Whither exports?

It has been observed that the value of exports made during the year 2012 has drawn backward economy wise as compared to that of the previous year. It is rather unfortunate to have suffered a decrease in exports that would affect the economy of the country in spite of a profitable increase in favour of building the economy as it is the desired will of the nation.

In recognition of the vital importance of export trade, the government gives highest priority to development of export trade. President Mahinda Rajapaksa, in all his budget speeches highlighted the necessity to improve export development, extending support to development of exports making new policies and grant incentives for direct market and product development activities. It appears that the Government has taken a keen interest on promotion and export development as it is the most essential need of the nation.

Export trade is generally defined as the live organ of a nation. It plays a huge role in building the national economy. If the export sector becomes inactive it will adversely affect the entire socio-economic scenario of the country. The significant role of export trade is expressed by the slogan ‘export or perish’.

In realising the importance of the exports to overcome the difficulties, governments do take all precautionary measures to secure the export sector with highest priority.

Developing exports

Governments have presented different plans to develop exports as it was the national duty to enrich the economy in a bid to build the nation. In 1972 the Five Year Plan proposed by the government in power under the import substitute economy preferred special area for export development. The open economy initiated in 1978 with the introduction of the export oriented or market oriented economy the export sector rose to the highest apex area of economy of the nation. The institutional framework was given wider powers in an attempt to uplift the development of exports.

The Sri Lanka Export Development Board (EDB) was established as the key institution responsible for achieving this objective of development of export trade. This became a highly powerful government authority instituted since export development played a key role in building the economy of the country.

The essential value of planning for promotional development of export trade has been clearly highlighted in the Sri Lanka Export Development Board Act No. 40 of 1979. In terms of the section 3(d) & 3(e) of the act it was required to formulate a national export development plan and to monitor on the implement of the plan. The founders of the EDB realised the importance of an Export Development Plan periodically to meet the challenges with new changes in the environment. It was in this context that the Five Year Plans on long term objectives were implemented by the then government.

The Government aims at a target of exports worth US $20 billion by 2020 under the slogan ‘tag 20-20.’ The institutions responsible for exports development announced at the colourful ceremonies that their target would be US $15 billion by 2015 in line with the ‘Mahinda Chinthana – Vision for the Future’.

The key plan aimed at this target was the Strategic Plan prepared by academics and professionals as announced for the period 2011-2015 launched at a highly colourful ceremony organised by Sri Lanka Export Development Board. The main intent of the plan was to increase exports to markets other than the EU and USA over 50% by 2015 with priority to items of products such as Tea, Apparel, Rubber products, ITC /BPO, diamond, gems, jewellery, food and beverages, spices and other related products with a contribution over 80% of the total export value. In addition, recommendations have also been made for development of SMEs and a few other minor areas in order to achieve the target. The summary of the plan was to achieve exports in US$ term at 13% average growth rate to reach US$ 15 billion in 2015.

Sri Lanka exports in 2012 up to November are US$ 8,990 million and can be assumed annual value as US$ 9,808 million. It shows that there is a decline 7 % compares to 2011 total export US$ 10,550 million. The decline of certain significant export sectors was caused mainly by the decrease in exports. If Sri Lanka wants to achieve US$ 15 billion, it has to be maintained high annual average growth rate 16 %.from 2013.

International financial crises situation may affect better performance in export trade. Seemingly the situation has gradually recovered from the crises in 2009 and 2010. The figures exported in 2009 substantiated the cause for the economic crises. Our exporters deserve a degree of credence for their commitment displayed in braving the challenges against attacks made on our image during this crucial period. Today it is a proven factor that tourism sector is booming the economy of the country and how the world is recovering from the financial crises.

Hence it is important to look into the areas, mostly important in an attempt to promote export development in the best interest of the whole nation.

Strategic plan

The strategic plan prepared by the EDB with specialised support would be the key plan projected to be implemented for export development during the next few years. It is more important to develop the strategies to face future national and international challenges. No single strategies measures appear to have been indicated in this Strategic Plan though development is generally expected.

All the promotional methods highlighted in this strategic plan cannot be considered as strategies but they are normal promotional tools applied from long ago. It also shows that same promotional tools applied for all product sectors. The proper wider strategies should be put into effect in order to launch an accelerated program on development of export but not general promotional tools.

In spite of the implementation of this plan commenced in 2011, the expected results could not be achieved for the last year due to the aforesaid factors. Now it is the time to revalue entire tools evaluating the outcome of the last year and to find ways and means in achieving best results.

A large volume of pages have been printed in this strategic plan for restructuring of institution as TPO’s in Sri Lanka. It is important to have restructured the institution, but it needs adequate resources, a clear vision with a mandate blessed by a proper leadership experienced with wider knowledge on international trade strengthened by a qualified staff of talents and skills to meet future challenges as indicated clearly in the article published in the newspapers under the heading ‘TPOs Towards Promotional Goals’ written by the writer of this article.

It demands immediate change of the attitude of the bureaucracy actively involved in promotional activities as the key role is played by them in export development. It is more important today to work with the grass root level of the buyer’s point of view rather than doing diplomatic trade.

Sri Lanka Expo 2012

Sri Lanka Expo 2012, recognised to be the most important event as highlighted by the EDB, recorded a participation of 1,000 buyers last year. As per the Expo website, confirmed orders received were to the value of Rs. 8 million (US $66,000) and orders worth of Rs. 1,500 million (US$ 12 million) were under negotiations.

In comparison with previous Expo exhibitions and normal trade fair participation with eight to 10 exporters, confirmed orders worth of Rs. 8 million is far below from the target. Even an exporter involved in small scale business earns nearly Rs. 6 million on orders per month. It is therefore advisable to evaluate the total organisational and operational work in comparison with the results of Sri Lanka Expo 2012 and arrange future Expo exhibitions with the participation of visitors who are having real purchasing powers.

It would embolden value addition to be included into the product through brand development. Today only one and two individual brands have the international recognition. This of course is much more essential to support building individual brands as it plays an important role on value addition. It is not specific if KPO/BPO figures pay the main part of the current export trade.

More attention may be focused on KPO/BPO and other service sectors as well. Necessity of utilising the maximum privilege from free trade agreements is called for in as much as the export trade depends continuously on USA and Western market. On the other hand the government behooves itself to look into the possibilities of initiating negotiations with concessions granted to win the influence of overseas governments and promotional organisations. The National Advisory Committee should be convened to discuss on the challenges and strengthen the exports as it has met only once in the history of EDB. Time is ripe to reconsider the avenues of opportunity on trade centres being opened and commission agents appointed in foreign countries in a bid to improve commercial trade.

Collective responsibility

Chambers and business associations, most of the members of which are exporters, do hold a collective responsibility of playing a significant role with the drawback of this grave situation. It is the bounden duty of the chambers and business councils to take all necessary measures to safeguard the interests of their membership.

As these business councils developed on country basis, steps should be taken to improve relations with their counterparts around the globe. All chambers and associations should work in unison with each other for development of the master plan. It would be appreciative if private sector also will share its responsibility to persuade them for active participation.

In the face of challenges ahead, the private sector too has a highly responsible role of partnership under this scenario. The private sector has become the livewire of strength in export trade as voluminous bulks of export products are being handled by private companies under export oriented economy. Apparently further drawback is liable to cause damaging crises over their business. Thus, it would be advisable if the private sector takes the leading role with due reputable manner on developing export trade.

People will appreciate if the private sector convenes a forum of entrepreneurs for discussion on meeting new challenges and resolve the issues amicably. Their views are considered highly important on development of strategies.

It is the duty of the authorities to safeguard the interests of the export trade, averting every possibility of a drawback given the proud history of the nation. It is imperative that organisations and authorities in charge of development of export trade immediately take all proper real measures and strategies join hands with private sector to meet the local and international challenges ahead.

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