The 18th Annual General Meeting of the Exporters Association of Sri Lanka was held recently at Hilton Colombo Residences. The Chief Guest at the event, Deputy Minister of Policy Planning Dr. Harsha de Silva stressed his firm belief that we must focus on exports, which would surpass the GDP. He said the lack of focus is a lack of vision and we therefore need a game plan which includes plugging Sri Lanka into the world making it the most competitive economy in this part of the world. 

Following are excerpts from his speech: 

Deputy Minister of Policy Planning Dr. Harsha de Silva addressing the 18th Annual General Meeting of the Exporters Association of Sri Lanka

Even though it’s a very busy day for me, I couldn’t turn down an invitation to address the exporters who I believe like the new President said, will drive this economy. So if I believe in something, I have to show that by at least being present and listening to the presentations made, so first of all thank you. And I am indeed happy to be here.

Mr. President, Vice President, Secretary, members of the Management Committee, Bandula Egodage Chairman, friends. 

The President when he was quoting John F. Kennedy said that the problems in the world cannot be solved by sceptics and cynics, whose horizons are limited by the obvious realities. You need men who can dream of things that never were. Now that is true.

You have to be able to dream of things that never were. I am no John F. Kennedy but I have dreams of things that never were. When I was asked to speak at the forum at the EDB, I basically blasted the Chairman and said ‘dump this in the garbage bin, I don’t want to listen to this’; because he talked about a $ 20 billion dollar export business by 2020. So I asked him, what that translates in terms of percentage of GDP, because the problem in this country is the focus on exports, since the percentage of exports has been coming down continuously. He referred to a figure of 17% in 2010 and 14% in 2014. But if you go back, Mr. Chairman you will see that it was 34% in 2000 so it has been coming down. 

That is a lack of focus. The lack of focus is a lack of vision and that is why you need people to think differently. I was speaking at the Rotary Club this afternoon at lunch, Kahapitiya was also there and I referred to our game plan for this country for the next five years at least. And that game plan includes plugging Sri Lanka into the world. If you followed me for the last five years you would have seen a consistency in my policy where I have always promoted exports and I have mentioned in more than one occasion that we have to concentrate on exports, exports and exports. 

I have had many run-ins with the then President of Sri Lanka, Mahinda Rajapaksa, that his focus was not appropriate. I have had a number of arguments with the former governor and secretary to the treasury that their focus was misplaced. 

And I used to ask in consultative committees, Mr. President, again we’ve seen a drop in exports in comparison to the GDP and either the governor or secretary would jump and say ‘ah no no, we have other things to do as well. So exports is also part of the economy, you must understand that we have to build roads and this and that.”

Wrong. Completely wrong. That is the wrong thing that they did. The focus must be on exports. They must understand that we have no future without exports. If you can’t understand that, go away. Give it to people who understand that. And my thoughts on who is to be the next Prime Minister on 18 August, understands that. That is the reason why we are focusing on exports. 

If you look at the policy statement that is presented in the manifesto, it is very clear; that we want to become the most competitive economy in this part of the world. The word competitive economy naturally suggests that it is a comparison between and among countries. When we say, most competitive, it means in relation to whom? Most competitive in relation to our competitors. So we are not looking at Sri Lanka as a Sri Lanka, the island nation of 20 million people. We are looking at Sri Lanka as a dynamic player in the global place. That is the difference. 

Sri Lanka cannot be considered in isolation. Sri Lanka must be considered together with a list of countries who have taken advantage of the imagine dynamic of the growth or trade. Be it Dubai, Malaysia or Vietnam. 

One of those slides, the 17th or 18th, the one that showed the Malaysian-Sri Lanka at the same level on expenditure and R&D, absolutely the same place about maybe 10 years ago and how it has now become 10 times what we are. Look at that slide again.

I mean, that is focus. The Malaysians understood that you have to focus on exports, competitive value added exports. So the gain will show hopefully on the 17th when we are elected. If we are not, the gain will not change. Then we can go back to the blurred focus. 

Maybe I need two glasses, I don’t know. So no, I am going to pull up the Chairman once again because what I asked the Chairman was 20 billion by 2020 is what? What does that mean? Then he said it means the same thing as 10 billion in 2014. I said that it’s not worth. Because the focus is there if we are there at the same place if we are at 14.9% of GDP. How did this go to 50 billion, its two and half times 20 billion you showed me two months ago? So I want to ask you the question, how did this happen. How did you change the target from 20 to 50? I can understand 20 to 25, but I can’t understand how we can go from 20 to 50. Sure had we for crying out loud, the UNP is going rock this. We have to have a party. Because the only thing that is changed is that UNP is coming to office. That is the only thing that has changed. Nothing else. The expenditure is the same, your tea exports are the same, and your other exports are the same. Your IT exports are the same. The only damn thing that has changed is that we are in office. 

So if that is the kind of confidence you ladies and gentlemen have in us. I would just say bye and go back and address some other meeting where I have to convince people to vote for me. So I think we have already convinced all of you that the only the change that has taken place is the change in people who really do believe in you. 

I say with sincerity, it’s not a joke. We understand that it is you who will drive this economy. And it is really sad to note that while the entire export is only 10 billion dollars, which is multiplied five times in the next time that is very double. 

The remittances have now surpassed almost 7 billion and it’s a sad story. You know it’s really not what we want.  Out of this 10 billion exports, look at how much value added exports, 5 billion in textiles and apparels. Value added might half of that. So how much of value do we bring in these exports. 

What is the net export? That is what you need to consider, because the net export of the remittances are of the hard work of the poor, lower end workers particularly mothers, wives, sisters who are really being tortured and killed. They have also committed suicide. This is not something we should be happy about. And I really didn’t like the word ‘rata viru’ which the previous government called them, as if they were giving them some honour. But it was really using them to make ends meet. They are not ‘rata viru’ they should look after these people. Just this morning, I dropped into my office and this lady came and basically told a sad story, that her brother’s wife was stuck in some holding centre in some Middle Eastern country and asked if I could call the ambassador and bring her down? I can’t do that. But that’s the reality; so going forward. 

I will give you one promise. And that is our focus will be on exports. You wanted to be included, Mr. Chairman in designing and developing export policies. I invite you to be a part of that and that is the way we are going to be moving forward, it should be consensus driven, it should be win-win, it should be addressing the issues, like Bandula said in the beginning when he said thank you; because you are the people who are creating the jobs and bringing the dollars. 

But if we can’t listen to you, why do we exist. So I am not going to give you a long speech about the economy etc, but just to let you that the new UNP led government starting the 17th, 18th, we know that with certainty. We will not guide you but facilitate exports and you need men who can dream of things that never were. I would like to see the exports to GDP in the next; I don’t know how many years, but to surpass the GDP. That means more than 100% of GDP. That is what our aim should be. Not the 20, 30 or 50, but exports should be more than 100% of GDP. 

If we can get there, I was just telling over lunch, that Singapore is 250% of its GDP and Hong Kong is 300% of its GDP. We don’t need to get there right away. Let’s have a target. Think about it; 100% of GDP. If you have a dream like that then we can really think about a completely different way of looking at exports; completely out of the box. Because you can’t just have plaster solutions, you can’t just gradually build this up. We are in serious trouble. We have to do something serious now, some massive surgery is required. 

With that I thank you all for inviting me and also please know that I am running for office for the first time from the Colombo District.

Thank you very much.

‘We don’t have proper national export policy’: Bandula Egodage

Achieving $20 billion export target from the Government side is no major rocket science if the exporters could focus in a more prudent way targeting on three key drivers — value addition, product market diversification and hi-tech products, Sri Lanka Export Development Board Chairman and Chief Executive, Bandula Egodage said at the 18th Annual General Meeting of the Exporters Association of Sri Lanka.

Following are excerpts from his speech:

Good evening ladies and gentlemen, Dr. Harsha de Silva, Chairman, Party Chairman, all members of the Export Development Association and members of the media. 

First of all, thank you for inviting me for the third time to make my Export Development Board presentation to all of you. It’s a great honour and privilege to say a few words at this moment.

In fact, I am not going to change what I have been constantly saying. Export driver and other major drivers during the last three years. Actually your President gave you a real update, so these are a few insights for you to understand how this export is faring in relation to Sri Lanka. 

What I am trying to say is that today, ladies and gentlemen, my first slide is starting with this. ‘Thank you’ for all the great effort, we are vacillators and you are the people who really do the job to take all export earnings to our country. So once again, thank you very much.

We are just making some comments on some of the insights. I would like to start with a little story. Three months ago, I invited today’s Chief Guest to my own institution, the EDB. When I say that we will target $20 billion by 2020 Chairman, you all know that, the export target was GDP, you all are nowhere. Today sir, I am correcting without knowing that you are the Chief Guest. 

You can see the exports towards $20 billion; again the key drivers. We from the Government side, there is no major rocket science. For you to achieve what you are targeting there are three key drivers that is value addition, product market diversification and the last one being hi-tech products. So in the product basket, it is based on these three areas.

I now want to give you some insights on what we are doing right, where we are faring well and are we doing enough; starting with value addition. 

Ladies and gentlemen, look at this scenario. 

Tea: Take the total value and volume. Value addition is 50 and so is volume. So where are we heading? What is the purpose of value addition if you are going to sell the same product the same way in the same volume? Even though we say we are selling tea with value addition. What exactly are we referring to when we say that? That was for tea.

Look at the cinnamon situation. 85% of the cinnamon we provide to the world look at the volume 33 million and value is 25. Basically if you look at it these three things, it’s again 50/50. Are we really doing value addition?

Look at Seafood. Seafood value addition – are we doing value addition when we change the taste of it? Please protect the seafood as it is. Maintain the freshness. Make the branding different, the packaging. These are some of the insights I wanted to share. That basket we are talking about value addition, you have to be able to pick and choose for the product. 

Are we doing it right? Are we doing enough? It’s not. 

Market diversification, what does it mean? While sustaining the main market, we want to look at a new market. Just look at the USA, there’s 25% of the total exports by USA. Depending on the USA has come down, but their exports have increased. The trend is right, but as Dr. Harsha de Silva insisted, we are doing something, but it’s not enough as a challenge. 

Look at the UK, market, its growing slowly, but the dependability is going down. Look at India, the exports are growing. While sustaining the current market, we want to achieve from other markets as well. This is the new market we have gained. 11 billion total. 

We are not satisfied with it, but the trend is right. Yet we need to do more. 

Product diversification:

It’s a very simple theory, you can in 1990, 2000 and 2014 and now we have about 3,375 products. We are basically in the right direction, but is it enough? 80% is non-traditional sales. Even here it’s 50/50. 

So it’s not enough. The third one I am referring to is;

High-tech:

High-tech is the global definition; it means research and development you incur into your rating. A high-tech product means high value products. We need to go for high-tech products because it has higher earnings. What are the ones we have? We have the raw minerals but are we doing it the right way to export it. I don’t think so. 

Look at the IT BPO. That is a high-tech product and services. Branding? Are we doing the real branding? Ceylon Tea, Ceylon Cinnamon, and Blue Sapphire – we have the brands but we are not doing the right branding. 

Research and development:

We need to invest more on research and development. Expenditure as part of GDP, the last red line is Sri Lanka. When we talk of high-tech it’s is the percentage of research and development in the industry. So here research and development remains in the last row, so how do we expect high-tech products. These are just insights that I want to share with you all. 

Some of the other Asian countries; look at how Sri Lanka has evolved; Sri Lanka, Bangladesh, and Pakistan – the latter being known for pharmaceuticals. It shows Pakistan as considering pharmaceuticals as high-tech products.

Now I am going to this one but I don’t want to go into details. 

Towards the 50 billion target. What do we have to achieve that? The infrastructure is there, the skilled labour is there, advantage of geographical location, economic total, taxation, literacy, government policy, hub concept is there. But why are the exports not increasing. 

If you don’t have the right value addition, don’t categorise it as value addition. How do you work towards 50 billion targets? It’s not a question. Come out with an FTA. Talking about these areas; existing agreements, you are talking about GSP plus, which the current Government is trying hard to get. FTA plays a large role. We have with India and Pakistan, but we need to have another one with China, so that is another aspect. 

I am not going into research and development in detail. I am not going to show you the slides because it will take time. We have a budget for this, innovating, reverse engineering like it’s done in China; energy saving, advance technology.

The next one is basically FDI. It’s where the money is. Foreign direct investments, we don’t have much of it. Not to capture the Sri Lankan market but the others. At the end of the day we need to increase exports and the quality aspects. 

Ladies and gentlemen, I know Dr. Harsha de Silva will give me a very good support to develop the national export policy. We have some good guidelines but if you really ask me, we don’t have the proper national export policy. We just finished an internal policy.

Trade facilitation:

It’s an important factor. One stop shop; simplified products; E-business is something too. To achieve these we need to make a move. These are just insights. SME developments; you all are SME, if you recall how you all started. 

We need to have a global supply chain, venture capital. Export promotion zone, something which the Government announced since recently. We need to capitalise on all this to make the 50 billion markets. Are we doing right? Yes, the trends show that. But are we doing enough? That is the big question.

So, toward 50 billion; let’s work together.