II. Leading Trade Prospects For U.S. Business Best Prospects for U.S. Exporters Agricultural Commodities and Food Products: Sri Lanka has been an excellent, consistent market for U.S. wheat in recent years, reaching $106 million in 1993. With a combination of sizable PL-480 and EEP programs, the U.S. supplied 100 percent of Sri Lanka's wheat in 1993. Maintaining U.S. market share, however, may be difficult as Sri Lanka shifts from a 100 percent government controlled (single-importer) system, to one with some competitive private sector importers. The fresh fruit and frozen food markets in Sri Lanka have developed in recent years to around a million dollars, opening avenues for U.S. suppliers. Australia is the major competitor in food products. Aircraft and Aircraft Parts: This sector continues to be one of the largest for U.S. exports to Sri Lanka, $10 million in 1993. Air Lanka, Sri Lanka's national carrier, has several U.S. aircraft (Lockheed Tri-Stars) which require spare parts, as do the armed services. In addition, recently acquired Airbuses include some American equipment. Telecommunications: The Government of Sri Lanka (GSL) is in the process of greatly expanding its telecommunications network. In the last two years U.S. companies have sold major earth satellite stations and international switches to Sri Lanka Telecom. Recently two U.S. companies were awarded contracts worth more than $50 million to provide 60,000 additional phone lines, radio links and switching equipment. As the network expands, business and consumer interest in related telecommunications equipment, including more sophisticated information and data transfer technology, is increasing. U.S. companies have already begun to develop this market. Energy Production and Conservation Technology: Electricity demand is growing at 7.5 per cent per year in Sri Lanka and production is hard-pressed to satisfy demand. The GSL hopes to add an additional 800MW of generating capacity in the next 8 years at an estimated cost of $1.4 billion. Substantial opportunities exist for U.S. firms to supply combined cycle, conventional oil, and coal - fired plants. These projects offer the possibility of increasing exports by hundreds of million dollars in the next few years. Given excess demand and rising energy prices, conservation in the short term can help mitigate energy shortages. Accordingly, U.S. conservation technology could find a market in Sri Lanka, as might hydro, wind, solar and biomass conversion technologies. Textiles and Related Equipment: Apparel manufacturing is Sri Lanka's most important industry. In 1993 this market generated more than $1.3 billion in Sri Lankan export sales (nearly 50 percent of total exports), of which the U.S. imported more than half. Sri Lanka currently imports $850 million worth of fabric annually, of which only $9 million is from the U.S. Demand for high-quality fabric used for export apparel will remain high and the U.S. can work to cultivate this market. In order to become more productive, Sri Lankan garment manufacturers are increasingly using computer-assisted pattern design and cutting and sewing technology, in which the U.S. has a competitive advantage. Sri Lanka is currently expanding domestic textile production, thereby creating opportunities for U.S. equipment. It imported 1 million dollars worth of textile equipment in 1993. Expansion of the Sri Lankan textile industry is resulting in an increased demand for cotton. While U.S. sales of cotton increased to more than a million dollars in 1993, this remains only 5 percent of Sri Lanka's total cotton imports. Computerization and Information Processing: Information processing in Sri Lanka has become increasingly widespread and sophisticated. As a result in recent years computer hardware and software sales have increased at more than 100 percent annually. Increased sales to the private as well as the public sectors have made this the largest growth market, with U.S. exports currently running around 3 million dollars a year. Financial and Management Services: As the Sri Lankan economy grows, financial markets will continue to expand rapidly. Sri Lankan expertise is developing in these markets and there are joint venture opportunities for U.S. firms engaged in underwriting, brokerage, and discounting, as well as the provision of other financial services such as retirement and personal financial planning. Pollution Prevention and Control Technology: Urbanization and industrialization present challenges to Sri Lanka's environment. The U.S. is distinguished in pollution prevention and control and should capitalize on these markets, focusing on solid waste removal, recycling, treatment and disposal technology. Light Industrial Goods and Equipment: Export-oriented development will lead Sri Lanka into increased light manufacturing of products such as household tools, small appliances, cutlery, kitchen products, and furniture. Consequently, opportunities for U.S. producers of industrial inputs and machinery, including lathes, grinders, drills, etc, should expand in the near-term. The following major sectors and products have the greatest potential for expanded U.S. investment: Infrastructure: The GSL has initiated plans for the construction of infrastructure on a build-own-operate or a build-operate- transfer (BOO/BOT) basis. Plans include power production ($1.4 billion), rail and road development ($286 million), port expansion ($150 million), water supply and sanitation ($40 million), and waste management. Telecommunications: The GSL has moved to expand the private sector's role in telecommunications. Private-sector cellular communications infrastructure is expanding very rapidly. Mining: A U.S. company is currently negotiating with the GSL to obtain a concession for a major phosphate mine; however, low world phosphate prices have slowed the pace of negotiations.