Ceylon Today Editorial

Trade, not ‘joy’ visits, crucial

15 February 2017

In this era of trade, when the head of a country visits a large economy, he's generally accompanied by a large trade delegation in attempts to further trade and investments.

But that doesn't appear to be so in respect of Premier Ranil Wickremesinghe's current visit to Australia. The delegates comprising this visit numbered a total of eight. Of those eight, one is the Premier's wife Maithiree and, among the balance seven are two ministers and one Deputy Minister (i.e., Ports Minister Arjuna Ranatunga, Minister of Irrigation and Water Resources Management Vijith Wijayamuni Zoysa and Deputy Foreign Minister Dr. Harsha de Silva), while the rest ostensibly comprise 'several personnel from the Premier's Office.

No mention is made of any members from the private sector accompanying Wickremesinghe on this visit.

Meanwhile, the New York based tradingeconomics website said that the value of Australia's economy in 2015 was US$ 1,339.54 billion and it was equivalent to 2.16% of the value of the global economy. (This newspaper was unable to immediately access information with regard to the size of Australia's economy at the end of last year).

In contrast, according to an Australian Government website, the size of Sri Lanka's economy was $ 82.5 billion last year. That means that the Aussie economy is more than 16 times, or, in other words, more than 1,500% larger than Sri Lanka's economy.
Also, the per capita income of an Australian in 2015 was $ 54,708.18, said tradingeconomics, whereas in the case of Sri Lanka, according to official Aussie data, it was a mere $ 3,869.8 as at last year. That means that an Aussie's per capita income is more than 14 times or more than 1,300% the size of Sri Lanka's per capita income.

Therefore, at least superficially, there lies a vast export market, 'down under' for Sri Lanka. Nonetheless, according to the Aussie Government, in the period 2015/16, Australia enjoyed a trade surplus over the island. Though exports from Sri Lanka to Australia grew by 18% Year on Year (YoY) to Australian (A)$ 226 million and imports from 'down under' fell by 14.8% to A$ 251 million, yet, the Aussies enjoyed a trade surplus of A$ 25 million over Sri Lanka. (According to the internet, one A$ was equivalent to $ 0.77 as at yesterday).

According to the Aussie Government, Sri Lanka's major sources of exports were tea & matè (A$37 million), 'other' textile clothing (A$30 million), textile clothing accessories (A$ 17 million) and 'fixed' vegetable oils & fats, 'hard' (A$ 17 million). Imports were led by vegetables,' fcf' (A$ 69 million), milk, cream, whey & yoghurt (A$ 42 million), wheat (A$ 28 million) and paper & paperboard (A$ 19 million), respectively.

According to World Integrated Trade Solutions (WITS), a statistical platform managed by the World Bank, the UN and the World Trade Organization, Australia's total imports in 2015 amounted to $ 200,114 million. Compare that with Sri Lanka's total annual import bill which is $ 20 billion, this means that Australia's total import bill is more than 10 times or more than 900% larger than the island's total import bill.

And not that Australia has a large population either. Its population is larger by a mere three million than that of Sri Lanka's. Whereas Sri Lanka's population last year was 21.2 million, according to the Census and Statistics Department, according to the Australian Bureau of Statistics, their population as at June of this year stood at 24.1 million. These show the massive consumption capacity of rich Australia, compared to that of poor Sri Lanka's.

According to the 'World's richest countries' website, Australia's imports last year were led by machinery ($ 27.3 billion or 14.4% of total imports), vehicles - $ 26.2 billion (13.9%), electronic equipment - $ 26.2 billion (10.6%), mineral fuels including oil - $ 17.6 billion (9.3%), medical testing equipment-$7.8 billion (4.1%), pharmaceuticals-$ 7.8 billion (4.1%), gems and precious metals - $ 7.6 billion (4%), plastics - $ 5.4 billion (2.8%), furniture, lighting and signs - $ 4.3 billion (2.3%) and iron or steel products - $ 4.1 billion (2.2%).

According to the same website, Australia's fastest growing exports were aircraft and spacecraft, up 631.4% (over 2012 figures) to $ 2.2 billion, tobacco, up 138.9% to $ 766.4 million, zinc, up 104% to $ 40.5 million, vegetable products, up 48.6% to $64 million, cereal and milk preparations up 34.6% to $ 1.2 billion, paper yarn and woven fabric up 26.4% to $ 18.1 million, other animal origin products up 26.2% to $ 75 million, dairy, eggs and honey, up 24.2% to $ 793.8 million, stone, plaster and cement, up 21% to $ 746 million, ceramic products, up 19.5% to $ 769.5 million, feathers, artificial flowers and hair, up 18.8% to $ 51.7 million, oil seed up 18.2% to $ 244.1 million, lead, up 17.6% to $ 10.5 million and glass up 16.7% to $ 763.9 million.

Therefore, it may be prudent, if the private sector, together with the government, would explore the possible strong points in the country's export basket that may be enlarged to accommodate the Australian market as well. A free trade agreement may be helpful in this regard.