Participation to the workshop on SME Development in

Emerging Asia: Integration to the Global Value Chain

Ms.D.L.Vasanthi Wijeratna
Assistant Director Ministry of Finance SRI LANKA

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian
Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does
not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used
may not necessarily be consistent with ADB official terms.

Location:
Between 555 &
950 North latitude
7942 & 8153 East
Longitude

World Heritage in Sri Lanka

SIGIRIYA
Sigiriya - "Eighth
Wonder of World"
Enter a time when
men tamed the
rocks, filled oceans &
built cities in the sky

World Heritage in Sri Lanka

Lord Buddha

Polonnaruwa District

Polonnaruwa is the Island's 2nd

largest kingdom. Today the ancient
city of Polonnaruwa remains one of
the best planned Archeological relic
sites in the country, standing
testimony to the discipline and
greatness of the Kingdom's first
rulers. Its beauty and serenity was
captured in the Duran Duran music
video Save a Prayer in 1982. The
ancient city of Polonnaruwa has
been declared a World Heritage site
by UNESCO. The Lankathilaka
temple and a colossal statue of the
Buddha made from stone is located
here

World Heritage in Sri Lanka

Surfing Adventures

Ampara District

Arugambay - "The
surfing capital of the
world" Adventures
from the tops of the
mountains to the
depths of the oceans

World Heritage in Sri Lanka

Ayurvedhic medicine
Sri Lanka Ayurvedha "Rejuvenate with
Ayurvedhic medicine"
For a mind free of its
cankers and a body free
of its pains

World Heritage in Sri Lanka

Perahera

Kandy district

Kandy perahera "The grand pageant

of Asia" Dive into the
colors, sounds and
lights of

Key Social Indicators

Description

Unit

Base Year

Value

Mid-year population

000

2015

20,966

persons per sq. km.

2015

334

Years

2014

74.9

Crude Birth Rate

per 1000

2015

16

Crude Death Rate

per 1000

2015

6.3

Literacy Rate

2014

93.3

Literacy Rate-computer

2015

27.1

Access Electricity

2015

98.5

Population density
Life Expectancy at Birth

Defining SMEs in Sri Lanka

Size
Sector
Criteria

Manufacturing Sector

Service Sector

Medium

Small

Annual Turnover

Rs.Mn. 251-750

Rs.Mn 16-250

No. of Employees

51-300

11-50

Annual Turnover

Rs.Mn. 251-750

Rs.Mn 16-250

No. of Employees

51-200

11-50

Importance of SMEs in the

Economy
Sri Lankas SME sector has been
identified as an important
strategic sector in the overall
policy objectives of the
government.
and it is seen as a driver of
change for inclusive growth
Regional development,
Employment generation and
poverty reduction.
SME sector is envisaged to
contribute to transform lagging
regions into emerging regions
of prosperity.

The government recognizes SMEs

as the backbone of the economy,
as it accounts for;
More than 75% of total No. of
enterprises
Provides 45% of the
employment and
Contributes to 52% of the
Gross domestic Products (GDP)

Importance of SMEs in the Economy

The SME sector dominates Agriculture, Plantation,
Construction, Manufacturing, Trade & Other services
SMEs in the Plantation and
Agriculture sectors
Paddy milling
Tea
Rubber
Coconut
Fruits and vegetables
Minor crops
Poultry Industry

SMEs in the Manufacturing

sectors
Textile & Apparel industry
Surgical Gauze Industry
Leather & Footwear
industry
Gem & Jewellery industry
Edible products, including
milk/fish based products
Cont

SMEs in the Services Sector

Health services
Passenger transport
Freight transport
Banking & Insurance
Tourism Sector
Telecommunications
Construction
Business Process Outsourcing (BPO)
Beauty Care industry

SMEs Export to Asian Countries

Market

2011

2012

2013

2014

2016 (January
To August)

2015

Value in Thousands of US Dollars

Brunei Darussalam

39.72

6.14

5.57

0.19

Cambodia

20.27

14.5

263.79

357.51

78.01

60.86

China

5,574.54

1,697.48

2,361.92

3,316.79

1,943.35

1,158.94

India

21,839.91

44,772.46

9,397.83

9,220.66

4,936.85

7,754.48

107.13

33.18

165.53

266.69

119.2

172.38

2,112.40

1,217.57

1,686.23

1,941.53

1,000.08

545.05

0.62

13.03

Indonesia
Korea South (Korea, Republic of)
Lao People's Democratic Republic
Malaysia

4.33
16,381.52

Myanmar

521.36

2.87

Philippines

1,639.58

517.29

553.09

163.34

141.2

183.3

119.56

3.31

132.27

67.71

128.65

6.11

93.05

0.68

111,643.94

50,896.69

2,400.16

1,211.01

1,254.74

848.45

Thailand

1,389.45

525.09

1,056.05

1,849.98

521.9

185.57

Viet Nam

1,315.79

550.97

1,402.22

790.46

169.86

356.94

160,564.14

100,303.16

20,648.74

19,661.52

10,790.31

11,263.04

Singapore

Total :

Existing Policies on supporting SMEs

Development
The major policy intervention areas are identified into
eight core areas namely;
Enabling environment
Modern appropriate technology
Entrepreneurial culture and skills development
Access to finance
Market facilitation
Research and development
Regional balance
Resource efficiency in developing SMEs
Source: National Policy Framework for SME Development

What is Global Value Chain

Global Value Chains (GVCs) where the different
stages of the production process are located
across different countries. Globalization
motivates companies to restructure their
operations internationally through outsourcing
and offshoring of activities.

Challenges/problems in integrating the SMEs to

the global value chain
low-income developing countries (LIDCs) are still
hugely under-represented in GVCs
SMEs, while representing the vast majority of firms
in the country, typically contribute less than half of
exports.
Some SMEs do succeed in participating in GVCs, it is
usually indirectly that is, they supply firms that
export, but do not export themselves
Lack of ability of SMEs to swiftly adopt new
technologies,
Lack of skilled workforce and less developed human
capital, to learn by doing, to innovate. Cotd

Challenges/problems in integrating the

SMEs to the global value chain
optimize SMEs production is constrained by their
small scale, limiting their ability to engage with
GVCs.
Less help to young SMEs scale up quickly and
better integrate in GVCs, it is important to lower
barriers to the entry, growth, and exit of firms.
Ensuring a level playing field for new SMEs is
particularly important
Less enhancing to SME access to external finance,
a critical enabler of their participation in GVCs.

Countrys strategies on SME development and

integrating SMEs to the global value chain
Establishment of a Technology Transfer and
Development Fund (TTDF) with appropriate
incentives to support
Recognize & reward innovative & technology leading
SMEs and assist them to participate in foreign trade
fairs, exhibitions
Foster University business linkages and ensure
curriculum development of universities and Technical
& Vocational Education Training
Building skills, entrepreneurial spirit and culture,
improve mindset and institutional capacity

Contd

Government will facilitate, support and

strengthen the mechanisms for easy and
affordable access to finance to SMEs
Special SME desks to facilitate access to credit
in banks and financial institutions
Expand the SME re-financing schemes,
banking clinics, non collateral based access to
credit
Scale-up concessionary bank loan schemes for
Women & Youth entrepreneurship
development

Cotd..

Promoting business linkages between large

enterprises and SMEs and facilitate buyer seller
meetings and buy-back and sub-contracting
arrangements
Overseas market information will be made available
to SMEs to access international market.
Establish SME website and e-commerce
arrangements to enable the SMEs to link with
exporters and buyers
Support product development ,quality improvement,
ethical practices , packaging ,branding and market
networking

Conclusion
we are currently experiencing a slowdown in
global trade. If trade and more specifically,
participation in global value chains is to
continue to create opportunities for growth
and jobs, we must remove obstacles facing
countries and firms that have not yet
managed the process of GVC integration.

Conclusion
So what can we do to help those firms,
people, and countries to share in the benefits
of GVCs in terms of growth, living standards,
and jobs? As SMEs are relatively more
impacted by the policy eco-system than
larger companies - they have indeed less
capacity to absorb policy deficiencies and
shocks their development requires a very
coherent, and carefully crafted, enabling
policy environment.

 the need to strengthen and diversify sources

of finance for SMEs, including trade finance,
to allow SMEs to seize opportunities in global
markets.

Recommendations
Open trade and investment policies should be at the
center of the policy choices
priority actions must be taken to implement and ratify
the WTO Trade Facilitation Agreement, alongside
investment in hard and soft infrastructure that would
allow goods and services to flow more easily across
border
reduce trade costs
rules of origin in G20 countries has to simplified,
nuisance tariffs eliminated and aid for trade initiatives
direct to SMEs
Contd.

Recommendations
lot that business can do to remove constraints and
foster supplier diversity, focusing on efficiency of
logistics, services delivery
establishing an action plan for universal ICT and
broadband connectivity that would empower SMEs
to leverage the digital economy, which can be a lowcost way for firms to engage in trade and to become
micro-multinationals.
global platforms for sharing best practices and elearning, involving both public and private sectors.