Role of private sector in TPOs

Today the private sector has emerged the engine of growth as introduced by some quarters of the Sri Lankan society. This recognition substantiates the beneficial importance of the huge contribution made by the private sector towards economic development of the nation. It is optimistic that their role of partnership would stand a pillar of strength to achieving the goal of sustainable economic growth. The entire nation owes a debt of gratitude to the entrepreneurs who have shared a greater responsibility in building the economy.

In economics, the private sector covers a part of the economy controlled by individuals or their own groups or companies. State does not interfere with them. It should be understood that a business enterprise is being run with the main objective of making profits.

Role played by the private sector

The role played by the private sector over centuries with their contribution is record high. The global change in political, social and economic development cited the governments to withdraw from major economic activities with resourceful opportunities made available for private sector to be engaged in major economic activities such as investments, trade, etc.

The main objective of the Government in taking measures involving participation of citizens was to look after the public weal. The change took place in mid part of 1970 encouraging the private sector to help uplift the lifestyle of the citizenry with their contribution highly valued by the Government. This was caused by the moving economy to open or free economy.

It is the general consensus that the private sector maintains a well planned system of economy in favour of the national development. The private sector has substantiated its capability in investments, trading, providing services, creation of employment opportunities and revenue by their skills and enthusiastic effort to boost the national economy. 90% of the development work in Caribbean counties rests under the tutelage of the private sector with nine out of every 10 jobs being created. Today the private sector in Caribbean Islands is making a meaningful endeavour on alleviation of poverty in an attempt to create a better living for their people. The private sector in Japan is duly honoured by the entire nation in recognition of the highly valued service rendered towards the development of the country.

Important part of the economy

With the introduction of the open economy or market oriented economy in 1977 to Sri Lanka, the private sector became an important part of the economy although their role was not felt before. Prior to 1977 the special feature was the control of economy by the State and was based on import substitute. New investments opened by the local and international businessmen under market oriented economy influenced a new culture in economic and social environment in Sri Lanka.

In the latter part of 1970s with countries transforming from the national economic policy to open economic policy, the export sector rose to the heights of an invaluable partner of the economic policy. The reason was the platform opened by the economic policy based on export oriented or market oriented policy for presentation of products and services to the mass international market. The Government and private sector both realised the essential need of a sound institutional frame work for promotion and development of export trade. The establishment of the Trade Promotion Organization (TPO) came into existence consequent to the meaningful dialogue taken place in the past.

The International Trade Center (ITC) established by the United Nations in 1964 under the United Nations Conference on Trade and Development on Tariffs and Trade (now known as the World Trade Organization) became the central institution supporting the developing nations with necessary assistance and guidance on promotion of export development and establishment of the TPOs. Sparkling feature was the initiative taken by the ITC with strong influence on the inclusion of the private sector into the decision making body of the TPOs.

Building the national economy

Trade promotional organisations, mostly Government-owned, play a significant role in building the national economy. Contribution by the private sector with the influence of trade promotional organisations is a remarkable manifestation of strength in building the economy as well.

In most of the countries, the board of directors of a TPO consists of private sector representatives. The power of decision making mostly by the private sector on export development in Singapore is a case in point. The Malaysian External Trade Development Corporation, the National Trade Promotion Agency of Malaysia (MARTRADE) consists of nine members in the board with highly-powerful representatives from private sector such as Managing Director Hyrax Oil sdn bhd, Chairman of Malaysian American Electronics Industry, and Managing Director of Export Imports Bank. Apparently participation of the private sector in the Board of Directors of Bangladesh Export Promotion Bureau is 50%.

The Sri Lanka Export Development Board (EDB) established in 1979 under the Sri Lanka Export Development Board Act is required to fill the Board of Directors with officials from ministries of which the duties are involved in export trade and its services and six members with experience in trade, industry, finance or any other field connected to export appointed by the Minister. The objective of the appointment of these six members is to open the avenue of opportunity for representation of private sector in the EDB decision-making body.

The final decision on export development and promotion of TPOs, like EDB, is taken by its Board of Directors. As decision making body of the institution, representatives of the private sector are appointed to support and encourage the Board to implement the programs on national development. Aggressive development will absolutely be the result of their role in pushing and pressing the institution for constructive work.

The founders of TPOs in Sri Lanka, especially EDB, expected a highly professional role from the private sector with high profile given to them. At the outset their performance of work was excellent with suggestions and views shared for national development projects under TPOs.

Playing the correct role?

Today, the necessity has arisen to ascertain if the private sector plays a correct role on their part towards national development within TPOs in Sri Lanka. Much more active work from TPOs is expected by the private sector under the environs of the ongoing new economic development in Sri Lanka.

Today it is a phenomenon that private sector members most frequently raise their hands in favour of the papers submitted by bureaucrats sitting at the Board meeting held once a month. Most of these submissions seem to be for approval of annual events and no new submission of projects to be noticed on the table. Sometimes views are expressed mildly on certain products represented by them. It appears that Board meetings spend time on administrative work rather than other important development projects being initiated.

There have been instances where approval had been given to administrative submissions without a thorough awareness of the subject adversely affecting the bright career of the ambitious officers. Given the opportunity to the private sector, with their high reputation it is believed that they will showcase their masterly performance of competence in keeping their good image.

It is vitally important that the appointments made by the Minister should literally honour the representation of the genuine need of the nation and not the appeasement of individuals.

The requirement of the appointment of Advisory Councils for export development activities as stipulated into the Act by the founding members of EDB is worth a pound of wit. The objective was to share the advice of the private sector on export development. As projected initially by the EDB, it was the onus of the Advisory Committee chaired by a private sector representative to develop production to mass market from production level under import substitute economy.

Accordingly these appointments were made on the basis of production level. Export Marketing Advisory Committee and National Export Advisory Committee were established in the year 2007 and 2009 respectively for promotional expansion of production which was a necessity for the nation. The National Advisory Committee, the most important committee of the two, had met only once. The other committee, the Marketing Advisory Committee, was working in a lackadaisical manner. Apparently the current appointments of private sector representatives are made on the basis of bureaucratic interests.

Contribution by chambers

It is an important to observe that export development work is being carried out by the chambers in a highly progressive spirit. The private sector, actively engaged in running the entire set of units, is far more involved with the chamber than any other institutions such as TPOs. All TPOs are duty bound to initiate dialogue with leading exporters in collaboration with Export Advisory Committee in cognisance of its national importance.

Imperatively, contribution of the private sector is an essential strength to the TPOs as a huge bulk of exports is handled by the private sector under export oriented economy. In recognition of their long experience of practical difficulties braved in trade, it would be highly beneficial to share their views and suggestions with the massive know how on development of export trade. As a matter of fact, they are free to take independent decisions on their own in the interest of national importance.

Social Contact Theory

Abhisit Vejjajiva, former Prime Minister of Thailand, emphasised the significance of the role played by the private sector in modern world when he addressed ‘Whether Social Contact Theory is in practice in the 21st Century’ at the World Economic Forum 2011.

He further stated that Social Contact Theory was active in developing and least developed countries emerging from poverty. Under the Social Contract Theory, it requires both the government and citizens to collaborate with greater responsibility in close contact meeting the essential needs of the citizenry. Today the private sector has taken over the responsibility of their contribution in participation with skills and competence on creation of job opportunities in its effort to alleviate poverty and uplift lifestyle of the people. This is a testament that the private sector has taken over the responsibility as a non state actor on behalf of the government under the social contract bound with the citizen.

The former Prime Minister of Thailand opined that it behooves the Government to take reciprocal measures to develop human resources and infrastructure sector encouraged with incentives as and when necessary. In pursuance of the contribution made by the private sector, a duty casts upon the citizens too to share their part of the duty in saving for more investments under this social contract.

It will be a convincing encouragement towards development of the country if the correct path is followed by the TPOs with mutual understanding to obtain support of the private sector. Representatives of the private sector in TPOs, considered to be the growth engine of national development, should act with responsibility, following the correct procedure and guiding the TPOs also to follow suit.

(The writer is the former Head of Corporate Affairs and Communication of the Sri Lanka Export Development Board. He can be reached on [email protected].)