The puzzling EDB Strategic Plan

Friday, 23 September 2011 02:10 -     - {{hitsCtrl.values.hits}}

By an Independent Analyst

In November 2010, the Export Development Board (EDB) of Sri Lanka unveiled the EDB Strategic Plan for 2011-2015, pertaining to promotion of exports. (Page 2 stated: “The intent of this Strategic Plan is to determine and define the specific roles of EDB and to identify its key action areas, over a five year period, rather than develop a national export strategy.”)

According to the report, the strategy formulation process has been facilitated by a respected professor of management in Sri Lanka. However, the process aptly describes the irony of Sri Lanka’s policy formulation, as it is very much similar to a situation where the tail comes before the body.

How far can the plan go?

In the absence of country export strategy at present, how far can the isolated EDB’s Strategic Plan go? Where is it going to fit under the overarching export strategy of the country? How does it fit into the plethora of export promotion institutions whose mandates are complementary in promoting country exports? These are the questions one can ask on the proposed Strategic Plan of the EDB unveiled at the end of the last year.

As mentioned above, the EDB’s Strategic Plan is burdened with achieving the visionary objective of the ‘Mahinda Chinthana’ to reach US$ 15 b by 2015 and to increase exports by 50% on all markets except US and the EU by way of making those objectives into their institutional objectives.

Does EDB have all the muscles and teeth to reach these objectives on its own? Has it clearly understood the pragmatic scenario of setting and achieving of such objectives with its own capacities? The rest of the article analyses the viability of achieving the aforementioned one of the main objectives as stipulated by the EDB strategic plan i.e. reaching $ 15 b export target by 2015.

Viability of achieving objectives

With due respect to the management guru who facilitated the development of the EDB’s strategic plan, I would like to propose a simple definition on what a strategic plan is with the help of a Google search.

As it always does, Wikipedia keeps it very simple, stating that strategic planning is the planning of combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.

Having said this, let us select the first goal i.e. achieving US$ 15 b by 2015 and the policies that EDB seeks to adopt to reach that target as well as the reality check of such goal and the policies.

As per a leaner extrapolation (Graph 1), reaching US$ 15 b exports by 2015 requires at least 13% average export growth from 2011 to 2015, whereas Sri Lanka’s average export growth for the period from 2006-2010 was only about 3%. (Source: International Trade Centre/ITC

On the other hand, this is a least possible theoretic scenario that to expect linear and non reversible export growth given the multifaceted factors that are being operated against such presumption.

However, it is possible to check the reality of maintaining at least an average 13% export growth as the minimum standard by looking at some historical figures of comparable countries, whose export strategies are more dynamic and proved to be effective than Sri Lanka.

As indicated in the table, the countries which are having more dynamic strategies and resources than Sri Lanka were able to record an average export growth even less than the least possible growth expected (13%) under the EDB Strategic Plan.

The writer would not like to deny the possibility of a turning around of Sri Lanka’s export targets from US$ 10 b to US$ 15 b, but the point is, are we ready with the appropriate policies and capacities to achieve this target under a highly volatile global economy?

Means to the end

Let’s discuss the other side of the strategic planning definition; the means (policy) that the EDB ‘Strategic Plan’ suggests to achieve the (15 b) goal. The EDB Strategic Plan discusses the current status quo and the EDB role as a promoter, facilitator and knowledge provider for the country exports in detail manner.

Sections 1-9 have broadly been devoted to this purpose and definitely a commendable task of EDB and its staff to understand where they are right now. Sections 10-13 are devoted to shed some light on the means or policy that the EDB suggests to achieve the $ 15 b goal.

More precisely, the main policy thrust for EDB strategic plan is explained under Section 13 as ‘Key Action Areas for Key Product Sectors (KPS)’. I have no argument on the content of Section 13 in the strategic plan. However, the question is, how far the means/policies prescribed by the Strategic Plan contribute to achieving the goal discussed above?

When formulating its Strategic Plan was the EDB aware enough of the plethora of institutions and wider spectrum of issues that are being operated domestically and internationally on Sri Lankan exportable products before they really putting into a promotional drive?

Apparel processes and dynamics

For example, with regard to the apparel sector, which is the first product under the Key Action Areas for Key Product Sectors, EDB suggests a series of actions which it is not fully capable of implementing nor mandated to implement.

As a matter of fact, when formulating these action points (policies), the EDB too has not properly considered the earlier processes and dynamics, where a panty supplied under the Victoria Secret brand had to go before it landed on the shelves in California.

In the absence of a larger picture of the country’s export policy, the best use of the EDB strategy would be to send a message to respective politicians and policy makers that Sri Lanka needs a country export strategy.

Though it is selective, it would be useful for the readers to know some of the action points (policies) prescribed by the EDB on the apparel sector and the weight of such policies to achieve the desired objectives. Under the apparel sector action points, EDB has placed itself in three distinct roles viz. promoter, facilitator and knowledge provider. However, in terms of the mandate of the EDB as given in its website, “The Sri Lanka Export Development Board (SLEDB) commonly known as the EDB) is the premier State organisation dealing with the promotion and ‘development’ of exports.” Ironically, under the proposed policies under the apparel sector, somebody has forgotten to mention the role of the EDB as ‘Developer’! As indicated earlier, there are so many activities involved for EDB to attend as a developer before the panty is packed for exports!

Role of promoter

In some of the areas and actions where EDB has declared itself as the promoter, it may not be possible for it to promote as easy as it is to put it up as a bullet point on the list. For examples, setting-up of a fashion design centre by EDB is a remote possibility given its budgetary conditions and level of skill availability for such task.

It has further messed up its cardinal promoter role of Sri Lankan products overseas markets by unnecessarily getting involved in the protection of the dignity of apparel workers at a time when personalities like Dian Gomes are turning garment workers into world respected sport men and women. The EDB promoter role has been further diverted under the proposed strategic plan by proposing to engage in a production line, upgrading SMEs and arranging concessionary loans for exporters. Nonetheless, under the same sector, EDB defined its facilitator role in few other areas such as rationalising of export/import procedures, promotion of alternative energy sources, facilitating of backward integration and more shockingly, to facilitate in lowering utility rates for exporters, where even the Government is struggling to introduce such subsidy scheme for the Sri Lankan exporters.

Akin to overloaded trade agenda

The EDB Strategic Plan reminds the writer the overloaded trade agenda under the World Trade Organisation (WTO) Doha Round. It talks more on other areas than simple logic of trade liberalisation.

The EDB Strategic Plan too has been overloaded with so many agendas and thus lost the sight of its very purpose of being the EDB. It lacks the focus and specificity of how to develop ‘X Enterprise’ to a level of attending the ‘Ambiente Consumer Trade Fair’ in Germany and get the first order for its value-added cinnamon cream from a buyer in Italy as this has been done by EDB effectively until the late ’90s through its simplest and targeted policies, or what one could describe as well-targeted ‘actions’.