Four decades since ‘visionary’ Export Development Act

Sunday Observer

13/08/2019

Four decades since ‘visionary’ Export Development Act

“This Act is truly visionary; I wish other countries had this in their export development framework!”, remarked a senior official of the Geneva-based International Trade Centre to me some months back. He was referring to the ‘Sri Lanka Export Development Act No. 40 of 1979’, which marks 40 years this month. He had found it to be an institutional arrangement that was far ahead of its time, and is still having relevance today – not just for Sri Lanka, but also for other developing countries. And he would know, having worked on export development strategies for over a dozen countries around the world.

Conceptualised at a time when Sri Lankan policymakers and development institutions knew very little about strategic export development, and when many parts of the developing world were still practising import substitution at best or autarkic policies at worst, the Sri Lanka Export Development Act stood out as a shining example of progressive government leadership. The political leadership for this Act was given by none other than the visionary Minister of Trade and Industry at the time, the late Lalith Athulathmudali. Four decades later, the Act, and the main institution that it birthed the Export Development Board (EDB) have made an indelible mark on Sri Lanka’s export development journey.

Key features

The Sri Lanka Export Development Act of 1979 provided for two key institutional setups; the ‘Export Development Council of Ministers’ and the EDB. The latter functions today and has gone from strength to strength. The former no longer exists, and one can argue is a gap in the current policy landscape today. The Export Development Council was made responsible for the formulation and implementation of national export development policies and programs. The Council was headed by the President and comprised Ministers in charge of key sectors, such as trade, shipping, industries and agriculture. Additionally, the Act established the Export Development Fund, which has now been somewhat compromised with all funds going to the Treasury and allocations coming back to the EDB on an annual basis.

Under the EDB, the Act provided for the establishment of ‘Advisory Committees’ for important export sectors. As stated in the Act, these Advisory Committees are responsible for developing and promoting specific products, product categories and commodities, and by design, include the participation of the private sector. In 1979, the concept of ‘public private dialogue’ wasn’t even conceptualised yet. But this visionary Act had built this aspect in and institutionalised it within the Act. Today, too, 16 Advisory Committees function under the aegis of this Act, appointed by the subject Minister, and anchored at the EDB. They are now playing an integral role in guiding the implementation of the Plans of Action of the National Export Strategy (NES) priority sectors and trade support functions. Having been a consultant on some of the NES sectors during its formulation and subsequently being on the implementation side of things at the Ministry, I can attest to the pivotal role that the EDB played in bringing the NES to fruition. Without such an institution, empowered by its Act, such national-level strategy initiatives would be much harder for a Government to undertake.

EDB Today

After an initial phase of impressive leadership with luminaries like Victor Santiapillai, Asoka Lanerolle, K. Gunarathnam chairing the EDB, there was some time when the EDB punched below its weight. However, the appointment of Indira Malwatte as the Chairperson in 2015 refreshed and energised the organisation. In her, the EDB found an expert in the export promotion field – both as a seasoned EDB officer earlier and later as an exporter herself. Perhaps unlike any previous Chairpersons, Malwatte’s first-hand experience as an exporter enables her to empathise with, and relate to, the issues and needs of exporters. Additionally, she brings in a much-needed gender perspective to export development, as the first woman to head the organisation.

Today, the EDB’s portfolio runs across the spectrum of export development – ranging from programs aimed at fostering inclusive trade at the grassroots level like the ‘2000 Exporter Program’, to programs aimed at macro-level transformation like the ‘National Export Strategy’ to reach the 2022 export target of US$ 28 billion. The staff of the EDB are now well respected among the export sectors that they work with. Recently, the EDB has made a shift towards an ‘enterprise focus’ rather than purely a sectoral focus and is gearing itself to deliver innovative support schemes to boost the competitiveness of export-oriented enterprises. The ongoing capacity-building program with ‘Enterprise Singapore’ (formerly ‘International Enterprise Singapore’) is a further step in this endeavour.

The EDB’s service to the economy has been silent and unpretentious. Hundreds of Sri Lanka’s top exporters would be quick to admit that some of their earliest forays into international markets were aided in one way or another by the EDB – trade fairs, B2B missions, grant schemes, market intelligence and matchmaking. Yet, too often I have heard officials at the Ministry of Finance or top political leaders making skeptical remarks about the EDB. They are mistaken, and they would do well to take a closer look at the institution’s contribution over the past 40 years. In fact, one only needs to survey the enterprises and sectors that have received EDB support to get a good sense of the institution’s impact. Perhaps now would be a good time to begin measuring it and being less humble about its contribution.

Act in 2020 and beyond

Policymakers today would do well to study the Sri Lanka Export Development Act, and recall Athulathmudali’s intention and vision set out 40 years ago. The high priority needed on the export agenda today is undoubted. There is ample evidence to suggest that export jobs are better jobs. Sri Lanka’s export to GDP ratio is still lagging behind, and there is a long way to go in diversifying our export basket and our export markets and boosting higher value exports. The unique and powerful institutional structure that the Sri Lanka Export Development Act brought into place – by way of the Export Development Council of Ministers – had no parallel at that time. Yet, today, that sort of high-level cross-Government championing of exports is lacking. This is especially noticeable with regards to resolving issues faced by exporters that are outside the ambit of the EDB or its line Ministry. Exporters need rapid and reliable resolution of their issues to become more competitive as firms, and for their sectors to become more resilient and agile.

Today, the lines between merchandise and services exports is blurring. This necessarily means that export development needs to consider issues outside of the typical focus of a trade promotion organisation. The linkages to logistics and transport, education and skills, technology and innovation, tax and regulatory policy need to be tackled. Moreover, the global and regional competition for exports has heightened, not to mention the pressure from trade tensions. And the complications of providing export support amidst tighter WTO compliance rules, require greater policy and programmatic savviness. Sri Lanka is well placed to tackle all of these within the visionary framework that the Sri Lanka Export Development Act offers. Perhaps, it’s a good time to look at enhancing the Act further and empowering the EDB even more, to ensure it has the necessary financial, technical and human resources to provide future-ready export development services to the private sector.

Source at: Sunday Observer