The Mahinda Chintana Development Framework has two key objectives – to maintain GDP (Gross Domestic Product) growth of over 8% and increase per capita income to reach $4,000 from 2005 to 2015. What do you consider to be the most pertinent performance indicators to know that Mahinda Chinthana is on the right track?
In 2010, GDP was already over 8%. Therefore, we are on the right track. Although the economies in Europe and the US are having problems right now, South Asian countries are doing very good. In this sense, we are quite sure that we will have high growth rates for 2011 as well.
When it comes to per capita income, in less than 5 years we have doubled the per capita income from $1,000 to $2,250. Now, we are trying to reach $4,000 per capita by 2015. I think it is a long period but with the way the economy is moving, we should be able to reach this target before 2015 or 2016.
The Mahinda Chintana, accords high priority to the development of the export sector with the objective of enhancing foreign exchange earnings, creation of employment opportunities and alleviation of poverty. How would you assess the role that the export sector can play in Sri Lanka´s present economic renaissance and social development?
Exports will play a vital role in achieving these objectives. I say this because the country cannot progress without exports, and they should play a vital role in any economy. Growth rates for exports in 2010 were almost over 17% and I am only referring to merchandising exports, not services. A good measure of how important exports can be, are for countries like Malaysia, Singapore and Hong Kong, where 100% of GDP is from exports.
The Mahinda Chintana states that our exports should reach US$15 billion income by 2015 and $20 billion by 2020. If you look at exports for 2009 and 2010, they were almost $8.3 billion. And if you look at the growth rate for the past 6 months, exports have grown 40%. As you know, our export partners are basically the USA and Europe. Between the two, they account for 50% of exports destinations.
By the end of the year and although our target is $9 billion in 2011, we will probably reach the $10 billion mark. We are quite sure that our exports will continue to grow steadily.
As the national export promotion organization, the EDB has the responsibility to play a leading role in achieving the national objectives, as set out in the Mahinda Chintana. According to the Strategic Plan 2011-2015 of the EDB, exports contribute nearly 25% to the country´s GDP. In a nutshell, what are the key objectives of the EDB and what strategies is it putting into place in order to accomplish them by the year 2015?
In order to reach our target of $15 billion by 2015 and we have developed a strategic plan in line with Mahinda Chinthana. Although we have over 4000 export products, we have recognized 7 key products among our exports, with apparel being number one, followed by tea and rubber-based product, gems, diamonds and jewelry, ICT, KPP and BPO (Business Process Outsourcing), spices and food and beverages. We earn $3.2 billion for textiles and garments and for tea we earned $1.3 billion last year with an over 30% growth rate until now.
The other 5 sectors range between $400 to $600 million and we want to raise this bar to $1 billion. We want ICT, KPP and BPO to be $1 billion industries in a few years. We do not consider our neighbors to be competitors. The Indian market is so big, that we will never be a threat to anybody, we are only trying to complement each other.
We are trying our best to improve exports and production. We want to come out with premium products and reach a niche market by creating value and coming out with top quality products. We produce the best garments with ethical manufacturing: garments without guilt. We are the kingdom of undergarments. We have the best tea in the world (Ceylon) and blue sapphires. And we produce 84% of the world’s cinnamon in Sri Lanka.
Perhaps one of the biggest obstacles to overcome when trying to build a global brand for Sri Lanka made products, is to ensure quality and safety standards. What procedures have been and are being put into place to ensure quality assurance and implement international standards in sectors such as food products?
We established the first green factory. In addition to this, we have very high-quality products, including garments, tea, ICT and food and beverages. The exporters are certified to international standards and EDB also supports the big timers as well as SMEs (small and medium-sized enterprises) to obtain international certification. We bring experts and support them financially in order to obtain the required certifications.
Despite adverse global market conditions export income recorded a 17.3% growth last year. Sri Lanka, for the first time, has seen its monthly export earnings surpassing the US$ 1 billion mark in March this year. Considering that the five year strategic plan of the EDB aims to achieve an export value to US$ 15 billion by 2015. In what ways does this respond to an increased awareness with regards to Sri Lankan made products?
I do believe so. Our products definitely offer international standards. Nevertheless, reaching $15 billion is a challenge. In order to almost double exports from $8 billion to $15 billion in almost 5 years, we have to enhance the quality of the products and add value. Value addition is almost 95% in ICT for instance. We need to create global awareness. We want people to think of premium products and quality when they think about Sri Lanka.
The Minister of Industry and Commerce, Rishad Bathiudeen, has said that “As we embrace the economic upswing in the global market it is more important than ever to showcase a strong growth state in the industry. In this sense, the EDB is planning to organize “Sri Lanka Expo 2012” an international trade fair in March next year. The objective is to attract new buyers to the country and showcase Lankan products to the international market. You are expecting the event will attract more than 500 buyers covering all market regions.
This event was last held in 1997. Indeed, we had a terrorist war for 30 years but it is now finished. In 2009 we faced the global crisis and although there was as decline in our GDP growth and exports, it picked up in 2010. GDP was around 6% in 2009 and it went up to 8%. We are quite resilient so history has created a conducive environment in Sri Lanka
When the crisis hit, I was the Chairman of Merchant Bank and the economy kept increasing. Big banks in the US and Europe keep closing but in Sri Lanka, even during the crisis, no single bank or financial company in Sri Lanka failed and not a single cent was induced by the Government. Our companies were managed. I managed 10 to 15 finance companies when I was in the banking business. The reason for our resilience is that we are and our economy is small.
With regards to Expo 2012, we are trying to create an international exhibition to showcase our products and services. We plan to hold it from 28th to 30th March next year and over 300 exhibitors will come and display their products. We are also going to have a symposium with key speakers from all around the world. We are trying to target 1,000 serious buyers from our existing and potential markets. In this sense, we are working with the other agencies like the Tea Board, the BOI and the Ministry of Foreign Affairs and foreign missions around the world. Also, we are working with the trade chambers in Sri Lanka and the councils. So there is a big team to ensure that we get the right audience for the event. We are inviting foreign stakeholders and we are looking at their profiles depending on their location and revenue.
To promote the event, we will be having 4 to 5 road shows starting next month. I will be meeting some partners in the UK and America and other regions next month. We are taking part in 40 international exhibitions. We will be launching our Cinamon logo in Cologne in Germany next month. The main exhibitors will be from the 7 sectors I mentioned before, as well as SMEs. Over 4,000 products are going out of the country and we have recognized companies of all sizes. It will be a platform for everything and we will be branding Sri Lankan exports.
How can the agency help exporters to strengthen their presences in different markets?
Our main goal is to retain our market share in Europe and America. In our strategic plan we are proposing a market shift. If you look at the World Bank Report of a week ago, they said that although Europe and America are facing a crisis, Asia will not be vulnerable to the crisis. Therefore, Asian countries will grow provided that they find their own markets in the region. And this is what is happening. Exports have shifted to India, China and Southeast Asia. So Sri Lanka is looking for partners from these regions.
You hold a B.Sc (Hons.) Degree from the University of Sri Jayawardanapura and a Master of Business Studies from the University of Colombo; a Post Graduate Diploma in International Business Relations from the University of Moscow, USSR and you are a business man yourself, you were awarded the “Entrepreneur of the Year 2000” by the Federation of Chambers of Commerce & Industry of Sri Lanka (FCCISL). You also have experience in the banking sector, having served as the Chairman of Merchant Bank of Sri Lanka PLC, Merchant Credit of Sri Lanka, MBSL Savings Bank and MBSL Insurance Company Ltd. What is the biggest asset that you are bringing into your actual position?
When it comes to my experience in the banking sector, I was in the right place at the right time. I was the Chairman of Merchant Bank and the Governor of the Central Bank supported me during the crisis. I managed an almost US$ 1 billion entity during the crisis, and not a single company failed. Companies are doing fine at the moment. Somebody needs to be here with this growth now. Expo was neglected for 15 years and the strategic plan was neglected for 3 to 4 years. The national export awards were also neglected for a couple of years, so things have been restored in the year I have been here. I like to make decisions and get things done.
Mr. Ratnayake, you assumed the post of Chairman & Chief Executive of Sri Lanka Export Development Board (EDB) with effect from Friday, 21st May 2010 and it is obvious that you came with a very clear vision, since in 2011 you launched the 5 year strategic plan. Considering the exciting times that Sri Lanka is living and the key role in store for the export sector, how would you like to be remembered and what would you like your legacy to be here at EDB?
I would like to achieve the $15 billion target in 2 to 3 years. It is possible. Our history has created this situation today, and we have to do it now. The country is very safe and the next couple of years will be very important. If we do not reach the desired targets in the next 10 years, we are never going to do it. We must get together and have a positive culture and sentiment. You need to be positive in every aspect. People should work tirelessly. In 10 years you will see a different Sri Lanka.
I do not think you have to wait until 2015 to reach 15 billion. It will be completely different 5 years from now. A lot of foreign investments are coming in and the best thing about it all, is that it is a Sri Lankan development model. We need to have our own model mixed with an international flavor. It has happened twice in the history of Sri Lanka. These are the positive things. Every Sri Lankan should be positive. You need to make it happen. If someone cannot do it physically, then contribute verbally.