Neil Farmer reflects on the packaging industry in Sri Lanka and its relevance to the UK …
Neither civil war nor regulatory barriers have been able to drive down the commitment to creating successful business opportunities in Sri Lanka. Rather, the Indian sub-continent treats challenges with enthusiasm and a determination to succeed. So what can we learn from this and what opportunities are there for British companies? H aving just returned from a trip to Sri Lanka, I thought it would be a good time to reflect on what is happening in the packaging market in the Indian sub-continent and the relevance to the UK packaging industry.
With a population of 1.258 billion and a growing economy, set to rival China as the largest in the world by 2050, India has a lot going for it. Currently the country is the world`s 10th biggest economy, but third in terms of economies by purchasing power. It has a new government that is business friendly and a desire to expand in manufacturing which accounts for 14% of GDP. Industry accounts for 24.7% of all employment. Sri Lanka is also growing after recovering from the ravages of a civil war, which destroyed some of the country’s economy and infrastructure, particularly in the north. With a population of 21.2 million, a GDP of $59.4 billion and a greater GDP per head than India, Sri Lanka has much to commend it.
Dynamism of those in the Industry
In my consultancy work I have been impressed by the dynamism of those living in the Indian sub- continent.
It is a young population, (median age in India 26.4 years, in Sri Lanka 31.4 years), full of energy and a desire to build, create and get things done. If you are seeking to construct a packaging plant in India, it is remarkable how much commitment there is to make this happen. Regulatory barriers, which in Europe might seem insurmountable, in India are approached with enthusiasm and determination to succeed. It is significant that the main export destinations for India are the United Arab Emirates (UAE), the USA and China. The main exports are engineering products ($65.3 billion) and petroleum & products ($60.3billion). Europe and the EU do not appear at the top or even near to the top of the list and this is disappointing and disturbing.
The same applies to imports, where the only European country in the top four countries of origin is Switzerland. There is a lot more that companies in our industry could be doing, particularly in the equipment sector, as machinery accounts for $27.6 billion worth of imports per year into India. The textile industry in Sri Lanka is well known for the volume of exports of garments and underwear. However this is being challenged by emerging countries such as Cambodia, which has far lower labour costs, making it a more attractive proposition for branded consumer goods producers. There is of course the famous Sri Lanka tea industry which has strong historic ties with our country, particularly from colonial times. However this is on the decline and more tea is now exported to Russia and the Middle East than to the UK.
How British Companies Can Help
All of which leaves us with the dilemma as to whether it is worth pursuing these markets and whether opportunities still exist.
Certainly from a packaging material viewpoint it is difficult to see how UK and European companies could compete. In the tea factories I visited in Sri Lanka much of the paper sacks I saw were from companies such as St Regis who have extensive operations in the country. The packs were well made and had excellent barrier qualities; it would be hard to compete in these applications. However machinery and equipment is a different matter. Large turnkey projects are needed in many regions. While I was in Sri Lanka, Coca-Cola announced a project to provide communities with clean drinking water and sanitation, in a joint project with the National Water Supply and Drainage Board (NWSDB). The company will be working with its partners to install two Reverse Osmosis water treatment units in certain parts of the country.
These units will help bring clean and safe drinking water to communities and are part of a series of initiatives all over Sri Lanka. Perhaps this is the way British machinery and equipment companies can provide expertise, knowledge and technical know-how to improve conditions for thousands of people. It would be good if packaging were to become part of the Total Solution to drive the economy forward, partnering with consumer goods producers and local communities. Were some of the expertise to come from the UK it would be a great thing indeed.