Sri Lanka’s new national industry policy and five-year strategic plan should help the island nation boost its manufacturing sector and exports, aiding broader economic recovery and enhancing the country’s presence in global markets, experts said.

Sirimal Abeyratne, a professor of economics at the University of Colombo, said the manufacturing sector has no limits of expansion, unlike agriculture. “It is essentially a ‘tradable sector’ that (will) help the country (Sri Lanka) to expand its presence in the global markets and integrate with global value chains,” he told China Daily.

Strengthening manufacturing will have a positive knock-on effect on other sectors, including agriculture and service sectors, he said.

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Sri Lanka's Ministry of Industries announced on July 31 that it has prepared a new national industry policy in a bid to boost manufacturing output, as part of wider efforts to shore up the national economy.

“The Ministry of Industry has played a crucial role in reviving the country’s economy amid past economic crises. Our goals for 2030 include increasing the manufacturing sector’s contribution to gross domestic product (GDP) from 16 percent to 20 percent, raising the role of entrepreneurship in the workforce from 2.8 percent to 7 percent, and boosting industrial exports’ contribution to GDP from 14 percent to 20 percent,” Secretary to the Ministry of Industries Shantha Weerasinghe said during a press briefing.

To achieve these objectives and build a globally competitive national industry base in Sri Lanka, a five-year strategic plan for 2023-27 has been prepared and submitted to the Department of National Planning, the official said.

“The new national industry policy and the five-year strategic plan of Sri Lanka will be the cornerstone of progress in its ongoing economic development,” said Lawrence Loh, director of the Centre for Governance and Sustainability at National University of Singapore Business School.

The expert noted that Sri Lanka is in urgent need of economic recovery after recent downturns.

“The policy and plan will set the direction for a whole-of-country approach to harness resources and investments to attain a strong economic growth momentum,” Loh said.

Abeyratne from the University of Colombo noted that industrial policy is important in navigating the economy and facilitating the growth of various sectors. It can create an enabling environment for industry growth by enhancing competitiveness and eliminating barriers.

Sri Lanka’s Ministry of Industries has introduced a registration system for manufacturing industries, with 3,925 industries registered by June 2024, Weerasinghe said on July 31. Also, the government has allocated funds to a loan scheme to enhance leadership and entrepreneurship in small and medium enterprises.

“The manufacturing sector will be particularly critical for Sri Lanka as it can tap on human capital more rapidly than the services sector,” said Loh from Singapore. “The country will have better comparative advantage in the manufacturing sector as the costs can be lower at the onset.”

However, to boost the expansion of manufacturing industries, Sri Lanka will need to lean on globalizing countries such as China for technical expertise and business opportunities, he said .

James Jin, professor of Asian Studies at the University of Tasmania in Australia, said the Sri Lankan economy is picking up again, which will boost trade prospects for the island nation.

“It is highly expected that trade in Sri Lanka will pick up for the rest of this year and next year, as the world trade recovers, and (as) Sri Lanka is putting (behind) … all the mistakes made in the last few years,” he added.

In fact, the South Asian nation’s Colombo Port has been recognized by Alphaliner, an information platform serving the needs of the liner shipping industry, as the world's fastest-growing port, with a 23.6 percent growth rate in the first quarter of 2024, Secretary to Sri Lanka’s Ministry of Ports, Shipping and Aviation K. D. S. Ruwanchandra told the media last week.

The port has some unique advantages compared to other exclusive economic zones in the region, said Abeyratne. “While it offers far greater incentives for both primary and secondary investors, it can cut across time zone differences between far-east and western markets,” he said.

“Once the country is able to overcome its current challenges with economic crisis, it will be competitive business enclave in the region.”

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Ruwanchandra said the Sri Lanka Ports Authority earned $50 million in the first quarter this year, while earnings in full year 2023 amounted to $100 million.

The Colombo Port City is being established as a service-oriented special economic zone on 269 hectares of land reclaimed from the ocean.

In efforts to enhance Colombo Port City's position as a globally competitive special economic zone, Sri Lanka's cabinet decided to amend the Colombo Port City Economic Commission Act, a government press release said. It said the amendments are expected to remove existing obstacles to business operations there.

Xinhua contributed to this story.

Contact the writer at vivienxu@chinadailyapac.com