Created: Wednesday, 21 August 2013
H.E. Dr. Palitha Kohona, Permanent Representative of Sri Lanka
to the United Nations in New York
University of Connecticut - School of Business
6th August 2013
Sri Lanka, a tropical island in the Indian Ocean was known as Serendib, Taprobane and Ceylon. The word “Serandip” gave the English language the word “serendipity” – “A welcome surprise”.
The term “Ceylon Tea” is synonymous with Sri Lanka. Ceylon Tea is renowned for its high quality, aroma, and taste. As the fourth largest tea producer and perhaps the second largest exporter in the world, we are in the forefront of tea exports to the world market. This is a position that we have maintained over the years.
Our tea industry dates from 1865 during the British colonial period. Ceylon, as the island was then known, produced coffee for export. By the end of the 1860’s, the coffee leaf disease decimated the plantations. This was an economic disaster for the planters who then turned to tea. In 1866, a pioneer began the first commercial tea plantation in Ceylon. This man, James Taylor, planted the new crop in 1866 and founded a profitable industry. Other planters followed suit and by 1877, the first recorded shipment of tea was dispatched to England. The famous brand, Lipton’s, had its origin in Sri Lanka. Within a decade, a new prosperous tea industry was built on the ruins of the coffee industry.
Ceylon tea enjoys a high reputation. One earned from producing fine blends and flavors benefiting from a unique environment of perfect climatic conditions that allowed a year round harvest. The combination of weather, rain, mist and dry spells combined with hand picking has produced a range of unique flavours. Much like the variations in wine produced in different regions. The elevation of the plantations has a significant impact on the flavor. Each elevation produces teas of unique character with a wide range of flavours and colour. By blending teas from different areas of the island and varied elevations, Sri Lanka can offer a very wide range of flavor and color. Some are full-bodied, while others light and delicate. Major tea blends around the world all use some Sri Lankan teas for blending.
The three major geographical zones in the tea growing areas are:
High/Upcountry: Above 4,000 ft.
• Nuwara Eliya - Delicately fragrant
• Udapussellawa - Exquisitely tangy
• Uva - Exotically aromatic
• Dimbula - Refreshingly mellow
Mid-Country: Between 2,000 - 4,000 ft.
• Kandy - Intensely full-bodied
Low-Country: Below 2,000 ft.
• Sabaragamuwa - Smooth & full-bodied
• Ruhuna - Distinctively unique
The tea industry continues to be economically important to Sri Lanka, although in dollar terms other industries have surpassed it. It used to be the main export earner. It is now one of the main exports and important source of foreign exchange and employment. The tea sector provides direct and indirect employment to more than one million persons, constituting 10% of the country’s population. The workforce is dominated by women. Export earnings from tea account for about 15% of the total export earnings, and reached US$ 1,412 million in 2012. The tea industry contributes approximately 2% of Sri Lanka’s GDP, generating 65% of agricultural export revenue.
The total export volume reached 320 million kilograms in 2012. The average price of tea exported during the year 2012 stood at US$ 4.41 a kilogram, compared with US$ 4.62 a kilogram recorded in 2011. The most important foreign markets for Ceylon tea are the United Arab Emirates, Russia, Syria, Turkey, Iran, Saudi Arabia, Iraq, United Kingdom, Egypt, Azerbaijan, Kuwait, Ukraine, Libya and Japan. In Russia, “Ceylon Chai” is highly valued.
The comparative advantage of Ceylon tea lies in many factors. Sri Lanka is the largest producer and the exporter of orthodox tea with the ability to produce tea throughout the year. Diversity in specific aromas and flavours is another area in which we excel. The highest quality standards are maintained and ISO 3720 is the minimum standard. We have the capability to produce the cleanest tea in the world in terms of minimum pesticides and residues. Methyl Bromide was removed from the production process in 2012. The Colombo tea auction is the single largest tea auction in the world. Auctions are held every Tuesday and Wednesday, every week except during the national New Year and at Christmas. Around 6.5 million kilograms are sold weekly. We export more than 50% of tea in value added form. The Value added product range of Sri Lankan tea includes green tea, flavoured tea, organic tea, instant tea, iced tea, and ready-to-drink tea. Tea based soap, bath gel, shampoo and cosmetic products have recently been added to this product range. Sri Lanka boasts the biggest tea research institute in the world. Colombo also has the biggest concentration of tea bagging plants in the world.
With this said, however, the Sri Lankan tea industry faces some challenges. The rising cost of production, particularly labour costs, declining productivity, adverse weather conditions, possibly caused by climate change, are just some of our problems. Political instability in major overseas tea markets, especially in the Middle East, has had an adverse impact. Reduced tea consumption in the European region due to the Euro-zone crisis is another worrying factor beyond our control. The tightening of sanctions on Iran too has had a long-term impact. Iran is a major market for certain fees. The high price of Ceylon tea is sometimes an issue in less affluent markets.
Where there are problems, there will always be solutions. We need to meet these challenges so that Ceylon Tea would continue to flourish in a fiercely competitive global market place. We must reduce the cost of production, adopt better agricultural practices, introduce fast growing cultivars with a longer life span, rehabilitate the soil, tap new and emerging markets, increase the export of value-added tea, using local tea blending expertise, and improve the quality of tea. Moreover, increasing government incentives for replanting, improving labour productivity and promoting the use of Ceylon Tea for health and beauty purposes are also important.
Sri Lankan tea industry celebrated 145 years in 2012. I hope that Ceylon Tea will continue as the best tea in the world.
(B) Sri Lanka’s Economy
Now, let me say a few words about Sri Lanka’s overall economy and investment opportunities.
From as far back as 500 B.C., Sri Lanka has been of trade interest to the world. We exported in spices, elephants, gems, pearls and timber. Ceylon Cinnamon sets the global standard for this spice. It is said that Hannibal’s elephants came from Sri Lanka. It was a thriving maritime hub and an important trading post between the East and the West, frequented by merchant ships from the Middle East, Rome, Greece, Persia, Burma, Thailand, Malaysia, Indonesia, China and other parts of East Asia. Sri Lanka was a key point in the Southern Silk Route. Ancient traders exploited Sri Lanka’s fortunate location in the middle of the Indian Ocean.
Centuries have passed, yet this standing remains. Sri Lanka of the 21st Century is a country offering a plethora of investment and trading opportunities and a promise of success and discovery, supported by liberal economic policies and an investor-friendly environment. Here are some of many compelling reasons why one should make Sri Lanka your next investment destination:
• A strong and resilient economy
• Supportive government policies
• An educated and adaptable workforce
• Developed social infrastructure
• Location and connectivity
• Access to key markets
• Developed infrastructure
• Quality of life
Please permit me to outline some statistics to further demonstrate Sri Lanka’s achievements:
1. Food insecurity is no longer an issue for Sri Lanka and absolute poverty has been reduced to 8.9%. The aim of the Government is to make Sri Lanka a poverty free economy by 2016.
2. 85% of the population has access to potable water. Child and maternal mortality rates have been reduced to the levels of more affluent countries.
3. Consistent with the “education for all” goal of the UN, Sri Lanka has achieved a 98% literacy rate, with a higher rate for girls and women.
4. ICT literacy in the country is following a path of exponential growth with a target of 75% ICT literacy by 2016. Sri Lanka’s Network Readiness Index ranking has improved significantly. Cellular phone penetration stands at over 110%. The era of simply being an outsourcing centre is drawing to an end.
5. 91% of the population is connected to the electricity grid. “Energy for all” will be a reality in Sri Lanka before 2015. Sri Lanka will also rely on renewables for 20% of its energy needs by 2020, contributing to the goal of “Sustainable Energy for All”. Sri Lanka’s carbon footprint remains negligible at 0.6 tons per capita per year.
Sri Lanka has just started a new journey after ending a 27-year conflict in 2009. Remarkable performances have been witnessed in all key sectors of the economy with the dawn of peace. The “Peace” dividend has been clearly visible as the economic growth rates reached over 8% in 2010 and 2011. The growth rate was 6.3% in 2012 and this was a reflection of the global downturn. By the end of 2012, our economy had recorded significant improvements in the areas such as the growth rate, increased level of investment, low inflation, very low unemployment, buoyant external trade and booming tourism.
The overall GDP stood at US $ 64 Billion with the per capita income at US $ 3,200 in 2012. A unique policy mix improved Sri Lanka’s status from low-income to middle-income. We successfully surpassed the IMF thresholds for graduation in January 2010.
The Service Sector remains the largest component of our GDP. At 58% in 2012, the service sector continued its strong expansion fueled primarily by strong growth in the hospitality industry, transport, telecommunications, trading, and financial services. The burgeoning sectors of Information Technology, training and software development are considered key areas for further growth. The Industry Sector accounted for 31% of GDP with the manufacturing sub sector accounting for 17.3% of the total GDP. The Agriculture Sector accounted for 11% of GDP. The plantation sector consists of tea, rubber, coconut, spices, horticulture, etc. As I mentioned earlier, tea is the major revenue generator of this sector.
Yesterday, the government of Sri Lanka inaugurated the Colombo South Harbor facility in Colombo. According to a recent Economist, the facilities offered here are superior to any in India. This is another landmark achievement since the commissioning of the second international airport, the Mattala Mahinda Rajapaksa Airport, last March and the new harbor, Magampura, in southern Sri Lanka in 2011. These infrastructure developments are key to realizing the goal of making Sri Lanka a regional hub in five key areas: aviation, maritime, commercial, knowledge and energy.
Sri Lanka is truly a great place to live and a great place to work. A country of numerous facets, Sri Lanka offers a spectrum of experiences, peoples, cultures and places. A cosmopolitan living environment surrounds those who choose to make the island their home. Social life is exciting in this city; gourmet cuisine, world-class shopping, theatre, cafes, art and host of star class hotels.
The “Pearl of the Indian Ocean” is still the most commonly used phrase to describe Sri Lanka - The tropical island of golden beaches, a brilliant blue sky and warm blue waters. For a country of its size, Sri Lanka has a rich and diverse array of ecosystems. With many endemic species of flora and fauna, the country has been recognized globally, by the IUCN, as a major biodiversity hotspot – one of only 34 identified around the world. We host the two largest mammals on the earth – the elephant and blue whale within two hours of each other. The population of wild elephants exceeds 7,000 according to the last year’s census. Whale and Dolphin watching is becoming highly popular among both local and overseas tourists. It is a top wind surfing and kite surfing destination.
Since the end of the internal conflict in May 2009, country has seen remarkable progress in tourist arrivals. Sri Lanka presents a unique experience to travelers with a remarkable combination of stunning landscapes, and captivating cultural heritage. Eight UNESCO World heritage sites, 1,330 kilometers of coastline with glorious arching beaches, fifteen national parks showcasing an abundance of wildlife, nearly 500,000 acres of lush tea plantations, 250 acres of botanical gardens, 350 waterfalls, ancient cities, which rival better known centres elsewhere, delicious cuisine with seafood as the centre piece, and a culture that goes back more than 2,500 years have made Sri Lanka a top tourist destination in the world. The world’s most renowned travel publisher – “The Lonely Planet” has named Sri Lanka as the number one destination in the world to visit in 2013. “The New York Times” recognized Sri Lanka as number one of the “31 places to go in 2010”. Condé Nast similarly recognized Sri Lanka. Sri Lanka realised its target of one million tourist arrivals in 2012 and received over US$ 1 billion in revenue. We are now facing the challenge of providing sufficient hotel rooms to accommodate tourists. In addition to the promotion of small and medium scale facilities, we have successfully attracted several global giants in the industry such as Shangri-La, Marriott International and the Hyatt Regency.
Sri Lanka is an ideal destination of ecotourism, with an immense range of activities for the whole family. When you choose Sri Lanka as an ecotourism destination, you contribute to preserving the environment, the culture and heritage and above all benefit local communities who are indeed the key custodians of natural resources, who play an active and critical role in conserving valuable biodiversity.
I invite you to visit Sri Lanka and learn and take back new ideas to influence your environment; contribute to preserving special habitats, learn about social and environmental issues and ensure that your spending contributes to conservation.
In keeping with the emerging requirement for responsible tourism, numerous green hotels have been built. For example, Heritance Kandalama, in the Matale District, which was built in the late 1980s, has gone to great lengths to safeguard the delicate eco system and the environment. The entire hotel is built upon a raised platform resting on columns, allowing rain and spring water to flow freely from the mountainside into the Kandalama Lake, one of the tens of thousands of irrigation reservoirs of Sri Lanka built by ancient kings. This design also facilitates the free movement of animals underneath the hotel, having a minimum impact on the eco system. The Sinharaja rainforest hotel project in Deniyaya, a natural UNESCO World Heritage Site, with a diverse culture of exquisite flora, is to be expanded with more eco-friendly aspects. A remarkable level of sustainability has been reached by incorporating the best practices in planning, construction and operations. They are also looking to introducing a Canopy Walk for the first time which would also be a first for the region.
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