Back to export-led economy?

Thursday, 23 April 2015 00:24 -     - {{hitsCtrl.values.hits}}

No need to re-invent the wheel, just re-engineer it! [caption id="attachment_409981" align="alignnone" width="252"] Lalith Athulathmudali[/caption]   The untimely demise of Lalith Athulathmudali 23 years ago on 23 April 1993, was a great tragedy for the export industry and to Sri Lanka. The late Minister had made an immense contribution to turnaround the Sri Lankan export industry which is now at cross roads merely contributing only 15% to the GDP. The sector needs a strong come back to strengthen the economy once again if we are to get our economic fundamentals correct. Last week the World Bank and IMF forecasted a slower GDP growth in Sri Lanka as the construction industry which was fuelling the economic growth for the last five years went through a slowdown. As an undergraduate, I had the privilege of meeting the late Minister during the period 1989-1993. He often visited our neighbourhood in the evening as he was a good friend of late journalist Richard De Zoysa. At informal discussions he inspired me as a young student to join the export industry and the shipping industry. Once I graduated I did join the export and shipping industry under late D.S. Jayasundara at Hayleys Plc. No need to re-invent the wheel Far sighted Athulathmudali always said one should read the export development act, which is to date one of the most powerful acts in the country. The Sri Lanka Export Development Board was established on 1 August 1979 under Sri Lanka Export Development Act No. 40 of 1979. He had also realised the need of an institutional framework for the development of export trade. An Export Development Council of Ministers was formed under the Chairmanship of the President comprising of the Minister in charge of related areas of exports. As the Minister of Trade and Shipping with the Department of Commerce under him, he established the Sri Lanka Export Credit Insurance Corporation and Sri Lanka National Insurance Corporation. The Presidential Export Awards, the introduction of the Exporters’ Forum and founding the Export Production Villages were all focused towards export development in the late 1970s. The Sri Lanka Port Authority was established where the Jaya container terminal (JCT) was commissioned in the 1980s for containerisation which was introduced to South Asia for the first time making Colombo grow to what it is today as the main transhipment hub of South Asia In addition, he paid particular focus on reorganising the Sri Lanka State Trading Corporation and the CWE and implementation of the Consumer Protection Act and Patent Act. The Mahapola Concept and Employment Trust Fund (ETF) was established to enrich education and social development activities among the people of the land with a long standing vision for the country under the new economic system. In my view there is not much to be done in terms of creating institutions. Need to go back to export led economy Exports at 15% of GDP are not going to help our real economic growth. For Sri Lanka to be fundamentally strong and to attract large scale investment, the Government and policy makers should at least target to double the current levels of GDP in the next decade. Manufactured exports achieving 40% of GDP should be a prime target. This was pointed out by Deputy Minister Dr. Harsha de Silva at many recent forums. EDB will have to rework the 2020 target for exports! To do so the institutions established under Athulathmudali are still active and alive but may need a new structure. In addition to this, in the year 1992 the Greater Colombo Economic Commission (GCEC) was transformed to set up the BOI by late President Premadasa and the current Prime Minister Ranil Wickremesinghe who was the then Minister of Industries, which transformed the garment and apparel industry in Sri Lanka by expanding manufacturing beyond the zones of BOI. In 2013 under President Mahinda Rajapaksa, Dr. P.B. Jayasundara took the initiative to amend the Finance Act to accommodate the new hub regulations to promote exports through entrepot trade and free zones creating the environment similar to Jebel Ali and Singapore. This has already succeeded with many new investments coming in a short span of time. Sri Lanka with its good logistics infrastructure and improved transaction systems now needs to drive the export industry. To do this sooner than later we need to re activate the council of ministers under the EDB as we need the political will to re-engineer the export industry to achieve new targets, structural reforms, modernisation of all the intuitions, and expedite market access reforms. In my opinion, most importantly it would be better to have all relevant ministries/institutions related for exports to be under one capable Ministry, such as the Ministry of Trade and Shipping that Lalith Athulathmudali had in his hand. If we are to focus on export led growth, new thinking must come to the fore front, professionals and business leaders must take steps to work with the Government to create the conducive environment and let go of the personal goals in the interest of the future of the country. As the 100 day political reforms are under way and hopefully in the final stages, now is the time that in parallel the Government of President Sirisena and Prime Minister Ranil Wickremesinghe who has much experience working with Athulathmudali during the J.R. Jayawardena government must start focusing on the economic growth through export expansion, trading and export diversification plan. The institutions related to exports have to be filled with independent professionals with experience and knowledge. No harm of importing expats, who have the ability and the wider expertise to work along with our experts to put in accelerated efforts to get our exports and trading sector perform better. In fact Dubai, Hong Kong and Singapore as major trading economies have a large number of expats, involved in running and helping the policy framework of those successful economies. The trade facilitation and competitive services sector are other essential elements that could help the export sector. Where there is a talented, educated work force, the export industry could once again be revived if proper focus is given to it. That would be the catalyst and the base for the rest of the economy to expand. As it is said, ‘export or perish’ may hold true for a small economy like ours. (The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, and immediate past secretary general of the Asian Shippers’ Council.)

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