corporation and senior officials including the Governor of the Central Bank, the members of the delegation had B2B meetings with over 150 companies in Sri Lanka at match making events organized by the Sri Lanka Export Development Board, as well as by the Benelux Business Council of the Ceylon Chamber of Commerce. The program also provided opportunities for visits to Sri Lanka’s blue-chip companies, several companies with Belgian investment.

  • Recalling the above successful business promotional visit to Sri Lanka in November 2010, the signing of the Memorandum of Understanding (MOU) (between BLSBC and the Benelux Business Council of the Ceylon Chamber of Commerce) is another step in furthering the connectivity of the BelgoLux Sri Lanka Business Council with Sri Lanka. The MOU signed between the two bodies will place a solid foundation for Business Corporation and it would be mutually beneficial for both parties. 
  • A business delegation led by Hon. Minister of Industry & Commerce was visited Belgium from 16-18 November 2011. The programme arranged for the two day visit included the following;
    • Presentation of EXPO 2012 Exhibition and Trade & Economic Prospects in Sri Lanka
    • B2B Meeting programme for the private sector participants
    • Business networking event
    • Meeting with Antwerp Chamber of Commerce
    • Visit to the World Diamond Center in Antwerp
    • Visit to Trade Mart (Distribution Center in Belgium)
    • Visit to Nova Logistics NV in Antwerp Port

 80 representatives from Belgium companies, Chambers and Trade Associations participated in the B2B programme.

  • 29 delegates from the Belgian business community participated in Sri Lanka’s EXPO 2012, the premier international trade exposition held in Colombo, 28-30 March 2012. There were many leading companies such as OVIBELL, Plant Technology Ltd. Automatic Systems etc participated as new European sourcing companies.
  • The Sri Lanka continues to participate at the European Seafood Exposition since 2009, held at the Brussels Exhibition & Conference Centre, Belgium. This is a great opportunity for seafood sector representatives interact with Sri Lankan suppliers of quality seafood. As the world's largest fish and seafood trade show, ESE Brussels is the premier venue for showcasing the world's marine-based foods to decision-makers and purchasers. The number of exhibiting companies at ESE topped at around 1,700 from 81 countries with over 25,000 buyers and sellers from around the globe.
  • Hon. Rishad Bathiudeen, Minister of Industry & Commerce of Sri Lanka had an official visit to Belgium from 18-23 December 2012. During the visit, the Minister participated in the Business Round Table Discussion held at the Head Quarters of Flanders Investment & Trade (FIT) on 21st December 2012. CEOs and senior managers from 29 leading Belgium companies have participated in the discussion. He also had a fruitful official meeting with Hon. Kris Peeters, Minister President of Flanders Region.
  • A Visit of Business Delegation from Walloon Investment & Trade (AWEX) took place from 5-8 December 2012. They had meetings with many Sri Lankan companies including visit to Mattala new airport. They also have met Hon. Minister of Economic Development during the visit. The delegation was led by Mr Philippe Suinen, CEO of AWEX.
  • A trade mission is being organized by FIT is to visit Sri Lanka and Bangladesh from  27-31 May 2013. Leading companies from Flanders Region are expected to take part in the programme.

Useful Web links for Business Information on Sri Lanka

1)   Government Agencies

Ministry of Industry & Commerce

Department of Commerce;   

Sri Lanka Export Development Board; 

Sri Lanka Customs ; 

Central Bank of Sri Lanka;    

Board of Investment of Sri Lanka; 

Central Environmental Authority (CEA); 

 Department of Census & Statistics; 

Department of Registrar of Companies; 

 Industrial Development Board of Ceylon;   

Industrial Technology Institute (ITI); 

 Ministry of Finance & Planning - The Treasury of Sri Lanka; 

Ministry of Trade, Marketing Development, Co-operatives and Consumer Services; 

Ministry of Plan Implementation; 

Sri Lanka Standard Institute (SLSI); 

Sri Lanka Tea Board; 

Joint Apparel Association Forum of Sri Lanka;     

http://www.garmentswithoutguilt.com 

Trade Chambers:

Federation of Chambers of Commerce and Industry of Sri Lanka (FCCI); 

 The Ceylon Chamber of Commerce; 

National Chamber of Exporters;  

 The Ceylon National Chamber of Industries;  

 National Chamber of Commerce of Sri Lanka;  

 Sri Lanka Association of Software and Services Companies (SLASSCOM);

For Trade Information & Assistance:

Trade Section

Embassy of Sri Lanka Brussels, Belgium

Tel: +32 2344 5523

Fax:+32 2344 6737

E mail:   This email address is being protected from spambots. You need JavaScript enabled to view it.

Website: www.srilankaembassy.be 

 

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