Sri Lanka,
strategically located in the Indian Ocean, continues to foster strong
international ties, particularly with China and India. As a significant player
in the US pivot to Asia, Sri Lanka's influence is felt through various
channels, including South India's sphere of influence, the Chinese Belt and
Road Initiative, and ongoing engagement with the US. However, despite its
advantageous position, Sri Lanka faces several distinctive challenges in its
trade landscape.
One pressing issue is the country's considerable debt burden. Sri
Lanka has grappled with high levels of debt, exacerbated by borrowing from
international financial markets and non-Paris Club creditors. The impact of
this debt on the country's economic stability remains a significant concern.
Furthermore, the Covid-19 pandemic has profoundly affected Sri
Lanka's economy. The necessary responses to the pandemic, including
restrictions on travel and trade, have led to decreased tourism, remittances,
and overall economic activity. As a result, the country has faced economic
recession, compounding existing vulnerabilities.
One of the persistent challenges Sri Lanka faces is the shortage
of skilled labor, particularly in key industrial sectors. Many young Sri
Lankans opt for informal employment, such as operating trishaws, rather than
seeking formal training or education. This trend has led to a scarcity of
skilled workers, hindering the country's ability to meet the demands of both
domestic and international markets.
Additionally, the depreciation of the Sri Lankan Rupee continues
to pose challenges. Currency instability impacts various aspects of the
economy, including merchandise trade, economic growth, capital flows,
inflation, and interest rates.
Leveraging Commercial Diplomacy for Trade Enhancement
Sri Lanka's extensive diplomatic network, comprising embassies and
high commissions worldwide, provides a platform for enhancing trade relations
and facilitating diplomatic engagement. Transforming these diplomatic missions
into hubs for commerce and trade promotion is essential for Sri Lanka's
economic advancement.
Recent studies by Vidyaratne and Sumanasiri (2020) emphasize the
vital role of foreign missions in promoting international trade. These missions
can foster industry integration, facilitate business intelligence sharing,
enhance stakeholder communication, forge strategic partnerships, and engage in
inter-governmental dialogue. Moreover, participation in trade exhibitions and
business-to-business interactions can significantly boost Sri Lanka's trade
prospects.
Trade exhibitions provide a crucial platform for connecting buyers
and sellers, enabling them to engage directly with decision-makers. These
events offer opportunities for knowledge exchange and networking, essential for
understanding the cultural and business dynamics of host countries.
In conclusion, by leveraging commercial diplomacy and addressing
its unique trade challenges, Sri Lanka can unlock new opportunities for
economic growth and development in the evolving global landscape.
References:
Abeyagoonasekera, A. (2017, November 20). ‘Sri Lanka facing the geopolitical game in the Indian Ocean’ lecture by Asanga Abeyagoonasekera at M | Daily FT. Retrieved November 17, 2021 from https://www.ft.lk/other-sectors/-Sri-Lanka-facing-the-geo-political-game-in-the-Indian-Ocean--lecture-by-Asanga-Abeyagoonasekera-at-M/57-643646
Vidyaratne, R. T., & Sumanasiri, E. (2020). Foreign Missions’ Role in Promoting International Trade: Empirical Evidence of Sri Lankan Foreign Missions Promoting Electronic Exports in Germany. International Business Research, 13(7), 173. https://doi.org/10.5539/ibr.v13n7p173
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