The Southern Province of Sri Lanka consists of three administrative districts namely, the Galle District, the Matara District and the Hambantota District. Economically the Southern Province is relatively under developed. The gross regional domestic product (GRDP) of the Southern area is around 10% of the Gross Domestic Product (GDP) of Sri Lanka. The per capita GRDP of the Southern area is around 70% of the national average. Infrastructure facilities of the Province are also relatively poor. Unemployment particularly among the youth is also relatively high compared to the national average which was 8.9% in 1999. Poverty is also a predominant factor specially in the Hambantota District in the deep South. Most people are engaged in primary agriculture based activities for their livelihood. There are approximately 26000 production enterprises with a workforce of 1-200. They are largely of the micro cottage type or SMEs, with a large concentration in handlooms and coir products. There is much scope for the development of the production base of the Province utilising existing raw material resources and human skills to achieve rapid economic development in the short to medium term.

The Southern Province has been the seat of youth unrest and rebellious movements in the past. The Government has therefore focused its attention on this Province to foster rapid economic development by initiating several large scale infrastructure development projects. In addition agro processing and industrial enterprises are facilitated and fostered through the creation of new capacities as well as through the development of existing capacities.

To achieve the above economic development objectives, the Government set up a special state institution called the Southern Development Authority (SDA). It fosters the development of entrepreneurship and enterprise through its own programmes as well as through programmes undertaken in collaboration with other state and private sector institutions.

In keeping with the objectives of the Government, the SLEDB which is the premier state institution for the promotion and development of exports has initiated several programmes and activities in the Southern Province to utilise available raw material resources and human skills, for meaningful participation in the overall export development effort. Among the major programmes and activities implemented by the SLEDB so far are the following :

Entrepreneurship Development programme as well as training programmes for skills development and management development focused primarily on Small & Medium Enterprises (SMEs).

The setting up of Export Production Village (EPV) projects for identified products, which have a potential for export utilising local raw materials and production skills.

Specific product development and quality improvement programmes for product sectors with a potential for exploitation of export markets, (e.g. silver, gold and platinum jewellery items of unique design, set with semi-precious and precious stones) complemented with development of production skills for the sectors.

Enterprise development programme which focuses on an identified and prioritized group of Enterprises (SMEs) to make them export ready. The identification and selection of enterprises has initially limited itself to the undernoted product sectors for which local raw materials, production skills as well as export markets exist.

Jewellery

Leather products

Handlooms & Household utility products

Agro products, value added coir products and floricultural products

Giftware (Wooden, Ceramic, Terra Cotta and Textile based products)

The programme basically consists of the formulation of Business Development Plans for each of the selected enterprises designed to achieve pre determined targets within a short to medium term time frame of around three years. It also involves the provision of an integrated package of assistance for each enterprise encompassing the areas of production, marketing, management, financing etc. Inputs are provided by harnessing the inhouse expertise and resources of the SLEDB as well as by collaborating with other relevant state and private sector institutions where necessary.

The Southern Province E Commerce initiative is an integral as well as a vital component of the Enterprise Development Programme in the Southern Province.

3.1 Objectives of the Project

The long-term objective of the Project is to :

export enable Southern Entrepreneurs

establish an Electronic Trading Community (ETC)

The short-term objective of the Project is to export enable at least 100 entrepreneurs in the Southern Province, to be accomplished within a period of two years. However, implementation of the Project has commenced with the initial selection of 50 entrepreneurs.

Collaborating institutions in the project are :

The Sri Lanka Export Development Board (SLEDB), including "TradenetSL" which at present is the Technical Section of the SLEDB for the provision of E Commerce Services.

The Southern Development Authority (SDA) which is a special state agency fostering development of entrepreneurship and enterprise in the Southern Province.

The Southern Province Development Authority (SPDA) another state entity which undertakes development activities in the Southern Province functioning under the Southern Provincial Council.

South Asia Trade Gate (Pvt) Limited is a private sector Company providing marketing as well as logistical support services such as freight forwarding to private enterprises.

Responsibilities of the Collaborating Institutions in the implementation of the E Commerce Project

The already established nucleus E Commerce Centre of TradenetSL which is the E Commerce arm of the SLEDB located in Colombo, is utilised by the Project. Additionally three Regional E Commerce Centres have been established in Galle, Matara and Hambantota in the Southern Province. Action is being taken to establish a forth E Commerce Centre in Moneragala which also comes under the purview of the SDA.

The SLEDB with the assistance of the SDA and SPDA is responsible for selection of 100 SMEs in fulfillment of the short-term objectives of the Project stated above. Selection of 50 SMES has been already completed.

Implementation of activities assigned to the SLEDB is carried through "TradenetSL" which is the E Commerce arm of the SLEDB. The SLEDB together with "TradenetSL" provides the following services.

Free access to the already installed hardware of the E Commerce Centre located in the SLEDB, which is the nucleus of the Project, and through it access to Internet.

Internet linkages to the Regional E Commerce Centres through the nucleus E Commerce Centre in Colombo.

Other facilities such as Trade Information Services provided to exporters.

Linking other relevant institutions which are in a position to provide a specialised service to the project with a view to establish an Electronic Trading Community.

3.3.2. ` SATG which is linked to the central nucleus E Commerce facility has the resources and skills to provide total supply chain management to entrepreneurs in the Southern Province, through buyer location, order procurement, and follow up services to promote their products in overseas markets, through an established network of buyer contacts and linkages. Follow-up services of SATG for the export of goods include freight forwarding services. SATG is responsible for the facilitation of business to business initiatives through the provision of value added services which include the following.

Identification of target product sectors for promotion overseas, in relation to already available marketing skills and capabilities, in consultation with the SLEDB.

Carry out primary market research with the assistance of overseas associates.

Location of buyers, provision of follow-up services and progress chasing with the assistance of overseas associates.

Carry out quality checks on products of Sri Lankan suppliers to ensure conformity to buyer requirements.

Co-ordinate procurement of required manufacturing equipment, financial support and technical services for the enterprises linked to the programme, from State and Private sector organizations.

Carry out any other necessary duties in regard to order procurement and follow up services.

The SLEDB assists SATG wherever possible to carry out the above functions.

3.3.3. Responsibilities of SDA and SPDA

The SDA and the SPDA financed (a) the cost of hardware required for the establishment of the four districts E Commerce Centres, and (b) cost of training of E Commerce Managers placed in charge of the E Commerce Centres. The following operational costs are also financed on an ongoing basis.

Advertising of products and services of the selected SMEs for Internet marketing.

Sample display of the selected SMEs for Internet marketing.

Web Page creation of the selected SMEs for Internet marketing.

The SLEDB shares the cost related to some of the above items.

The day to day operations of the E Commerce Centres have been entrusted to young University graduates, selected for the purpose. Two graduates have been assigned to each Centre to function as E Commerce Managers, after appropriate training. TradenetSL has undertaken provision of training of the E Commerce Centre Managers covering the full range of technical and marketing aspects encompassing the project with the objective of achieving a common work norm.

Special training of the E Commerce Centre Managers in the techniques of Web Page creation for the selected SMEs.

Technical support services for the maintenance and efficient operation of the E Commerce Centres. This includes upgrading of hardware and software in the Centres to meet the specific needs of SME entrepreneurs.

Information searches and Internet marketing activities for the selected SMEs based on specific requests of E Commerce Centre Managers.

Advisory services to the selected SMEs both directly as well as through the E Commerce Centre Managers on request.

Although TradenetSL is a self financing entity, the cost of the above services to the selected SMEs is initially provided on a subsidised basis through the mechanism of sharing of costs by the participating institutions in the project, excluding SATG (Pvt) Ltd. Since it is a private sector organization.

The parties collaborating in the project have entrusted management of the operations of the Project to TradenetSL. Accordingly the E Commerce Centre Managers are to be absorbed shortly to be part of the existing staff of TradenetSL.

However, TradenetSL is reimbursed operational costs related to the Project for the present, by the other state sector organizations participating in the project.

When the selected SMEs begin to enjoy visible benefits as a result of services provided by the project, it is proposed to levy suitable charges for the services provided by TradenetSL to the SMEs depending on the future pricing policy of its services. Although the project will be directly administered by the TradenetSL, its future direction and policy guidelines will be provided by a Management Committee comprising representatives of participating institutions in the project.

The project is just about one year old, since the E Commerce initiative was first conceived by the participating institutions.

Initial teething problems have virtually been overcome with the training and imparting of skills required by the E Commerce Centre Managers to enable them to provide an effective service to meet the expectations of the participating SMEs. However, this aspect is being continuously upgraded by TradenetSL as an on-going activity.

The E Commerce Centre Managers provide advisory services and information searches on request to the selected SME entrepreneurs who call over at the respective centres.

Internet market searches as well as specific information searches by linking with international data bases through the nucleus E Commerce facility of TradenetSL are also conducted by the E Commerce Centre Managers on a regular basis. When necessary additional assistance and advice is obtained from the Cyber Trader specialist staff in Colombo.

Internet Advertising Services are provided to the selected SMEs through TradenetSL. Also buyer enquiries received by TradenetSL are channeled to the appropriate SME entrepreneurs.

Collection of information from the 50 selected SMEs for the creation of appropriate Web Pages for marketing of their products and services have almost been completed. This task has been carried out by the E Commerce Centre Managers under criteria and guidelines provided by TradenetSL. Creation of web Pages for 35 of the selected SMEs have already been completed.

The enthusiasm and interest demonstrated by the SMEs participating in the Project acknowledging the opportunities made available to them to use E Commerce services is very encouraging. Results are now beginning to materialise. Positive buyer enquiries have been received by some SMEs participating in the project from buyers in the USA for crafted jewellery products and hand made paper products as a result of services provided through the project. These are being actively followed up.

A noteworthy overall benefit of the project is that SME entreprenuers in the Provinces who are not in a position to invest in equipment related to E Commerce on their own, as well as those who find it difficult and cumbersome to travel to Colombo to use the specialised E Commerce services provided by the Cyber Trader of TradenetSL through its nucleus facility, now have the opportunity to avail of virtually all such services through their respective E Commerce Centres in the provinces.

With the completion of the company profiles related to the products and services offered by the selected SMEs and the creation of Web Pages, SATG (Pvt) Limited, the specialist marketing services provider of the project will be required to engage itself in buyer location and related services, through its overseas network of contacts.

Thereafter depending on buyer requirements, necessary changes in regard to product development, quality improvement etc. will be effected by providing necessary inputs to the relevant SMEs under the integrated package of assistance for enterprise development.