EDB Chief calls for collective approach to revive exports

Daily Mirror, 1 April 2016

By Shabiya Ali Ahlam

Sri Lanka has been known all over the world for its tea, rubber, coconut and as of late
for its apparel and information communication technology (ICT). But due to the grim
global situation and increased competitor activity, the country’s export sector has
moved towards a negative growth trajectory. While the dampened growth in Sri
Lanka’s key export markets and competition are not the only causes for the lag, the
challenges on the ground have contributed significantly to the dip. With the new regime
taking over and promising better economic prosperity, the business community is yet to
witness a revival. Mirror Business sat down with Export Development Board (EDB)
Chairperson Indira Malwatte for an in-depth discussion on the strategies
conceptualised to drive the export sector forward. The newly appointed chief gave a
comprehensive view on the current situation, efforts taken and the challenges ahead in
making Lankan exports the prime foreign exchange earner for the nation.
What is your take on the current situation with regard to exports? Where
do we stand?
The current scenario is not very good. It is the international scenario where the
whole global economy has come down. So, it is nothing special to Sri Lanka. If
you look at the statistics of our competing countries, it is observed their exports
too have come down. There will be uncertainties till the end of the US election
and with the UK contemplating to detach from the European Union (EU).
Economies such as China and Russia have experienced dampened growth.
These have contributed to the slowdown of the global economy, which in turn
resulted in local exports to drop.
Our tea was a major export which got affected by the Middle East turmoil.
Russia was our main market for tea and the ruble has been depreciated. Our
seafood exports dropped due to the EU ban. We are out of the GSP Plus. But
that I would say is a blessing in disguise, since without that our exporters
became more innovative, aimed at different markets, looked at different
segments and that in a way was good. Our exporters have faced that challenge
and we have become smarter, but of course having the GSP Plus at the correct
time would help us.
All these have accumulated over the last few years to bring our export figures
down. However, the EDB is highly proactive and we are not hiding behind the
fact that the global economic situation has been bad. We have geared our
programmes to meet the future challenges.

Any local factors that contributed to the grim situation?

I suppose there was a lot of focus on infrastructure development in the country,
which is also important for exports. But the focus on export itself was not
necessarily there. During the war the entire country was behind eradicating
terrorism. Similarly if the whole country is behind exports and understands the
importance of it, we will witness a turnaround.
When you look at the foreign exchange inflows to Sri Lanka it is a disgrace that
we are depending on the foreign remittance. It is not the knowledge economy
that is contributing to the foreign exchange space but our hardworking low-end
human resources, especially women, who are key contributors. We should not
be happy about this as it only adds to the socioeconomic problems in our
country. We should not encourage this.
The other option was to go for loans. If they were at special interest rates, it
would have helped as we have now to service them. Therefore, importance of
exports come in, since there will be manufacturing, production, new
employment generation and a whole array of activities coming in if the sector is
supported.
The budget brought in the Export Development Council of Ministers. That is
something that is very special in our Act where the relevant ministries involved
in any export-related activity will come under the close purview of the
president. The relevant ministers will sit in this council and look at the export
sector as a whole - else we will be doing things in isolation.
This has been revived after 24 years and ensures the commitment of every
ministry. The EDB in its own little way started working closely with the
relevant ministries and government agencies. For example, with the Tea Board,
we have discussed each other’s action plan looking at how best our resources
can be put together for the maximum benefit of our country. Similar efforts are
taken with other sectors.
We are setting up a lot of links between what the EDB can do and what the
Primary Industry Ministry can do. We are working very closely with the
exporters and government organisations.

So you mean the EDB is opting for an inclusive and integrated approach?
Yes.

In terms of targets, what is the set for 2016?

Keeping in mind the 2020 target of US $ 20 billion, for 2016 we are looking at
achieving a target of US $ 14 billion.

How do you plan on achieving that target?

We have prioritised our sectors. We have something called the main earners, the
bread and butter line which is apparel, rubber based, tea and ICT. In that we
conceptualised a different approach for each sector. For apparels, for example
we plan for a vertical integration, where we will have our own designers going
into the fashion market.
We are trying to link our components with the global value chains instead of
trying to do everything. The new trend is to play to your country’s strength and
specialising in a specific area.
Given the grim global situation as you highlighted, are you optimistic the
US $ 14 billion end-2016 can be achieved?
Unless we are optimistic we will never achieve these targets. The EDB is not
going to sit back and say there is nothing that can be done. We are adjusting our
programmes to meet the new demand. One key example is us actively looking
the export of professional and technical services and construction industry, the
area of service experts.

Given the grim global situation as you highlighted, are you optimistic the
US $ 14 billion end-2016 can be achieved?
Unless we are optimistic we will never achieve these targets. The EDB is not
going to sit back and say there is nothing that can be done. We are adjusting our
programmes to meet the new demand. One key example is us actively looking
the export of professional and technical services and construction industry, the
area of service experts.

What are the measures taken to reach the target?

Sometimes there are issues in trade facilitation and a small help for the EDB can
contribute a great deal. Such as the exchange control regulation - we are looking
at addressing these areas to achieve these targets.
We have started conducting the Exporter’s Forum where a lot of the issues get
highlighted. We have had this before but now it is very proactive. In addition to
that we want to convert this forum into a live event throughout the year. We will
be introducing in about few months an online system where exporters can
submit their issues and the EDB will then assist in resolving the same.
The EDB is working with the International Trade Centre to conceptualise a
national trade strategy for which the meeting with the stakeholders has already
been completed. This I stress is not the Export Development Plan. For the
national plan to be implemented, the EDB alone cannot do it. That is where the
Export Development Council of Ministers becomes relevant. Once the national
strategy is done, the council will adopt the same and work in this regard which
will take place in April.

Now that you mentioned strategy, what is the direction the EDB is moving
in this regard?
Having identified the main earners, we then have the stable contributors, such as
the gem and jewellery and coconut-based industry.
For the gem and jewellery, we are seeing how well we can liberalise the
industry and get it going. Some drastic decisions need to be made on it. We
want to be a gemstone hub and in order to do that we need a wealth of materials.
Sri Lanka has exclusive materials but buyers wouldn’t come in only to but that
alone. A buyer would want his calibrated stones and a whole lot from one place.
A major decision is to liberalise the gem stones import to Sri Lanka. We can get
our highly-skilled lapidary industry moving. Along with this will come the
development of the jewellery manufacturing industry.
Then we are looking at aspiring contenders where we have to do a little work.
Such are the shipbuilding and yacht industry. There are about 250 yacht sailing
and bypassing our island nation. If we have yacht building facilities to service
them, they would spend at least two days in the country. That will not only help
the particular industry but create the need for a whole other range of services as
they would require entertainment and other activities. For that we want the
marine infrastructure done and we are working with the Megapolis Ministry on
this endeavour.
A key area is also the fishing industry. This week there is a team going from Sri
Lanka to Brussels for discussion on lifting the ban on seafood exports from Sri
Lanka as we now comply with most of the requirements that become important.
However, we didn’t wait for the lifting of the ban in the EU but started working
with Russia, a region that consumes a lot of seafood. The EDB and the Fisheries
Ministry started a dialogue with the exporters of fish. There were health
requirements we had to meet and a delegation was in Sri Lanka to inspect the
processing plants. They were very satisfied with what they witnessed. With this,
the exports to Russia will see a surge. Marketing promotions in that region are
also given due emphasis.

Then there are potential future stars, where sectors such as fruit and
vegetable become important.
How about the efforts in ICT services?
That is categorised as one of our main earners and is very relevant to us. We
have a number of programmes and one is in branding where from the budget,
the EDB has been given Rs.150 million for this endeavour. Sri Lanka is not yet
known as a country where you can outsource most of your services. The
London Stock Exchange is completely done by our nation so we have a lot of
winners but the international community is unaware. It is essential we have a
promotion to shed light on the fact that Sri Lanka is a source to reckon with for
ICT.
We are not looking at very large entities but those medium sized. The reason
being we want to match our requirements and supply with their demand.
Furthermore, we are also in the midst of kicking off the 1000 business start-ups
programme for young graduates. Many are unable to gain access to funding as
they do not have collateral. The business start-up initiative is to identify good
ideas that can be commercialised. The EDB together with the two state banks
and universities will extend a helping hand to setup their industries. We will
primarily be working with the incubators of the universities as we will be
working with the graduates who have been interested and ready to take off.

How are the bilateral trade agreements helping to boost exports?

The free trade agreements (FTAs) is an area we are trying to actively work on
and that is something we have to maximise on. We currently have FTAs with
India and Pakistan. With the Indo-Sri Lanka FTA (ISFTA), 81 percent of exports
to that country has been under the trade pact in 2015 and import from India
under the ISFTA stood that 5.61 percent the corresponding year. We have
certainly benefitted from that. There are certain non-tariff barriers and issues
that come up, but those are matters that can be discussed and facilitated. There
are almost 4000 items that can be exported to India duty free and another 4000
we can export to Pakistan.
We must maximise these agreements. The government is also considering an
FTA with Turkey and China. If we don’t have FTAs or multi-trade agreements,
Sri Lanka will be left behind. On the Trans-Pacific Partnership (TPP), a number
of countries have got on board and moving forward.
Having India, just next to us as a large market with a growing middle class, we
cannot neglect this - similarly in Japan and China. While we wouldn’t neglect
the US and Europe and acknowledging the issues in the Middle East, we are
gearing up to look at Asia itself to push our exports.
The need to diversify markets has been stressed time and again. What are the
new markets explored?
Brazil and the African markets are two new we are exploring.
In Brazil, we are initially targeting the apparel sector. We invited three leading
buyers from that country to see how we can forge into their market. We are
currently having talks with the ambassador of Brazil in Sri Lanka as well as our
ambassador in Brazil as to how their fashion designers could work with our
exporters to target their market. Similar strategy is to be explored in China as
well.

In the national budget, it was observed concessions were given to value

addition. Is this a strategy actively explored to boost export earnings?
This is a new strategy. We now have a representation of Sri Lanka Institute of
Nano Technology (SLINTEC) at the EDB premises to allow exporters to gain
access to new technology easily.
They are starting a R&D Clinic once a week where the exporters can come for
consultations to discuss ways and means on making the most of technology and
progressing to the next level. This is open to all exporters regardless of their
capacity.

In terms of support from the other relevant agency and department staff, is
it at required levels?
Most are on the same page and we have close consultation with them. This is
where the Export Development Council of Ministers becomes important. If the
national strategy is implemented, all these departments will become part of our
efforts. I must say the staff of other relevant agencies are highly receptive. The
EDB has an excellent rapport with them and we are building this further.
Eventually it will facilitate the exporter and therefore increase earnings.
Minimum delays and procedures, within government regulations are the
requirements for the exporters.

What are the challenges faced when implementing these strategies?

Challenges will be there in almost everything. This is why the whole country
has to get behind exports. Everyone’s support is needed and this should happen
at every point.

In terms of export finance, what are the solutions explored other than the
Exim Bank?
The Exim Bank is a positive move. Ideally, if we could get all the banks to give
at least 10 – 15 percent of their portfolio to the export community at competitive
rates, that will be a good solution. Moreover, they have to take those projects as
project financing, consider their worthiness and lend against them. They have to
take some risk. It will be excellent if this can come from the Central Bank.
However, pending all that, we are working with a number of commercial banks
very positively.
How would the EDB step in?
We would be recommending the exporters to the banks. We would identify what
is blocking their progress and convey it to the banks. They would have the
comfort that the EDB has already assessed these companies. We won’t be taking
up any lending.

What is the message you would like to give out to the export community?
As the EDB, we would like a collective approach. We are not the sole body to
increase exports - we are only the facilitators - it is the exporters and all relevant
government departments’ commitment towards this drive. The exporters have
done very well for our country under different conditions and we are grateful to
them. Often when the figures come out, the EDB is blamed saying it has not
done anything. It is a global scenario; we are part of the global economy. We
need to adapt ourselves, change our markets and focus based on a number of
situations. For that, a concerted collective effort from every individual of the
nation is essential.

- See more at: http://www.dailymirror.lk/107672/EDB-Chief-calls-for-

collective-approach-to-revive-exports#sthash.ySCcXvEx.dpuf

- See more at: http://www.dailymirror.lk/107672/EDB-Chief-calls-for-

collective-approach-to-revive-exports#sthash.ySCcXvEx.dpuf