Towards promotional goals

The vital importance of the development of export and its national value with policy on priority for export trade was emphatically stressed in the Budget speech for 2012 presented by the President.

The projected objective was to achieve the export target braving the challenges from the international market. Imperatively Trade Promotion Organisations (TPOs) are bound to play a significant role in a bid to strengthen this scenario.

 

Export trade maintains a high reputation, playing a pivotal role in strengthening the economy of any country. Similarly fluctuation of exports would cause adverse effects on social and economic development of the country. Given the issue for consideration the initiative measures were taken to develop export trade, a long term process braving the challenges encouraging the exporters to be involved in business trade.

Exporting local production should not be branded a presentation of only quality products to the international market. Literally it is a crystalline presentation of competent skills with pure labour availed of the abundance of natural resources, display of colourful image and unshakable identity of the nation.

With countries moving towards the national economic policy to open economy in latter part of 1970s, the export sector rose to the heights of an invaluable partner of the economic policy. The reason was the platform opened by the economic policy based on export oriented or market oriented policy for presentation of products and services to the mass international market.

The business community especially in developing countries appositely thought the timely need for a comprehensive dialogue for the purpose of forming an institutional framework to coordinate the constructive development with speedy progress of export activities as the global tendency was moving towards open economy of which export is the key factor.

The International Trade Centre (ITC) was established by the United Nations in 1964 under the United Nations Conference on Trade & Development on Tariffs and Trade (which later became World Trade Organisation (WTO) to extend support to the trade development work of member nations. The main objective of instituting the ITC was to offer strengthening support to the developing countries on export development and building institutions for the purpose.

The International Trade Centre being the central institution in helping the developing nations on development of export trade convincingly encouraged, assisted and advised the establishment of National Trade Promotional Organisations.

Today more than 166 official national trade promotional institutions in nearly 200 countries are in operation around the globe and it has been estimated that annual budget of the TOPs of the world has been estimated to nearly US$ 10 billion.

In view of media publicity trade promotion organisations in certain countries are believed to have crowned with operational success considerably while they are not so effective in some countries. Singapore Trade Development Board, India Trade Promotion Organization Council, Malaysia External Trade Development Corporation, Korea Trade and Investment Promotion Agency and British Overseas Trade Office have taken the lead in promotional network.

Trade promotion organisations have taken appropriate measures to work with cooperation on regional and international basis in a bid to reach the maximum benefit for the best interest of the nations. Asian Trade Promotion Forum with a large gathering is a case in point.

Trade promotional organisations mostly government owned play a significant role in building the economy of the nation. It has been revealed that the private sector too contributes an inestimable service under trade promotional organisations.

In the Philippines the private sector organisations accredited with export development work represent the Export Development Board. But the Sri Lanka Export Development Board consists of six representatives from the private sector sharing their responsibility in the export development work.

The inclusion of the private sector into the trade promotional organisations was mainly due the advice and influence of the ITC. This decision to authorise the private sector to be involved with trade promotional organisations is considered a positive step towards progress.

Sri Lanka experience on establishing TPOs goes back to the early ’70s. In pursuance of the proposal to establish export promotional institutions on recommendation of the five-year plan introduced by the United Front Government of Prime Minister Sirimavo Bandaranaike, an initial attempt was made to establish a Trade Promotion Organisation in 1972.

It was the Export Promotion Secretariat established under the Ministry of Planning and Implementation. It was believed that there were a few organisations being operated to look into the areas of tea and gems, etc., before the ’70s.

Consequently, the Export Council of Ministers, Export Advisory Committee and Export Promotion Secretariat were appointed in September 1972 with the objective of formulating a coherent policy, establishing an integrated export program and coordinating and monitoring the implementation of the export development program.

The Export Promotion Secretariat became unfortunately a failure as a result of the ineffectiveness of the above said committees that never met and no financial resources either was received for the purpose. It was just a division in the Ministry of Planning and Implementation.

Sri Lanka introduced the policy of open economy in 1977 with radical changes in the social economic system aiming at an export orient national economic policy. The necessity to establish a powerful institution for export promotion was deeply felt in regard to the implementation of this policy.

Lalith Athulathmudali, the then Minister of Trade, highlighted in Parliament the grave importance of a Government institution managed by a Board of Directors with collective responsibility to snowball cardinal measures in motivating export development encouraged by incentives as needed.

The Sri Lanka Export Development Board was accordingly established in 1979 and has achieved its objectives as a Trade Promotion Organisation. The EDB has played a historical role during the last 30 years of its administration obligating its national duty involved in promotional development of exports.

In the recent past comments have been made by the World Bank and several other interested parties on the poor performance of Trade Promotional Organisations that have not reached the required standard of their responsibility. In the name of the esteemed service contributed by national trade promotion organisation, it is imperative if investigation is launched on the work of the trade promotional organisations as to how satisfactory their performance of duty has served the nation.

A reservoir of challenges with development of technology, changes in global economy, social transformation, variable consumer demands, etc., have confronted TPOs in their effort to expand promotional development of export more favourable to the nation. Therefore, it becomes vitally essential to strengthen TPOs with suitable facilities to face the challenges caused by the modern needs and wants demanded by the global atmosphere.

In the name of the credibility of TPOs, it has been observed that other institutions too seem to follow the same guidance on promotion of export trade. In the light of the vast development in business new institutions are being opened by the private sector entrepreneurs in their endeavour to achieve their business objectives.

Product associations, federations and new chambers emerged within the business community during the last few years obviously followed the same tools as played by the TPOs. Therefore TPOs own a right of duty to adopt appropriate strategies as needed for promotional development as an integral partner to the national development since these new institutions are confined to a limited membership.  A development culture operational at interface level would be ameliorative between public and private sector particularly on export production in the interest of the nation. A wider share of responsibility rests on TPOs taking cognisance of the fact that they are mostly involved with the private sector in this effort of promoting export.

TPOs having adequate resources, a vision and a mandate blessed with a qualified staff of talents and skills, will achieve their ambitious goal if a dedicated attempt is made. It is believed that most TPOs were established in early 1980s in response to the need of the time.

The scheme of TPOs was appositely changed to meet the new challenges in the global economy. It is noticeable that those Asian TPOs have touched on minor changes without affecting the major structure. The significance featured by these structural changes is a demonstration of revolutionary steps taken towards national interest on long term basis against bureaucratic demand.

It was clear vision and mandate of the TPOs that helped to bring this great success. The mandate given to TPOs was to take the lead in promoting trade encouraging production of national origin and dedicate to expansion of national products in the international market.

The influence of the abundance of adequate resources, financial assistance and the dedication of the professional staff of the institution was the main cause for this success of the TPOs. The leading TPOs built up their own source of funds in collecting money through various means by a minimum charge for services offered.

An Export Development Fund was established under the EDB Act in 1979 to be utilised for export development in Sri Lanka and funds for this purpose was collected from the cess enforced on imported products. But today the expenditure for administration and promotional activities of the EDB has been taken over by the Treasury. In Singapore, Malaysia and many other developing countries the relative institutions are run by their own funds collected from the services offered by them.

Employment of a staff qualified with skills and competence is the prudent practice followed by the recognised TPOs of the world. Moreover, appointment to the high office of management should be made with learned professionals having a thorough knowledge of the subject leaving political appointees ignorant of the portfolio left aside in the interest of the nation.

Participation of private sector representatives as members of the Board of Management in TPOs for long term decisions is considered important not as mere sitting Members of the Board but with constructive share of contribution exerted on promotional development. The objective of appointing private sector representatives to the Board is to make the TPOs effective in the right direction against external intervention.  It is proposed to strengthen the environmental background within TPOs with trade development strategies to ensure a cost effective service to the stakeholders in line with absolute needs of the nation.

(The writer is the former Head of Corporate Affairs and Communication – Sri Lanka Export Development Board. He can be reached via [email protected].)