Sri Lanka is Australia’s 23rd largest export market, accounting for 1.2% of exports amounting to AUD $218 million while Australia is Sri Lanka’s 14th largest export market and accounts for 1.6% of total exports amounting to AUD $171 million. The two-way merchandise trade between the two countries amounted to AUD $389 million in 2013/14.
Major Sri Lankan exports to Australia include apparel, tea, rubber products and clay construction materials while dairy, vegetables, paper and paperboard, and animal feed make up the major Australian exports to Sri Lanka. In fact Sri Lanka is Australia’s largest importer of lentils, importing around 70 percent of Australia’s lentils. It is also the 8th largest source of students pursuing a tertiary education in Australia.
Tourism and education are just two sectors with great potential for further collaboration and growth between the two countries. Fisheries, infrastructure development and logistics, as well as, premium foods are key industrial opportunities for Australia in Sri Lanka. Key investment opportunities from Sri Lanka to Australia include (but are not limited to) IT, spices, exotic teas and other non-traditional exports.
Education continues to play a significant role in the Sri Lanka Australia bilateral relationship, with Australia being the leading provider of tertiary education services to Sri Lanka. The number of Sri Lankans studying in Australia has been increasing and about 8,000 Sri Lankan students currently attend Australian tertiary institutions.
A number of Australian educational providers operate in Sri Lanka, including Monash College; Edith Cowan University; University of Southern Queensland; William Angliss Institute; TAFE South Australia; University of Ballarat; and Curtin University of Technology. A number of Australian universities also have distance education facilities as well as articulation programs where, for example, the first two years of a bachelor degree are completed at a Sri Lankan institute and the third year at an Australian university in Australia. Three Australian tertiary providers have launched distance education facilities in Sri Lanka: Monash College, an affiliate of Monash University; the Australian College of Business and Technology, an affiliate of Edith Cowan University; and Royal Melbourne Institute of Technology (RMIT). The University of Southern Queensland provides a distance-learning program in Sri Lanka, which is offered by the Sri Lanka Institute of Chartered Accountants. There is an opportunity for Australia to further strengthen its relationship with Sri Lanka through increased collaboration in the Technical and Vocational Education (TVET) sector. Sri Lanka is also becoming an educational hub for foreign students from neighboring countries.
Sri Lanka is Australia’s 24th largest tourist destination. In 2013/14 there were 64,515 departures to Sri Lanka. Tourism to Sri Lanka has grown by 15.8% over the past five years. Tourism to Australia (from Sri Lanka) is also on the increase. In 2013/14 there were 21,237 short-term arrivals, an increase of 5.5% from the previous year.
Tourism is one of Australia’s most important industries accounting for 4.6% of total employment, and contributing A$43.4 billion to Australia’s GDP. It is worth more than 8.2% of total Australian exports. Sri Lanka’s per capita income is the highest in South Asia, and with increasing levels of affluence, Sri Lankans are traveling abroad as tourists in ever greater numbers. Tourism was Sri Lanka’s 4th largest foreign exchange earner accruing US$1.7 billion in 2013, which was an average of 2% of current contribution to GDP. Employment both direct and indirect amounted to 270,150 jobs.
The growing tourism sector presents opportunities to consolidate and expand Australia’s footprint in premium foods, and to introduce Australian building technologies to leisure developments. Sri Lanka is rapidly expanding its tourism sector and hopes to increase its tourism arrivals to 2.5 million visitors a year by 2016. Opportunities abound for Australian companies seeking to help Sri Lanka meet its demand for room capacity. There is also considerable scope for professional hospitality training to meet the human capacity requirements of this boom.
Several Australian software companies have opened Research and Development (R&D) and Software Development & Delivery facilities in Sri Lanka. They join many other companies from around the globe that have setup similar operations in Sri Lanka to take advantage of a highly skilled and motivated workforce. Reliable and inexpensive ICT infrastructure, low cost of labor, neutral English accents and low staff turnover rates make Sri Lanka an ideal offshore destination for Australian companies looking to fast track their growth. Correspondingly, Sri Lankan ICT / BPO companies like Mitra Innovation and SAKS are looking to expand into Australia and some have begun to open operations in Australia to better serve their expanding local customer base.
Sri Lanka is fast emerging as a niche player in the global outsourcing marketplace for companies seeking higher quality customized services. Unlike other services delivery locations primarily geared towards servicing very large businesses with correspondingly high staffing requirements. In contrast, Sri Lankan service providers are looking to support small to medium sized Australian companies looking to avail themselves of world class outsourcing services. For the 2nd year in a row Sri Lanka won the National Outsourcing Association’s (NOA) Offshoring Destination of the Year Award 2014, validating that the country is a leading destination for outsourcing of information technology and Business Process Management.
Agriculture & Manufacturing
Australia has been a leading partner in Sri Lanka’s bid to become a self-sufficient dairy producer by continuing to help increase local fresh milk supply and reduce reliance on imported milk powder. Austrade and the Australian Export Finance and Investment Commission (Efic) have helped to develop public sector capacity and effective dairy management systems in Sri Lanka. Sri Lanka’s National Livestock Development Board (NLDB) imported dairy cattle, infrastructure and expertise from Australia’s Wellard Rural Exports to increase the size of the national dairy herd and raise the daily average yield from 4 Litres of milk per cow to a number nearer to Australia’s 26 Litres. Fisheries both inland and near-shore are ripe for development and collaboration. Sri Lankan waters produce fish and shellfish for both domestic consumption and export.
Free Trade Agreements (FTAs) with both India and Pakistan allows Australian companies to manufacture and export over 4000 product categories into India and Pakistan on a duty free basis. FTAs coupled with tax and other incentives provide Australian manufacturers direct access to 1.5 billion consumers. Among the largest Australian investments in Sri Lanka is Pacific Dunlop’s Ansell Lanka rubber products plant, which is one of the largest foreign investments in Sri Lanka and the largest single industrial employer in the country.