Sri Lanka’s economic future | Daily News


Sri Lanka’s economic future

40th Anniversary of Export Development Board:

Sri Lanka Export Development Board (EDB) celebrates its 40th Anniversary today. EDB has been playing a significant role in helping develop Sri Lanka’s economy for the last 40 years with a remarkable contribution towards the socio-economic development of the country as the key national institution for export development and promotion. It is of vital importance to assess the service made by EDB during the last 40 years.

Sri Lanka enjoys export trade with a proud history from ancient time mainly in early days with availability of natural resources and also due to strategic location in Indian Ocean. Since independence from the British, Sri Lanka continued to follow the traditional export trade system till late 1950s as developed by the colonial rulers. Sri Lanka later followed her export trade under the import substitute economy from 1959 to 1977.

In the latter part of 1970s, Sri Lanka introduced market oriented economy also known as open economy. The main objective of market economic policy was to remove the barriers in trade locally and create export oriented economy. The main goal of creating export oriented economy was to develop product and services from Sri Lanka to huge global market.

Those who created open economy in Sri Lanka realized the necessity of a complete institutional framework and infrastructure in achieving this goal. Development of Ports, Implementation of Free Trade Zones and Establishment of institutions like SLECIC are a few examples. The establishment of the Sri Lanka Export Development Board, a national need for institutional framework for development and promotion of export trade which is the main organ of open economy was a distinctive step taken by the authorities.

In 1970’s International Trade Center (ITC) and the United Nations Conference on Development of Trade & Tariffs influenced the establishment of Trade Promotion Organizations (TPO) in member nations to move towards open and free economy with the objective of development of export trade. The Export Promotion Secretariat was found in 1972 by Sri Lanka as pledged under its Five-Year Plan to support export development. This was established as a division of the Ministry of Planning and Implementation to be functioned only for limited promotional activities. However, it was so unfortunate that this became a fiasco.

Origin of Sri Lanka Export Development Board

Sri Lanka Export Development Board (EDB) was established on August 1, 1979 under Sri Lanka Export Development Act No. 40 of 1979. The significance of the Act was that the EDB was entrusted with wide powers on export promotion and development for performance of its duty at the highest standard in the best interest of the nation.

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. Apparently this procedure was not obvious in any of the government institutes. Hence it is an attempt of a direct showcase of national interest on export promotion.

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 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 programmes; 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. Chairman and the other Board members consisted with Permanent Secretaries of Council of Ministers and 6 members from the Private sector. International Trade Centre influenced the appointment of more members for the TPOs in consideration of the role played by the private sector. This was the reason behind appointment of more private sector representatives to the EDB. The writer has written an article on Role of Private Sector in TPOs in 2013 giving more details. However, the TPOs born after1980 such as Malaysia External Trade Corporation, Singapore Trade Development Board were established by application in the same manner.

Remarkably, the contribution made by EDB in the development work was enormously commendable during the last forty years, so to speak. Implementation of Export Development Plans, simplification of export procedure, Organising Exporters’ Forums and Presidential Export Awards, Formulation and Implementation of the financial assistance schemes, Exporters’ own marketing effort schemes, Organising buyers – sellers meetings , trade fair participations , Solo Country exhibitions, inward and outward missions, Operation of trade centers and Export promotion windows in selected countries, Training programmes, Supply development programmes, branding strategy for Sri Lankan products such as Ceylon Cinnamon, Sri Lanka Pineapple, Export Production Villages, Integrated agricultural development programmes, SMEs, Development of publishing Magazines, Implementation of E-commerce and strengthening relationship with international promotional organisations etc. are its accomplishments.

The most significant strength of EDB is the EDB Act which empowered huge powers. It is a perfect model for other countries as an influential institution with guideline powers legally enforced to implement its principal objectives. It clearly indicates the functions to be implemented. It is an Act in force for the last 40 years without any amendments. Export Development Fund which has been established under para 13 of this Act is an ideal example. The fund mainly collected from the levies, imposed for imports and selected exports. In early stage of EDB, 1% of levy was imposed for all imports for Export Development Fund and increased this fund in huge amount. These funds were utilized for development of export as guided by the Act. In 1980 under the Export Expansion Grant Scheme disbursed a large amount of non-refundable grants to exporters in a bid to strengthen the fund is an indication. In 1994 Treasury took over its control utilizing the funds for other activities including social benefits. Later EDB had to depend on the Treasury against huge challenges in executing its development work. In the meantime, the Government utilized this Export Development Fund from time to time to raise the government funds in changing or imposing new levies to meet the needs of Government.

Export trade

The important feature is the essential value of planning for promotional development of export trade has been clearly highlighted in Sri Lanka Export Development Board Act No. 40 of 1979. 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. The founders of the EDB realized 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 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 colorful ceremonies with unbelievable targets. In 2009 the Plan which was under the theme of 15 -15 targeted US$ 15 billion exports and the other Plan launched in 2015 aimed at US$ 20 Billion in 2020. But the reality is, Sri Lanka maintained US$ 10 billion of total exports per year during the last 12 years.

At the initial stages EDB realized the need for equal distribution of export turn over to rural areas and decentralization of export production with opportunities and necessary requisites made available to villagers as a sine qua non in order to raise the standard of their lifestyle. Significantly, it is also the responsibility of the EDB to take necessary measures to identify the new resources available in rural areas and develop it to meet the demands of the international market.

In an attempt to achieve objectives of the rural development plan, Export Promotion Villages and integrated agricultural model projects covering a vast area of the country were instituted strengthening closer relationship between the rural producer and the exporters. EDB in widening its rural development projects, opened its regional offices in mid early 1990’s in Kandy, Kurunegala and Galle and later expanded its regional office network in the districts of Ampara, Hambantota, Badulla and Mannar. After the end of a thirty-year war, EDB swiftly moved forward in taking priority measures to strengthen development of recourses in the North and East. However, focusing on rural development by EDB during the last few years was rather unfortunate. This clearly appears in the Presidential Export Awards. Regrettably, the investment made by the exporters in rural areas of Gampaha, Kalutara, Kurunegala and Kandy districts are not recognized for presentation of awards although their contribution to rural development in these districts was highly appreciable. This shortsighted move of the authorities discourages the exporters of their access to the threshold of rural community. It is shows that the EDB bureaucracy systematically averted extending priority to rural development.

The efforts taken by the initial leadership of qualified professionals of international trade accentuated EDB to the apex of its glory. The political leadership of Lalith Athulathmudali, the then Minister of Trade was arguably competent. The relevant Bill presented by him was appreciated and approved by the Parliament unanimously with a few amendments only with regard to administrative factors. Certain projects such as Export Production Villages, Preparation of Export Development Plan and few other activities were originated by Mr. Athulathmudali. The Exporters Forum a model of Korean Exporters’ forum which was Chaired by Mr. Athulathmudali to conduct resolving difficulties and issues faced by the exporters was handled in very professional manner portraying his mastery leadership.

Originally, it was the internationally recognized professionals in Global trade that gave leadership to the EDB. Good example is Victor Santiapillai, the first Chairman of EDB. In reply to a question raised by the Opposition Leader Amirthalingam at the Presentation of Export Development Board Bill in Parliament in 1979, Mr. Athulathmudali emphatically stated “Chairman is Victor Santiapillai, the Secretary General of UNCTAD – GATT ITC – International Trade Centre – with world wide experience on this subject. I thought he was the best man to be influenced for his contribution to the benefit of the Motherland. He will be appointed as new Chairman of EDB.” (Hansard Vol 5 No 2/ May 25, 1979) Immediate successors of Santhiyapillai were Asoka Lanerolle, Consultant to ITC and K. Gunarathnam, Chief of International Trade Division of ESCAP. First Director General S. Kulathungaa reputed Civil Servant played a significant role in implementing the projects and programmes. Almost all the programmes and projects operated even today were introduced by these leaders. 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.

Challenges ahead

In the past 40 years, there was a vast development supply base exceeding nearly 4,500 products which demonstrated by diversification of export products and markets. A proximate number of 4,500 exporters are directly involved in export trade while 6,000 are indirectly engaged in exports in addition to those firms affiliated with export sector in handling shipping, insurance and packing etc. EDB is complacent with slender pleasure as a responsible partner to the progressive development of the export trade by its dedicated contribution made during the years.

One cannot forget that the EDB, during the challenging situations faced by the Export sector, strategically moved forward strengthening its share with the exporters, particularly at a time when imposing barriers etc.

Today it is expected EDB to face much more challenges in the future. In early 1980’s the production of exports was more than 30 % of GDP which was significantly high but today it has plummeted to less than 20%. This indicates the contribution of exports made to national economy has considerably decreased. It is suggested to target the production of exports to 30% in an attempt to help improve the national economy. In this context, the vital responsibility of the EDB is to take immediate necessary measures to increase at least the export value to US$15 billion within a two-year or three-year short term Plan rather than indicating unpredictable targets.

If positive approach is focused progressively on rebuilding our exports, it will help echoing again its famous slogan “Sri Lankan Pride across the World – EDB”.

(The writer is the former Head of Corporate Affairs and Communications of Sri Lanka Export Development Board.)

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