1. Pre-requisites for
export promotion and development
promotion in developing countries entails the following
2. Focal Point Export
Promotion Organization (EPO)
In Sri Lanka. the
Export Development Board (EDB) was set up in 1979 by an Act of
Parliament as the focal point EPO, at a time the economy was
liberalized with state recognition of the private sector as the
"engine of growth."
At the time the EDB was
set up, the network of institutions which provided specialized export
support services were considered to be adequate. However, it was not
the same with the provincial or regional institutional structure
providing export support services for export oriented enterprises in
regional locations in the country.
structure of the EDB
The policy making
structure of the EDB consists of a Board of Directors, which has both
public sector and private sector representation at the highest level.
Public sector representatives are the CEOs (viz. Secretaries or
Additional Secretaries) of Ministries whose functions relate to
exports in one way or another. There are generally nine such
Ministries covering the subjects of Trade, Shipping, Industries,
Agriculture, Plantation Industries, Textile Industries, Fisheries,
Finance, Foreign Affairs, Planning and Rural Industries.
representatives consist of 6 members who are experienced and have
proven capacity in industry, trade or finance or in any other field
connected with export development. Additionally, the CEO of the Board
of Investment (BOI) of Sri Lanka which is the state agency responsible
for approving foreign direct investment (FDIs) in Sri Lanka and for
the management of the Free Trade Zones, is an ex-officio member.
The Chairman of the
Board of Directors of the EDB who is also the CEO is appointed by the
Minister in charge of trade. The Minister also appoints the private
The Export Development
Act also provides for the constitution of an Export Development
Council of Ministers (EDCM) chaired by H.E. the President of Sri Lanka
and comprising the Ministers of the Ministries represented on the
Board of Directors of the EDB.
The EDB is responsible
for the formulation and implementation of the National Export
Development Plan (NEDP), as well as policies and programmes for export
development, with the approval of the EDCM.
4. Powers and functions
of the EDB
The EDB is vested with
wide powers and functions, the salient features of which are as
According to the Act
which set up the EDB, every decision made by the Board in the exercise
of its powers has to be implemented by every Ministry represented on
Within the scope of the
above powers and functions the EDB was assigned responsibility to
implement specific programmes and activities encompassing market
development and supply development, for export.
5. Human resources and
financial resources of the EDB
The EDB was set up with
qualified and experienced core professional staff to fulfil the needs
at that time related to the various functional disciplines of exports.
Financial resources to implement export development activities arose
principally from two sources.
assistance was received from several foreign donor agencies.
6. Strategic plan for
export promotion and development
The Export Development
Act vested the EDB with the responsibility of formulating and
monitoring the implementation of the National Export Development Plan
(NEDP). This is a strategic five year rolling plan which details
strategies, action plans and targets on a sectoral basis covering all
export products. The EDB co-ordinates the preparation and
implementation of the NEDP with all related public and private sector
institutions including NGOs.
Private sector inputs
for the preparation and implementation of the NEDP arise from several
sectoral Exporter Associations and Advisory Committees which are also
set up by the EDB as provided for under the Act. These sectoral
Exporter Associations and Advisory Committees also assists the EDB in
the formulation of Export Development policies and programmes for
recommendation to the EDCM for consideration and approval.
At the time the EDB was
set up as the national focal point EPO, the support provided for
export promotion and development at the highest levels was manifested
in a Exporters Forum. This Forum which met once in two months was
chaired by the Minister of Trade. It enabled all problems of exporters
to be discussed freely with the relevant public sector institutional
representatives and other connected agencies with a view to speedy
resolution of any constraints that were encountered.
7. Broad range of
services provided by EDB and their impact
The broad range of
services provided to exporters encompassed (a) market promotion and
development (b) supply development, (c) trade information and (d)
trade facilitation and simplification.
The emphasis was mostly
on market promotion programmes. Market research, supply development
and provision of timely and up-to-date trade information received much
Nevertheless the EDB
adopted a sectoral approach for product and market development, with
the focus on certain priority product sectors with potential for
development. As a result, exports of apparel, gems, jewellery and
diamonds, fisheries products and agricultural products achieved
substantial growth and expansion in the early 1980s. For instance,
textiles and garments developed as the largest export sector,
displacing tea. Today this sector constitutes more than 50% of Sri
Lanka’s total exports.
In regard to supply
development, direct investment assistance provided by the commercial
banking system in Sri Lanka to export-oriented ventures was considered
to be inadequate. Banks usually considered investment in export
ventures riskier in relation to investment in other areas of economic
Therefore, in keeping
with its role as the State EPO, the EDB adopted a facilitatory and
supportive role to stimulate investments in export-oriented production
and services by providing direct assistance to entrepreneurs in the
form of "seed capital" (a) to augment the investment capital
entrepreneurs were able to provide and (b) to encourage the banking
sector to provide the balance investment capital required on a
commercial basis as the EDB shared part of the risk. Subsequent
evaluation of direct assistance provided by the EDB on the above basis
showed substantial returns in terms of overall exports generated by
the assisted ventures. Such assistance also enabled many small time
entrants to the export field to develop into large exporters.
Similarly the EDB also
provided direct assistance on a cost-sharing basis for individual
exporters’ own market development efforts as well as for
participation in international trade fairs. Further export
performance-based incentives were also provided.
Most of the direct
assistance schemes were terminated in the early 1990s, mainly due to
shortages of financial resources. Also, policy-makers were of the view
that the role of the commercial banking system was to support
investment in export ventures purely based on their commercial
viability while State institutions should move away from such
activity. However, this approach is known to have affected many small
and medium enterprise (SME) entrepreneurs as they are (a) unable to
raise the total quantum of capital required, on their own and (b)
provide collateral demanded by commercial banks to support
8. Issues that have
affected the export development effort during the last decade
The EDB has been able
to establish only two trade promotion offices overseas, in the
Netherlands and Maldives, due to financial constraints. Each office is
staffed by a single officer. Additionally, Commercial Secretaries are
based in some Sri Lankan Missions overseas, covering important
markets. However, they are attached to a separate State agency viz.
The Department of Commerce, within the purview of the Ministry of
Trade. Their duties relate mainly to bilateral and multilateral trade
agreements and duties assigned by foreign missions. As such, they are
unable to focus their attention on market intelligence and trade
development functions, to the desired extent.
It is therefore
apparent that the overseas trade support network is far from adequate,
in relation to the needs of the modern competitive trading
environment, including entry into new markets.
Locally the EDB has
representative offices in three out of nine provinces. They too have
very limited staff. The network of other specialized trade support
agencies in the Provinces is also inadequate. This has placed
limitations on the expansion of the entrepreneurial and exporter base.
controls and related rules and regulations have also placed
constraints on the delivery of flexible, timely and meaningful export
support services. Although the Act of Parliament which set up the
national EPO provided for some independence from State administrative
controls, this has not really happened due to dependence of the
institutions on state financial resources, as a result of its failure
to develop alternative fund flows, through the provision of
The EDB has been unable
to retain core professional staff due to its inability to offer an
attractive emoluments and incentives package along private sector
lines, and also due to the lack of well planned career development
opportunities. This factor is also linked to overall rules and
regulations of the State.
There is an apparent
deterioration of professionalism and leadership that has been made
available to the Institution.
Since the establishment
of the national EPO in the early 1980s exports grew at an average of
over 10% per annum in dollar terms. However, during certain years of
the last decade the rate of growth has reduced as seen from the export
performance data in the annexure.
deceleration of growth could be primarily due to global recessionary
conditions and other international financial crises.
9. Present scenario
There is a reduction in
the availability of state financial resources, due mostly to national
priorities such as defence expenditure and social support programmes.
Additionally, donor technical assistance has dried up substantially.
On the other hand it is
strongly felt that the EDB itself has failed to formulate new
meaningful export development programmes, to convince authorities to
allocate financial resources, in relation to competing demands.
Some important direct
assistance and incentives hitherto offered to exporters have been
withdrawn due to financial constraints.
co-ordination and integration of services provided by specialized
institutions to exporters under the leadership of the EDB has led to
erosion of the image and superior role played by the EDB over the
years as the national EPO. A major factor that has led to this
situation has been the non-functioning or dormancy of vital structural
links such as the EDCM, Exporters Forum, Exporter Advisory Committees
and the NEDP. However, action is now being taken to revive these vital
structures once again.
There has been an
erosion of the quality of services provided by the EDB in relation to
their adequacy, flexibility, timeliness and effectiveness. This could
be attributed to the rather rigid administrative controls that have
been imposed as well as the adequacy and timely availability of
financial resources. Administrative drawbacks that have surfaced
within the Institution over the years could also be linked to the
available professionalism and leadership.
There is inadequate
implementation of new export development programmes that are designed
to meet the aspirations of exporters in relation to needs arising out
of the modern world trade scenario. However, some vital new services
such as IT and E Commerce services are being developed, albeit with
limited financial resources.
10. Lessons for the
approaches could add dynamism and vigour to a meaningful new export
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