Revival of trade promotion office by NPP essential

The manifesto of the NPP was launched last August by its leader Anura Kumara Dissanayake

National People’s Power (NPP) that came to power with a landslide victory, in its manifesto has clearly noted the necessity of export development and even key members of the NPP in various fora highlighted that priority would be given to export development.

Since the latter part of the 1970s Sri Lanka has been following the market-oriented economy or so called open economic policy. The main objective of the founders of this open economy was to create an export-oriented economy to produce products and services to the mass global market. Even the major partner of the new Government Janatha Vimukthi Peramuna (JVP), a Marxist party and NPP commonly believes in the need of the existing economic policy which is based on a market-oriented economy. The NPP Government accordingly may consider to continue the same economic policy with strategic changes introduced for the benefit of the people as needed. 

The general public has confidence that the new Minister of Entrepreneurship Development Sunil Hadunnetti and Chairman of EDB Mangala Wijesinghe will reinvigorate the export development commendably. With heartiest congratulations on their appointments to these highly responsible posts, it is important to emphasise the huge challenges that will emerge ahead in the export trade perceptible by the present local and global socio-economic environment.

A powerful institutional framework is utterly necessary if meaningful success is expected for any field. There is a similar type of institution already established for export development. With the introduction of an export oriented economy in the latter part of the 1970s, there was a necessity to establish an influential institution or Trade Promotion Office (TPO) for promotion of export development.

As a result, Sri Lanka Export Development Board (EDB) was established on 1 August 1979 under Sri Lanka Export Development Act No. 40 of 1979.

It is obvious that EDB as the only TPO in Sri Lanka has been empowered with a higher responsible task in development of export. It appears during the last few years that a certain invisible hand behind has been striving to scrap the powers and disrupt promotion of the development process. But if the history of EDB is taken into consideration it would be easily realised that this institution is masterly capable of promoting export trade with knowledgeable expertise and experience already achieved.

The power of EDB

In recognition of the highly important role of the Sri Lanka Export Development Board (EDB), it is considered this is the best opportunity to recall the power of EDB specially its Act by the new Government with new vision.

The structure built for the EDB was unique. An Export Development Council of Ministers was established under the chairmanship of the President. The Ministers in charge of Trade, Shipping, Industries, Fisheries, Finance, Foreign Affairs, Planning and Rural Industries were the other members of the Council. The objective of the Council was to advise the EDB with directives for prompt execution of the decisions taken by the Export Development Council of Ministers. 

As a leading Government institution in respect of export development EDB was entrusted with duties of greater responsibility such as to advise the Council of Ministers led by the President of the country on national export development policy; to formulate National Export Development Plans; to facilitate the supply and diversification of products and services; execution of research and market development programs; to help resolve the issues of the exporters involved with the Government; develop exporting skills; extend advisory assistance to the exporters and improve international relationship with related agencies, etc.

The Board of Directors was established for the administration of the EDB, to implement advice and direction given by the Council of Ministers and the functions and activities stated in the Act. The structure of the Board was an exceptional creation. The Chairman and other Board members consisted of Permanent Secretaries of Council of Ministers and six members from the private sector, Chairman is the Chief Executive Officer as per the EDB Act empowered to take necessary decisions as and when needed. In order to ease the Chairman to make it effective clearly, an amendment to the Act was passed at the final reading of the Bill highlighting the Director General to perform duties as the Secretary to the Board.

This structure was followed by various countries as a model for their TPOs. Similarities can be seen in The Malaysian External Trade Development Corporation, the National Trade Promotion Agency of Malaysia (MARTRADE) and Bangladesh Export Promotion Bureau. 

The most significant strength of EDB is the EDB Act which empowered huge powers. It clearly provides the necessary powers for national institution for export development, powers for planning, implementation of export development activities and also raised funds by establishing EDB Fund. The special feature is that for the last 45 years no amendments have ever been made to this act.

These features do not appear in many organisations. This powerful structural framework led by the President of the country and Board of Ministers cannot be found in any other Government institution in Sri Lanka.

Contribution made by EDB enormously commendable

Contribution made by EDB during the last 45 years for the development of the nation was enormously commendable. A large number of development activities have been implemented successfully. The majority of them were implemented during ’80s and mid ’90s.

In 1996 EDB fell into an unfortunate situation. The main cause for this unfortunate situation was the removal of functioning of the Export Development Fund from EDB. It is impossible to carry out any projects without funds. Article 13 of EDB Act Export Development Fund was established to collect the necessary funds for export development activities. It was established initially with Rs. 9 million released from consolidated fund. The fund is mainly collected from the levies imposed on imports and it is solely utilised for export development activities. Since 1979 to 1996 large numbers of projects and financial assistance schemes were carried out by EDB successfully. 

In 1996 the Treasury took over the control of EDB funds in order to manage other Government expenditure. Unfortunately, his shortsighted decision taken by the Government adversely affected the export development activities. Thereafter, EDB had to act on Treasury guidance for implementation of its development projects. 

In 1983 during the disturbance period, this Fund was so much helpful in sorting out the difficulties faced by exporters. But during the COVID-19 pandemic, EDB was unable to support the export sector due to non-availability of funds.

In view of the above, it is most important to reverse the control of Export Development Fund back to EDB because it is enacted into law by the EDB Act. Former chairmen never discussed this matter with political leadership in power at the time. It is advisable if the new Chairman and new Minister Sunil Hadunnetti consider this matter deeply and decide to grant the control of funds back to EDB as a national priority for the benefit of export trade. 

The key factor of the success of the EDB was the initial leadership of EDB. The recent appointments made by President Anura Kumara Dissanayake for national institutions are quite meaningful. The appointment of Dr. Hans Wijayasuriya for digital economy is a fine example. Similarly, the first three Chairmen of EDB guided correct leadership to EDB. The efforts taken by the initial leadership of qualified professionals of international trade accentuated EDB to the apex of its glory. Originally, it was the internationally recognised professionals in global trade that gave leadership to the EDB. The first Chairman was Victor Santiapillai, the Secretary General of UNCTAD – GATT ITC – International Trade Centre and immediate successors of Santhiyapillai were Asoka Lanerolle, Consultant to ITC and K. Gunarathnam, Chief of International Trade Division of ESCAP. First Director General S. Kulathunga a reputed Civil Servant played a significant role in establishing EDB.

Appointments for leadership were personal and political

Unfortunately, since the end of the term of these erudite leaders, all appointments made for the leadership have been personal and political thereby leading to stagnation of EDB activities.

After the leadership of first three Chairmen who had international recognition, the leadership of the EDB was later replaced by private sector representatives with high hopes of development but failed. Even though there were a few exceptions, most Chairmen failed in their responsibility of serving the nation to their managerial potential. Some of them were not from high rank positions in the private sector, some were from the SME sector and not in full time. Their scopes were narrow mainly towards the areas of their sectors. They proved that they were not experienced to run a powerful Trade Promotion Organisation (TPO). They held these ranks only for the purpose of prestige and some of them worked part time in EDB. 

It is the responsibility of the NPP Government to appoint the most suitable full time Chairman. Appointing a part time Chairman will make a path to control export development activities through the bureaucracy.

It is not an easy challenge for any institution to achieve national and international recognition together at the same level. EDB since inception worked very closely with international institutions like UN bodies UNCTAD, ITC, etc. and other global promotional institutions like CBI Netherlands, DECTA UK, Norimpod Norway, Impod Finland, Jetro Japan, Kotra South Korea. 

When the arrangements were made to establish EDB, ITC played a significant role to create a strong TPO. Even CBI of Netherlands provided all facilities to run a promotional centre for Sri Lanka in Netherlands. Until mid-1990, frequent visits of members of the TPO’s overseas and foreign consultants were a commonly visible feature in the early days of EDB. It is not noticeable in any other Government institution that a UN body operates with in a government institution. 

EDB should be proud of the fact that an ITC branch office (International Trade Centre) operated with EDB premises since 1979 to 1994. This proves the importance of EDB closely worked with international key institutions with regard to international trade. It is a duty of new Government to renovate for a clean house and invite all global bodies back to EDB. 

Exporters’ Forum

EDB has been operating an official gathering called Exporters’ Forum to discuss and make solution to the issues with regard to export development. This Exporters’ Forum modal was introduced by South Korea and EDB applied it in 1982. It is a gathering of political leadership, officials of ministries, banks, other relevant institutions and export community in to one arena and discuss their issues to find solutions. In early 1980s it was operated successfully. After that every forum held was only a platform for discussions and delivery of speeches with no constructive decisions for export development. These forums became a fiasco due to no proper leadership and guidance. On certain occasions, the Deputy Minister or a Junior Minister or a high rank official chaired the forum. But unfortunately, no positive solution was found against the issues. It a duty of the new Government to reorganise it in giving proper leadership. 

The founders of the EDB realised the importance of an Export Development Plan periodically and the need of design a plan has been clearly highlighted in Sri Lanka Export Development Board Act. In terms of section 3(d) & 3(e) of the Act, it required to formulate a national export development plan and monitor on the implementation of the plan. It was in this context that the Five Year Plan on long term basis was implemented by the then Government. The first National Export Development Plan was launched in 1981 and the first three plans were prepared methodically indicating with realistic targets. Later the preparation of plans was mainly designed to suit the need of political propaganda and also abide by legal requirement stated in the Act. Last two plans were launched at highly colourful ceremonies with unbelievable targets. In 2009 the Plan which was under the theme of 15-15 targeted $ 15 billion exports and the other Plan launched in 2015 aimed at $ 20 billion in 2020. But the reality is, Sri Lanka maintained $ 10 billion of total exports per year during the last 12 years. The Minister should be considered proper planning to achieve realistic target considering the changes of local environment and global trends.  

It is a well-known fact that global trade has been changing with the development of global social and economic variations with modern trends. Export strategies should also be planned in accordance with these new tendencies. However, the Government is fortunate to have the influence of a masterly efficient institution established 45 years ago to effect implementation of its strategies. Moreover, EDB essentially needs reorganisation equipped with qualified management, Export Development Fund, proper planning and re launching of the original logo in order to rebuild promotional development of export trade obviously fallen.