Sri Lanka - France Trade Shows a Significant Growth in the Past Two Years. Sri Lanka France Business Council Highlights Untapped Potential of the 5th Largest Economy

24th January 2012, www.dailynews.lk, By Sanjeevi Jayasuriya

The trade relationship between Sri Lanka and France has recorded a significant growth in the past two years. Reviewing the trade performance between Sri Lanka and France we see an encouraging revival with healthy increase in both imports and exports, despite challenging business conditions. Exports to France in 2010 increased by 12% to US$ 160 million compared to the previous year, Sri Lanka France Business Council Immediate Past President Nirmali Samaratunga said.

The apparel exports accounted for the major share, notwithstanding removal of the GSP plus facility. The imports from France showed an impressive increase of 49% to US$ 152 million as against the previous year, with 46% of the total been on account of imports of electrical machinery and equipment, she said at the recently held AGM in Colombo.

The first quarter figures of 2011 indicated an upward trend, with exports showing an 11% increase and imports a 154% increase over the previous period, which is encouraging.

The economy of France which was impacted by the downturn of 2009 has shown resilience and recovery in the years that followed. The first quarter of 2011 indicated that the economy has been growing at a stronger pace than expected at 0.9% - one of the best in Europe, although in the period July-September has slowed down to 0.4%. ‘Meanwhile we need to be mindful of the emerging situation in the Euro Zone and the growing sovereign debt problem of several countries leading to a possible recession in the Euro Zone.’

‘We need to be geared to minimize the threat of a possible global economic slowdown which would impact both our countries,’ he said.

Total trade stood at just over US$ 300 million in 2010, with balance of trade remaining in favour of Sri Lanka. It is a mere fraction of the country’s total trade, exports being 1.9% of total exports and imports just 1.2% of the country’s total imports. The investment continues to be around $ 45 million again highlighting the potential for greater French investments especially with the emerging opportunities in the newly liberated areas in sectors such as agriculture and fisheries as well as in the rebuilding and strengthening of the country’s infrastructure.

All this indicates the untapped potential, which our Council can play a role to harness especially in view of France being the 5th largest economy globally. The strategy is to identify sectors, hitherto untapped, where there is emerging potential for Sri Lanka products, and where our products, notwithstanding the loss of duty concessions and preferential trade facilities, can hold its own. These include high end, value added products, marketed particularly through niche marketing and branding.

Furthermore, it is necessary to identify and focus on the emerging market trends in Europe including France, where demand is growing for eco friendly and health products such as organic products and herbal medical products such as ayurveda products.

We need to target such areas where our products have a competitive edge. The recent Budget 2011 proposals which are development oriented with strong focus on exports and upgrading technology and research and development will be a further support. France’s strengths also need to be exploited to a greater degree in key industries such as telecommunication, machinery and pharmaceuticals, through greater awareness and promotion and linking Sri Lanka business with French counterparts. The inward and outward trade delegations can play a very valuable role in facilitating this, Samaratunga said.