National Export Development Plan: past mistakes should not recur

The EDB has initiated the process of formulating the National Export Development Plan (NEDP) 2025-2029 in collaboration with the Asian Development Bank (ADB). The strategic export development plan is being developed as part of a policy-based loan program between the ADB and the Industry and Entrepreneurship Development Ministry, and it aims to position exports as a key driver of the economic transformation which is necessary for the island to become a developed economy.

A core strategic goal of the NEDP is to raise Sri Lanka’s export revenue to $ 36 billion (excluding tourism receipts) by 2030 in alignment with the Government’s vision of ‘A Thriving Nation – A Beautiful Life’. The target itself appears quite daunting and ambitious given the sluggish growth of merchandise exports in the recent past. Over the last decade or so, the value of Sri Lanka’s merchandise exports in particular has been oscillating without taking off. In 1990, Sri Lanka’s exports were $ 2 billion and were on par with that of Vietnam and Bangladesh. However, the two competitors had leapfrogged over the last three decades whereas the South Asian Island had languished. In 2023, Vietnam’s exports were $ 355 billion and Bangladesh’s exports were $ 60 billion while Sri Lanka’s corresponding figure was miserly $ 12 billion.

The NEDP is expected to be implemented from 2025 to 2029 – a period in which there would be no change of political power in the country at the centre. The previous NEDP, which was titled as the National Export Strategy (NES) 2018-22, became a complete failure as it suffered an abrupt end with the change of the Government in 2019. The five-year Strategy envisaged Sri Lanka to generate $ 28 billion in exports by 2022. The comprehensive plan was developed with the views and suggestions of more than 600 public and private-sector stakeholders across the country. Nevertheless, a key challenge which stands in the way of the NEDP is the presidency of Donald Trump which will end in January 2029. The US is Sri Lanka’s largest export market, and the incumbent administration in Washington has no coherent policy on international trade.

Sri Lanka’s over reliance on few export industries – mainly apparel and tea – and dependence on key export markets have hindered the progress of the export sector. The dynamics of the modern global trade order are such that production processes are divided into separate stages, with each country specialising in a particular stage of the production sequence, resulting in different countries specialising in different tasks within vertically integrated global industries. Countries like Vietnam and even Cambodia have successfully joined global production networks through meticulous policies and it is an area which warrants the attention of the Government as well as policy makers. 

Another area in which Sri Lanka has fared poorly is attracting export-oriented FDIs. Most of the major foreign investments have been in fields like higher education, telecommunication, and real estate that cater to the local needs and the BOI has not been successful in generating the kind of export-oriented FDIs that have the potential to propel the country’s economy to greater heights. During the Sirisena-Wickremesinghe administration, there was an effort to merge both the BOI and EDB to enhance the focus on obtaining export-oriented FDIs, but it never took off the ground.

The forthcoming NEDP needs to learn from the mistakes of the NES. The NES suffered from poor coordination and lack of commitment from line agencies connected to regulation and promotion of cross border trade. Although the EDB was at the forefront in terms of developing the NES, the state export promotion agency did not have the required authority when it came to implementation.

The development of exports should not become the responsibility of one particular state agency, rather it requires the collaboration of the entire public service as well as stakeholders representing the export community in the country.