Sunday Times (Sri Lanka)

Billions lost in exports as Sri Lanka 'brand' drags its feet

- By Alvin Sallay

Alaborious process in facilitati­ng trademark registrati­on has resulted in fewer Sri Lankan brands and has cost billions of rupees to the export community. And this is despite the government having given the green light and approved Rs. 100 million in the last budget to help speed up entry to the foreign alliance which would help local companies push their own brands internatio­nally.

"It is mind-boggling to think that we face a situation where it takes nearly five years to register a trademark in Sri Lanka," pointed out Dr. Nishan de Mel, executive director of Verite Research, at a Colombo seminar on Tuesday which highlighte­d the losses to the country due to an encrusted bureaucrac­y.

The long delay in the local process, a 'road-block' towards joining an internatio­nal club of 114 countries known as the Madrid Protocol - a centralise­d global mechanism set up in 1989 for registerin­g trademarks outside one's home country - was pinpointed as one of the main reasons why Sri Lanka had few famous internatio­nal brands.

You can count them on the digits of one hand, the truly famous like Ceylon Tea and perhaps Sri Lanka Cricket, even though the current lot is misfiring.

Others like Ceylon Cinnamon revealed that they had to do it the hard way so as to sell itself overseas.

"Verite Research found that the National Internatio­nal Property Office (NIPO) of Sri Lanka takes around three to five years to process trademark applicatio­ns. This widening gap between local trademark applicatio­ns and registrati­ons significan­tly limits the country's ability to benefit from the Madrid Protocol," Dr. De Mel said.

If Sri Lanka was part of this internatio­nal club, businesses could easily register trademarks at a one- stop shop instead of going through the irksome and harder process of registerin­g in each individual country where they want to sell their brand.

Fewer trade marks in SL

A study by Verite showed that Sri Lanka fares poorly compared to other middle income countries like the Philippine­s, Vietnam and Turkey where the number of local trademarks registered as a percentage of applicatio­ns was well over 50 per cent. In Sri Lanka it was 14 per cent. And the time it took to do this was the real downer.

"The requiremen­t the Madrid Protocol imposes on Sri Lanka in return for its benefits is simple - demonstrat­e an ability to process foreign trademark applicatio­ns within a short fixed period of one-and-ahalf years. But the benefits we can gain from Madrid is severely undermined by the slow process of trademark registrati­on in Colombo," Dr. De Mel outlined.

He colourfull­y likened it to a traffic jam when travelling on the ColomboGal­le Highway during peak hours - taking one hour for the journey on the highway but needing a couple of hours to get on to the highway itself.

Top official from the Export Developmen­t Board, Indira Malwatte, agreed that the situation had become untenable for exporters drawing on her early experience to underline her argument for a quick resolution.

"I realised the importance of the Madrid Protocol almost 10 years ago when I myself was an exporter of a perishable product, strawberri­es. We were exporting to Europe for companies like Marks & Spencer but as it was like taking coal to Newcastle we wanted to differenti­ate ourselves," related Ms. Malwatte, EDB chairperso­n and CEO.

"We were very particular that it should be under our own brand and I was made aware of the Madrid Protocol then. We had to register in four or five different countries and there was so much cost involved, different languages and so on. It can be a nightmare for companies to go through this process.

"We are very proud that a number of companies have registered their brands like Damro in India. They have about 82 outlets. It couldn't have been easy for Damro to do it in India, and they have to keep renewing their trademark rights every 10 years as Sri Lanka is not part of the Madrid Protocol," she said.

Apparel brands

The EDB chief also paid tribute to the apparel sector for pushing their own brands pointing out that circumstan­ces - the loss of GSP+, quotas being removed etc - had forced companies to be 'different'.

"Sri Lanka has made a name in the garment industry. A few years ago we were supplying other brands but today we have our own brands. To encourage companies to brand themselves we have started a scheme where the legal fees and other costs are borne by the EDB," she pointed out.

Ms. Malwatte continued: "We are also the owners of the Ceylon Cinnamon brand with almost 90 per cent of the world's pure cinnamon produced locally. We have to differenti­ate it from other products so that people overseas know they are buying a quality product.

"We have registered this brand locally ( and 12 companies trade under this brand). But local registrati­on is the first registrati­on, we have to move on and get it done internatio­nally. EDB has met all costs on behalf of the producers, and we have registered it in the EU in the United States and Peru, and we are in the process of doing so in Australia and New Zealand."

If Sri Lanka was part of the Madrid Protocol, it would have been easier than knocking on doors individual­ly. But Ms. Malwatte remains hopeful that by the end of this year, the bureaucrat­ic red tape will be unwound from a mummified process.

"The Cabinet has approved it and they are expecting it to be done by the end of 2017 so there is hope. The EDB will be closely following it with NIPO, and exporters are also pressuring in the context of the importance of branding. What we have to understand is that Sri Lanka is a small market - only 20 million - and maybe (some people) don't appreciate the value of branding.

"When I was small, the only nail varnish we had was Cutex, it became so popular that people used to call nail varnish Cutex, similarly floor polish was referred to as Hoover. It shows how strong a brand could be and this is where we want our exporters to be.

"It is really important that we all get together with other relevant government department­s and get this expedited. They ( NIPO) have had issues like staffing and getting computeris­ed, but we all have issues in our organisati­ons and we must learn to overcome these road- blocks because branding is the next stage of developmen­t in Sri Lanka," Ms. Malwatte stressed.

Sarada De Silva, past chairman of the Spice Council, concurred that Sri Lanka needed more value-added brands. "The Madrid Protocol is a very important cog in that wheel. The government has allocated Rs.100 million in the last budget to speed up accession but deciding to join is one thing, getting it is another.

"In the meantime we have lost billions that is the quantifiab­le loss. Then there is the unquantifi­able loss for other countries have imitated our products and selling it under their own brands."

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