Core Viewpoint - Sri Lanka should shift its strategy towards high-value service exports due to structural limitations that hinder the expansion of manufacturing exports despite decades of incentives and free trade agreements [1] Group 1: Export Challenges - The export sector in Sri Lanka faces ongoing challenges that are not only governmental issues but also broader structural challenges within the economy [1] - The India-Sri Lanka Free Trade Agreement has yielded only modest benefits, while the Thailand Free Trade Agreement has not been implemented for various reasons [1] - Existing trade agreements are undermined by high domestic costs, affecting the overall export performance [1] Group 2: Comparative Advantage - Sri Lanka's comparative advantage lies in service sectors such as tourism, IT/BPM, logistics, and shipping rather than in manufacturing [1] - Global apparel giant Uniqlo considered investing in Sri Lanka but required a factory that could employ 10,000 workers, which the country cannot provide [1] - Approximately 70% of inputs for local manufacturing are imported, limiting domestic value addition, whereas service exports like digital and IT services or tourism generate higher foreign exchange inflows [1]