Meeting export targets
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Plans, plans, plans……it’s easy to prepare a plan but often difficult to implement it. That’s what we Sri Lankans have done over and over again…..making plans but not implementing them. The country’s rule of law is a good example of having laws which are not implemented for political reasons, hesitancy or reasons of corruption.It’s just like the famous saying ‘even the best laid plans of mice and men’ which means the best laid plans don’t always come through.
Remember the then United National Party (UNP) government’s five-year rolling economic plans in the 1980s under the guidance of then Finance Minister Ronnie De Mel (the longest serving Finance Minister). That phase ended with the exit of the UNP.
We have other five-year plans and now even a plan for 2048 to mark 100 years of independence though this plan is likely to be achieved only if the current President or his team is in power during that period.
The latest plan is the ambitious 5-year strategic target of the Export Development Board (EDB) to increase exports to US$31.3 billion per year by 2027, more than double the value of current exports.
Increasing exports to meet the country’s import expenditure and garner enough foreign exchange (dollars) to meet other needs, a point repeatedly stressed by my fellow columnist Prof. Sirimal Abeyratne in his columns, is the only way out for the country in the present abyss and economic pain.
Before I could proceed further in writing my column, the phone rang. It was Arthika, my nonsensical economist friend also known as good-for-nothing Somey, calling on this Thursday morning. I welcomed the call as I wanted to discuss the EDB proposal and its future, with an economist.
“Hello…….nice to talk to you again after last week’s conversation. I was in the midst of writing about the EDB’s 5-year export plan,” I said.
“That’s interesting because last week I was discussing the ‘export or perish’ call by the late Lalith Athulathmudali, Trade Minister in the 1980s,” he said, adding that this slogan first came from India.
“Lalith was a visionary and along with Gamini Dissanayake and Ronnie de Mel were the brains of the then UNP government in charting a new economic course after 1977. We haven’t seen such visionary leaders in recent times,” I said.
“Apart from the diversification of apparel exports and IT services exports and remittances from Sri Lanka migrant workers, Sri Lanka hasn’t seen much change in its export mix. We continue to be dependent on commodity exports (which however is not a bad thing), while the focus should also be on increasing value added exports of tea instead of raw tea exports,” he said.
“Without increasing our export base, we would forever be saddled with a balance of payments issue instead of surplus foreign exchange,” I said. We concluded the conversation promising to meet over coffee (which should be the next best export commodity) next week.
At this point, I overheard the conversation by the trio under the margosa tree. They seemed to be discussing disturbing issues.
“Mae davas wala janathawa godak duk vindinwa egollange suba-sadaka prathilaba laba ganna (People are suffering these days in receiving their welfare benefits),” said Serapina.
“Egollanta godak wela banku asala inna wela thiyenawa eh mudal ganna. Aie apey baladarinta beri mae karma vidimath karanna (They have to wait long hours outside banks to receive their cash payments. Why can’t the authorities streamline the process),” asked Mabel Rasthiyadu.
“Thava prashnayak thama anduwe ispirithalawala beheth nethi eka. Den leddunta anivaryayenma beheth poudgalika parmacy walin ganna wela thiyenawa wedi milata (Another problem is the lack of medicines in government hospitals forcing patients to purchase these costly medicines from private pharmacies),” said Kussi Amma Sera.
Government sources said that the ‘Aswesuma’ (welfare) funds were being disbursed to 800,000 families this week in the first stage of the programme, out of a total of two million recipients. This scheme replaces the decades-long Samurdhi benefit scheme for the poor and underserved communities.
Back to our discussion on the long-term export development plan, the current level of export (and services) earnings was around US$12 billion in 2021/2022, while Sri Lanka is aiming to increase this level by nearly three-fold in five years (by 2027). Is this a too ambitious target?
Proclaiming a three-fold increase in exports in the next five years is useless unless Sri Lanka diversifies its export base. Apart from traditional exports – agriculture and industrial products plus IT, tourism and worker remittances – the country needs to foster new items in the export basket.
This is where the trade or economic officers in Sri Lankan missions abroad can help develop new items of export after examining the import needs at their stations and advise the EDB accordingly. In the meantime, proceeds from IT services are increasing though the shortage of IT skilled labour (with a large number of software engineers migrating) is likely to affect growth in this industry. Tourism proceeds are also increasing with the return of tourists to the country after several bad years from 2019 to 2022.
The EDB says it plans to increase the market share of Sri Lanka in the top 10 existing export markets by 10 per cent annually. The top 10 markets are the US, the UK, India, Germany, Italy, the Netherlands, Canada, the UAE, Belgium and France, it said.
Missing the target is the name of the game. Take for instance, the plan to double exports from $10.6 billion in 2011 to $20 billion by 2020. Of course, 2020 was affected by the COVID-19 pandemic followed by the economic crisis in 2022, reasonable grounds for missing targets.
One of the areas which need a closer study is pitching into the global supply chain network. Due to regional tensions, big manufacturers like the US and China are looking for partners to supply accessories for large scale products and fitting into this supply chain is one of the ways forward.
The new 2027 export target comes in the backdrop of merchandise exports in July 2023 dropping to $1 billion, a fall of 11.79 per cent compared to the value recorded in July 2022. The decline was due to reduced demand especially for apparel and textiles, rubber and coconut.
As I wound up my column, Kussi Amma Sera walked into the room with my second mug of tea, saying, “Sir, den wahinna patan gena (Sir, it has started raining)”. I nodded my acknowledgement, hoping that the weather gods will herald the rainy season and help farmers and others suffering due to the drought.
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