World Bank offers advice to make Sri Lanka's international trade more efficient
Tue, Oct 31, 2017, 01:54 am SL Time, ColomboPage News Desk, Sri Lanka.
Oct 30, Colombo: The World Bank says the Sri Lankan government's aim to open up borders for trade in its vision to position the country as a global logistics hub of trade alone is not enough.
While the opening markets for the local Small and Medium Entrepreneurs (SMEs) will facilitate adoption of new technologies and encourage firms to innovate and improve the competitiveness of local firms to compete in the global markets, it's critical that trade is carried out in an efficient and inclusive manner, the global lender says.
These views were expressed by the World Bank Country Director Dr. Idah Z. Pswarayi-Riddihough delivering the key note speech on a conference on applying new technologies to make Sri Lanka's International Trade more efficient and Inclusive – “Making Sri Lanka's International Trade more efficient” on Monday.
The World Bank official outlining a few key ingredients to make the trade more efficient Dr. Pswarayi-Riddihough says the country needs to create an investment friendly environment that will benefit trading communities irrespective of the size of their business as well as reducing the trade transaction costs faced by the trading community.
The Country Director also points out that the number of institutions interfacing with traders must be reduced and use technology to promote transparency and efficiency in the business environment.
She also suggests creating a National Single Trade Window to allow all parties involved in trade and transport to lodge standardized documentation and information at a single point of entry – for import, export and transit-related regulatory requirements.
Dr. Pswarayi-Riddihough says technology is as good as the people who use and manage it and only can go so far if the cultural ways of doing business are not changed for success.
Full text of the speech:
Key note speech on: Making Sri Lanka's International Trade more efficient
by the World Bank Country Director for Sri Lanka and the Maldives
Idah Z. Pswarayi-Riddihough
A conference on applying new technologies to make Sri Lanka's International Trade more efficient and Inclusive.
Hon Mangala Samaraweera, Minister of Finance, Hon. Malik Samarawickrama, Minister for Development Strategies & International Trade, Bryce Hutchesson, Australian High Commissioner, Mr Rajendra Theagarajah, Chairman of the Ceylon Chamber of Commerce, distinguished guests and colleagues.
I am privileged to address you in this important forum. Let me start by acknowledging the many government counterparts we work with; as well as our partners in the Australian Department of Foreign Affairs and Trade, with whom we share a long-standing relationship as development partners.
The economic policy statement recently delivered by the Honorable Prime Minister underscores the critical role of international trade in expanding the economy and giving all Sri Lankans the chance to live a better life. This is further elaborated in the government's economic policy framework titled “Sri Lanka Vision 2025: A Country Enriched” which focuses on achieving an export target of USD 20 billion per year and aims to position Sri Lanka as a global logistics hub.
Known as a trading nation from the ancient times, this renewed interest from Government of Sri Lanka to reposition it as a trading hub is indeed welcome. It is also quite well understood that with increased ease of trading across borders the country will attract more foreign direct investment. Opening markets for the local Small and Medium Entrepreneurs will facilitate adoption of new technologies and encourage firms to innovate. Overall, it will improve the competitiveness of local firms to compete in the global markets.
But, it's not enough to simply open up borders; it's critical that trade is carried out in an efficient and inclusive manner. Let me outline a few key ingredients to achieving this:
First: Create an investment friendly environment that will benefit trading communities irrespective of the size of their business. This will in turn open new formal employment opportunities with higher income.
An example of such enablers includes a simplified regulatory framework governing the trade regime with few anti-export biases. In the case of Sri Lanka, streamlined processes for the Board and non-Board of Investment companies; updated customs' ordinances; and clear, transparent border management would significantly boost investor confidence.
Second: Reduce the trade transaction costs faced by the trading community. Per the Logistics Performance Index, in 2014 the average cost to export from Sri Lanka is US$579 whereas in Vietnam this is about US$237 and in Thailand this is about US$250. Similarly, the average time to export in Sri Lanka is 2 days whereas in Thailand and Vietnam it takes only 1 day.
Third: Reduce the number of institutions interfacing with traders. A recent assessment by our team found at least 22 agencies involved in issuing regulations and approvals related to trade. Another study by the Department of Commerce found 34 agencies involved in publishing regulations that affect trade.
Fourth: Use technology to promote transparency and efficiency in the business environment. Streamlining approval processes; and enhancing communication between government agencies and with the private sector increases efficiency. The proposed Trade Information Portal, will be critical; and I would like to acknowledge the government and DFAT for all their efforts and support in making this a reality.
Fifth: Create a National Single Trade Window to allow all parties involved in trade and transport to lodge standardized documentation and information at a single point of entry – for import, export and transit-related regulatory requirements. The work being carried out to develop the requisite Blueprint is a critical step as it maps processes involved in trade, and develops options to streamline the flow of information between agencies and the private sector.
Finally: Institutional culture matters. Technology is as good as the people who use and manage it. All these points I have mentioned will require institutional behavioral changes, many that will challenge the status quo for doing business, even the skills required to operate in this new environment. Hanging on to the way things were done before, even with new technology will only go so far. This is where many good ideas die unless culture changes
There is no substitute to formalizing new agreements to increase the sharing of data amongst government agencies and the private sector; honoring signed agreements to standardize and streamline data requirements; and re-training of staff. This is the hard part; and it will require strong commitment from the government and development partners. The establishment of a National Trade Facilitation Committee, demonstrates high-level commitment to a new trade facilitation regime and it is noteworthy. But we must push ourselves to do better – and I continue to expect a lot, even from the World Bank and from Australia.
Let me end by highlighting why the innovative blockchain technology, the key reason we are gathered here today is important. The technology allows the traceability in supply chains, a key ingredient to today's consumer confidence. Consumers don't only demand a variety of products; but they also want to know where the products are coming from. With re-entry into GSP+ this information will be a game changer.
I very much look forward to today's discussion; and I encourage you all to share your thoughts so that this journey to a more efficient and inclusive growth is not yet another dream; but a reality we are all involved in creating.
As I conclude, I would like to yet again thank the government, the private sector and Australian Department of Foreign Affairs and Trade for all their efforts; and of course, my team for their contribution.