Written in collaboration with the National Export Strategy (NES) Management Unit
Journeying through 2019 was an economically and politically volatile experience for Sri Lanka. From the constitutional crisis recovery in January to the Easter Sunday aftermath in April, wrapped-up by the presidential election and a regime change in November. The macroeconomic fundamentals weren’t stabilized by external safety nets either; overseas, the strengthening USD, following the policy interest rate hikes in the USA resulted in foreign investment outflows from emerging markets, including Sri Lanka. 2019 closed off with a depreciating rupee, quieter investor sentiment, along with an intensified pressure for exports to balance the foreign exchange dip. Stridently steering ahead through adverse politico-economic conditions has been Sri Lanka’s national export blueprint: the National Export Strategy (NES).
The NES was designed and launched to transform Sri Lanka into an export hub driven by innovation and investment. This thrust in exports will be facilitated by four Trade Support Functions (TSF) and six focus sectors. The TSFs namely: logistics, trade information and promotion, national quality infrastructure, and innovation & entrepreneurship. The six focus sectors: information technology & business process management (IT-BPM), wellness tourism, boat building, electrical and electronic components, processed food and beverages, and spices and concentrates. Through a series of sectoral and TSF strategies, and the associated Plan of Actions (PoAs), the NES aims to grow Sri Lankan exports to USD 24.7 Billion by 2022.
Despite the unpredictable backdrop, the NES made headway. In 2019: LKR 400 mn fiscal allocation was dedicated to implement NES projects (for new projects and projects continuing from 2018). Over 30 new projects commenced in 2019; the year concluded with a project completion status of 72%. Alternative grant funding of LKR 22 mn was also pledged by international development partners to implement selective NES projects. Examining the broad strokes of NES, its evident that by 2019, the national agenda has received resources to operationalize 40% of its PoA.
The IT-BPM sector continues to lead with 20 activities being carried out. The ongoing ‘IT Initiative’ steers the success of the IT-BPO sector, a flagship project aimed at propelling the IT-BPO industry as the leading foreign exchange earner in Sri Lanka. Also, in the frontline is the National Quality Infrastructure sector strategy, with over 50% of its PoAs receiving support. This sector is strongly supported by the United Nations Industrial Development Organization (UNIDO), via the EU-Sri Lanka Trade Related Assistance Project. The EU-SL project and UNIDO have contributed to NES implementation by building the capacity of MUSSD, the introduction of new CAB accreditations, increase the participation of SLSI in international technical committees, and establishing the National Quality Council (NQC). Figure 1 below depicts the implementation support each NES sector has received; Figure 2 illustrates the thematic areas ongoing NES projects are supporting.
Commencing 2020 with a fresh political underpinning, the NES is now being driven by the Ministry of Industrial Exports and Investment Promotion (MIEIP), in close collaboration with its implementing partner - the Export Development Board (EDB). To kickstart the year, the MIEIP has provided fiscal provisions from the first Vote on Account to continue NES implementation for the coming four months. As the succeeding National Budget verges, the Ministry and the NES Management Unit (NESMU) - housed at the MIEIP - will closely coordinate with over 40+ nationwide implementing partners to consolidate budget proposals; the collated proposals will then be submitted to the Treasury. Since January, the MIEIP organized a series of public-private dialogues to identify industry bottlenecks that need immediate rectification. The discussions were also a platform for the MIEIP to reaffirm its long-term commitment to NES implementation. While the MIEIP will continue to follow-up and escalate concerns to implementing partners, the NESMU will play an active role in mobilizing resources while coordinating the implementation of NES.
Should any party be interested in further details on NES progress for 2019, please reach out to the NES Management Unit at firstname.lastname@example.org or 0112 341097.