Sri Lanka’s trade, export and investment competitiveness drive is falling behind regional rivals as Asian economies accelerate coordinated strategies to secure markets and attract capital, according to a warning from a leading economic policy think tank. The Centre for a Smart Future (CSF) says the country’s reform trajectory is marked by weak urgency, limited ambition, and poor coordination across institutions.
The think tank argues that although the underlying policy problems are widely recognised, the response from authorities has remained slow and fragmented. More than a year after CSF issued a detailed policy note outlining eight priority reforms for trade competitiveness, progress remains limited. Meanwhile, the global trading environment has become more volatile, placing additional pressure on Sri Lanka’s already constrained foreign exchange earnings.
CSF notes that export performance has improved only marginally in terms of diversification. Efforts to broaden the export base and move up the value chain remain insufficient, even as government officials prepare a new National Export Development Plan covering 2026 to 2030. However, the organisation cautions that the existence of a plan does not guarantee execution, pointing to the previous National Export Strategy for 2018 to 2022, which was well designed but undermined by weak institutional capacity and inadequate budget support.
A key concern raised is the absence of strong institutional mechanisms to drive trade expansion. Gaps include the continued vacancy of a Chief Trade Negotiator role and the lack of a dedicated authority to lead international commercial diplomacy. CSF stresses that competing Asian economies are deploying highly coordinated policy frameworks that integrate trade negotiations, market expansion, and investment promotion in a single strategic system.
The report further highlights that Sri Lanka’s exporters lack sufficient structural support to innovate and scale. While a small number of leading firms have demonstrated strong resilience in global markets, most small and medium enterprises continue to struggle with competitiveness constraints, limiting the country’s ability to diversify its export basket.
Comparative regional analysis shows that several Asian economies have moved decisively to embed trade and investment policy within tightly coordinated institutional frameworks, combining export promotion agencies, investment boards, and negotiation units under unified strategic direction.
CSF warns that Sri Lanka continues to operate with fragmented governance structures that dilute accountability and slow decision-making. In an increasingly competitive global environment marked by supply chain realignments and shifting trade blocs, such fragmentation is viewed as a structural disadvantage.
The think tank argues that without urgent institutional consolidation and clearer leadership mandates, Sri Lanka risks missing emerging opportunities in high-growth sectors, while peers secure long-term market access and investment flows through proactive economic diplomacy and targeted policy execution.
By a Special Correspondent