Financial Times - Glorious Future for Sri Lanka Exports? Praise from World Bank Economist

When I illustrated the success of the Sri Lanka Cricketers in UK where they completely annihilated the masters in every department of the game, to reflect the Sri Lankan potential there were many who challenged my wisdom during a time when media was buzzing with news of every possible Sri Lankan packing the bags to leave the country.

The other day listening to Ismail Radwan, Senior Economist and Private Sector Specialist of the World Bank addressing the cream of the country’s exporters at the Annual general Meeting of the Exporters Association of Sri Lanka (EASL) I was more than convinced that I am not alone in this assumption when the learned economist also drew examples from the “Cricket Theory”.

He said here is a Sri Lankan cricket team playing like world champions in the UK, what’s the secret behind this success --- it’s the best talent based on merit and not on political, racial or religious basis, well coached playing in a level playing field and maintaining a winning streak in world class quality. His advice to Sri Lankans was to follow this model, go for the best talent, fight for level playing fields and be world class.

Radwan was emotional when he recalled Sri Lanka’s glorious past and Marco Polo’s description of this little island and urged the exporters to work towards a glorious present and future too perhaps reminiscent of Tibetan Monk Rev S Mahinda who earned a name for himself for his motivational poetry to lift the morale of the Ceylonese during the colonial regime and gave an awakening to a depressed nation.

Commending the garment industry he elaborated how this industry from small beginnings in the eighties economic resurgence has now come up to a $2 billion export industry notwithstanding the MFA phasing out and also has developed a successful feeder industry base for the accessories. This industry has grown with correct leadership catering to global JIT (just in time) needs to be truly world class. Tea, Sri Lanka’s principal agricultural export has benefited from the privatization process of the nineties however much of the tea is exported in raw form and Sri Lanka has not promoted international blending to be a truly global player. In the Arabian Desert land, Dubai a tea blending hub has been set up taking advantage of its liberal trade practices.

Moving on to the international arena Radwan stated that OECD countries spend as much as $300 million in subsidies to the agricultural sector and US and European farmers are getting richer with these while poor country farmers languish in poverty. He advised Sri Lanka to lobby for removal of non-tariff barriers to benefit their exports.

Mohan Mendis, re-elected as the chairman of the EASL was critical of the Inland Revenue Department’s failure to address the delay in releasing VAT refunds for exporters and lamented that the present impasse beats the very objective of zero rating exports who have to compete in a global market. The negative impact of this delay has resulted in most exporters getting in to working capital difficulties and incurring penal costs apart from chasing behind the refunds.

He also added that time has come for the business sector to find its own solutions to these issues rather than spending their resources on unproductive representations. His advice to the exporters was not to wait for government handouts. However the exporters’ chief was complimentary of the government for many fiscal concessions such as relief on ESC for agricultural products and the very recent tax exemption granted to tea bag exports which he felt would spur the investment in this sector.

Expressing optimism on the positive growth trends of exports Mendis asserted this is the only way for Sri Lanka to fight the increasing oil prices by strengthening the export industries to curtail the ballooning trade deficit.

Economists globally are unanimous that strong, independent institutions are essential for economic development. Sri Lanka’s transformation from an agriculturally dominated economy to an export led manufacturing economy with a growing service sector in the 1980s is now talked as a model to spur growth and reduce poverty.

Some of the key institutions that paved the way for this economic miracle were the GCEC now known as the Board of Investment (BOI), Export Development Board (EDB), Mahaveli Authority and the Tea Board to name a few. Another was the Council of Ministers for Exports. It was equally true that some of the country’s best talent was picked to lead these vital organizations. Today the Ministry of Plantation Industries has lost its importance among the non cabinet ranks, in fact up to the mid eighties too plantations were under a minister who held many other cabinet portfolios (plantation as a sector was fragmented among at least 5 ministries) thus reducing the priority for the vital export crop sector, and the position was rectified subsequently under the period of the late Gamini Dissanayake.

As Ismail Radwan says we need the best talent and leadership in these institutions and not choices based on politics or other such personal attributes. It is these institutions which encouraged the new economic initiatives that saw the building up of the value added exports and service sector and foreign investment. On this score one cannot be happy about the recent fiasco of the harassment to the TRI Director even though the damage control came much later

Thoughts for the Week
While reiterating our recent success in UK that cricket is an international industry worth many billions and employment to many it was not the best of news to hear that off the field administration squabbles continue even at the expense of the time of the first citizen.

Over the week end at the local “Twickenham” picturesque CR & FC grounds a league rugby final of high quality was witnessed before a mammoth crowd when the Kandy SC from the hill capital demonstrated their superiority over the Colombo club by annexing the plum of the local rugby.

The neglect of English language in the school curriculum is a much talked topic; in this background it was a pleasant experience to witness a grand western band display last Saturday at the BMICH when Thurstan College held their annual Brass Band concert under the theme “Echoes of the Frozen Empire” with the participation of many leading Colombo schools.

I am made to understand this resurgence of western music not only in Colombo but also in outstations is the direct outcome of the reforms of the 90’s that reintroduced Western music into the school curriculum. Perhaps more reforms in education sector will bring more benefits to the country.