Bureaucracy seen among key reasons for poor export performance

From left: Verite Research Economic Research Head Subhashini Abeysinghe, Verite Research Executive Director Dr. Nishan De Mel, LFVPPEA Chairman  Zuraish Hashim and LFVPPEA Second Vice Chairman Suresh Ellawalla
Pic by Nisal Baduge

By Chandeepa Wettasinghe
Sri Lanka’s complacent bureaucracy has caused exporters to give up or move their businesses to other countries, which has mainly accounted for the country’s abysmal export performance, the Colombo-based think tank Verité Research said, yesterday.
Verité Research Executive Director Dr. Nishan De Mel said the slow and outdated public sector is one of the primary causes of Sri Lanka failing to succeed, since it has made processes inefficient and placed costs on obtaining often unreliable information for the modern, fast-paced private sector.
“So, often what happens is, exporters give up. They either try or they move out of the country or they do some other business. This is why Sri Lanka’s exports have fallen from 33 percent of GDP in 2000 to 12.7 percent of GDP in 2015,” he said.
He was speaking at a media conference on ‘Agri exports: What’s holding Sri Lanka back?’ jointly organised by Verite Research and the Lanka Fruit and Vegetables Producers, Processors and Exporters Association (LFVPPEA).

“Nobody’s talking about how we can bring about an efficient public sector, (after) causing so many problems,” he complained.
LFVPPEA Chairman Zuraish Hashim also concurred with Dr. De Mel’s views and said that many potential exporters are also not motivated to start exporting due to the challenges they observe.
The current government, while in opposition, criticised the previous government for bloating an inefficient public sector, but after coming into power, has continued its predecessor’s policies and even gave a major public sector wage increase, which caused a significant fiscal imbalance.
Dr. De Mel said that the problems are not always caused by the politicians unlike what the public usually believes is the case to be, but that politicians need to enact reforms to create an efficient bureaucracy.
“Normally, from what you read on the newspaper, you would think that everything has to do with the politicians, but the public sector has a lot to answer for. How do we get a competent, professional public sector? We need to recruit excellent people and give promotions based on performance,” he said.
He noted that in other cases, such as agriculture, the politicians replaced a 1924 law with the 1999 Plant Protection Act, which calls for bureaucrats to develop regulations, but that the state still follows the Plant Protection Regulations of 1981, which are based on the 1924 legislation.
Further, he said that parliament passed the Seed Act in 2003, which called for the setting up of a Seed Council, which has not been created to this day by the bureaucracy and that both these structures are important to regulate the importation of raw materials required for agriculture exports, which are currently hard to source.
Meanwhile, Verité Research Economic Research Head Subhashini Abeysinghe said that exporting perishable items from Sri Lanka is difficult due to the lack of climate control facilities at the airport’s four checkpoints where boxes are opened randomly, causing products to expire, despite them also going through a scanner.
She noted that this is due to the government not repealing the regulations that were in effect during wartime and that even shipments packed in the exporter’s climate-controlled warehouses in the presence of the officials who stamp the packages are reopened at the airport.
“They work in silos, without any input from the stakeholders,” she said and added that some public officials, when presented with research that debunks their processes, admit that they were not aware of any problems and genuinely attempt to create solutions.
However, she said that in some cases, criticism by the private sector results in some officials targeting and sending such companies in bureaucratic circles in retaliation.
“Some things can be taken off but are you ready to do it? Are you ready to play ball to help us boost exports,” Hashim questioned, presenting a challenge to the country’s bureaucracy.