Could you give our readers some background information on the Export Development Board in terms of its historical background, its infrastructure and its main activities in Sri Lanka today?
The Sri Lanka Export Development Board was established in 1979, with a main objective to develop and promote exports from Sri Lanka. The Export Development Board is structured in a manner to handle the multi-faceted promotional activities, which have to be dealt with. In a way, the board is an apex organization for export development. Presently, its main focus is on exports firstly and secondly on trade development. We have a good resource base in the island covering agricultural products, plantation products that cover tea, rubber and coconut including plantation products and also other agricultural export crops such as spices, fresh fruit and vegetables, cut flowers and foliage. The other sector, which has a great potential for development, is the fisheries sector. We do have a series of fisheries food products, e.g. prawns, which is a significant export item. In spite of Sri Lanka being an island, the fisheries sector in particular, is yet to be developed in order to make a significant impact on the economy. The reason being is that we still import fish products into the country while we export certain kinds of products such as lobster, crabs to niche markets, particularly to the Far East countries, Japan and Singapore. In the textile sector, the export of garments accounts for nearly 50% of our total exports. In addition we have other manufacturing sectors such as diamond, gems and jewelry sector. This is a developing sector with a significant potential and we have 2 trade fairs annually the "Luster" and the "Facets" exhibitions.
Sri Lanka is very well known for its textile exports, garments and diamonds. What is the focus for this year and the near future in the promotion of these products?
We focus on a set of priority products. One in the developed sectors, especially in the garments sector in order to expand and encourage its expansion, which needs very sophisticated inputs and strategies to reach niche markets, particularly against the background of the agreement being phased out by 2005. This sector is gaining national attention only in terms of expansion with regard to a quota free period. Tea is another area where one can have investment in further value-added areas such as the development of organic and flavored teas. Other kinds of products need a lot of support to develop this sector on an entrepreneurial and regional basis.
For the rest of the export development sectors our focus is on entrepreneur development, mainly for the agro-based and mineral based sectors, which need basic development, skills development in their technology, upgrading, management and productivity improvement and market access skills. This needs to be focussed on with a network of area offices. Priority products will have to be selected and be based on resource based products. In the coconut sector, coir by-products with environmental friendly and biodegradable nature are in demand for various uses. Therefore the fiber sector can be focussed on as a priority. In the agro sector, we have flori culture where we are developing both the entrepreneurial skills and best practices in cultivation, quality upgrading of seeds and planting material and technology improvement. We have a tropical climate ideal for fruits and vegetable cultivation and have a good mix for flori cultural products as well. These are resource based and thus a priority sector. Cutting across the agricultural products, it will pave the way for organic products, such as pepper, cloves and cardamoms could fetch premium prices in the future. We have a mineral sector with graphite, zircon, silica, and quartz, which are awaiting exploitation and investment funding. In this sector, we are mining the precious, semi precious stones and graphite through traditional methods. We have a lot of quartz but it is still awaiting exploitation.
We need to attract investors, we need traditional exporters of these products to be linked up with their counter parts in order to see the value of further processing opportunities and to create mutual investments ventures. We have to expose our mineral products to the related end user industries and generate investment via them by getting technology into the countries mining business. There is presently an environment lobby which would not be too pleased with certain kinds of investment and exploitation in this area but we are very alert to environmental requirements, needs, certifications and certainly all our projects will take these views into serious consideration. We must not inhibit trading in some form and allow liberal exports of products in order to have necessary linkages, which will see the merits and feasibility of investment and see the mutual advantages in them. In regards to the Industrial sector, we have an electronic sector, which is also a priority area.
The domestic market is small in this sector and one has to look at the strategies of promotion of certain industrial products on the larger market of the Free Trade with India, bilaterally with India and larger with the SAARC region. Therefore some of these strategies have to evolve from looking at opportunities not only within the Sri Lankan market but also in the immediate region to create a wider market. The ceramic industry is good as we can take in more investment. We have a well-developed floor tile industry, table wear, ornamental ceramics that can take in more investment. The investments should come from the relationships that the exporters have built up overseas so that market access comes with it. Finally we have the IT sector, which is a strategic sector. The EDB itself is encouraging the entrepreneurs who we are developing in the regions to get involved in e-commerce so that they could get used to the Internet and develop their own export developing market. The IT sector has been one of the main focus of the government and in the recent budget; software has been made a priority sector. The strategy is to get a world leader into our electronics industry. In software we emphasize exporter services such as web designing and data entry services and we look upon the export of services as a future significant activity of the EDB.
| You mentioned earlier that SAARC and the Free Trade Agreement with India have created opportunities for exports. What are your expectations for the exports of Sri Lanka now with the Indian Free Trade Agreement in place?
We have to promote in-goods into the Indian market. The basic duty concession of 50% is quite attractive and this makes the price calculations sharper.
There is a joint commission due in Sri Lanka in the near future and we will be meeting with them to react to our own experiences of free trade agreement exports which are not up to expectations.
For the export of garments, given the background that the raw materials are cheaper in our liberalized open market in Sri Lanka, we find our fabric rather cheap and create a costing factor for our exporters. Indian tax of 50% concession is based on the total value addition rather than on the net value addition of the product of apparel in the country. Quite a lot of interaction is needed from both sides to sought out these difficulties. We have to do some niche marketing in India and to SAARC regions and need our own lobby groups in these countries to make sure that we compete in these markets on a level playing field on the principal of comparative advantage. Generally there is a feeling that there could be distribution advantages by exporting from Sri Lanka as against from the north of India down to the south and there may be certain distribution economies accruing in the southern area. In the future probably we will have to have a physical presence to lobby and get in our products into these markets. Related to SAARC, some concessions are better than the FTA.
To guarantee economic growth, the government wants to make Sri Lanka an export-oriented country. To what extent do you feel that you are contributing to the economic growth in Sri Lanka?
The EDB has over the years had a fairly significant catalytic role. It did participate directly by taking equity in strategic enterprises to develop the export sector. However gradually, the EDB preferred to fade away and get into priority areas as the liberalization of the Colombo based entrepreneurs grew. Our assistance is now more in the form of technical assistance. Our offices carry out sectional studies and are linked directly with the business sector to help them develop, by forming them into associations, and developing the business culture in this manner. This is how we interact with the business sector. During our meetings, we identify the opportunities and constraints facing the sector. We take it up at the policy level with the government, and we implement them through the trade chambers and other institutions, training programs. We participate with the private sector in certain institutional arrangements such as developing the packaging sector. We have various combinations of relationships with the trade chambers, the associations and the private sector enterprises in order to articulate the difficulties and to influence a good policy climate for these respective sector activities. Wherever necessary we assist to develop institutional relationships at the enterprise level and have fine-tuned certain relationships. For rural development we have got various novel arrangements for e.g. Export Production Village Company. At the sectional level, we group them into associations and provide secretarial facilities and thereby influence our policies. We also give them access to markets. The EDB in the past, encouraged exporters to go into markets in various sectors by directly assisting the big and small companies to go overseas. For the past 2-3 years we have rationalized to be more economic and only to support them to be more productive and to privatize the export of participation. We get the exporters to meet the majority of the costs. For the small and medium enterprises, we give them opportunities to participate in local fairs organized by us. There is a privilege and development objective in supporting a few exporters on a cost-sharing basis.
Can you give us some figures in terms of staff, and how does the EDB raise funds?
As far as the staff is concerned we have 310 persons and 129 from the executive level upwards. The funding comes through the government plus asepses on imports.
The Far Eastern Economic Review might be back in three years to do a new report on Sri Lanka. Where do you see the country during that time, especially the EDB and what effects the Free Trade Agreement with India will have on the further development of the trade sector and the country?
We would probably see our organization looking at exports together with some emphasis in ascertaining trade development with liberalized trading and need to encourage the private sector entrepreneurs to take over. We hope to fade away as soon as we don't have a facilitating role. Therefore we see our role as getting more involved in developing work in the regions and small and medium enterprise development and in getting technical assistance to those areas.
Where public funds are involved, we should go into the role of facilitation and development of roles. We have 1800 effective exporters within a total of 3000 exporters but you really need double the amount to venture out and to expand the business entrepreneurs. In 3 years I hope that the economy would be ticking as a whole, one could expect to get on to the original figures of 30 to 40% annual increments. As is, our export sector is very resilient, competitiveness is present in the current environment and heavy competition is present in particularly with the Asian markets.
Since our readers are interested in finding more about other business opportunities in other countries what would be your final message to them?
To look at the EDB web site where all the business opportunities are listed for you.
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