Big companies couldn’t catch Zara’s eye, a government department did

Indira Malwatte’s Export Development Board did what Sri Lanka’s largest firms couldn’t, and she promises to do more

When global fast-fashion retailer Zara (a $16 billion revenue company) placed orders with Sri Lankan clothing manufacturers in early 2016, few people credited the Export Development Board (EDB).

“Clothing exporters couldn’t reach Zara, so they came to us for help,” says Indira Malwatte, chairperson and chief executive of the EDB.

Established 40 years ago, the EDB’s role is to facilitate export firms in reaching global buyers. Since then, many such firms have become large, world-class names, like clothing makers Brandix and MAS, investing outside the country as well. In recent years, the EDB has misplaced the prestige it once enjoyed and looks more like an ordinary government department. But all that is changing.

A former career EDB official, Malwatte is back from retirement to lead it. She brings with her the experience of building a successful business exporting strawberries. “If I didn’t make use of my contacts, we would not have been able to export anything,” she says.

She’s determined to bring about change. The EDB will be a catalyst for change, she vows, lobbying for the government to improve border procedures so no exporter would have to depend on public officials. The EDB has also convinced India to recognise Sri Lankan quality certifications, a bugbear in Indo-Lanka trade relations.

“The EDB is here to find solutions for exporters. There is nothing called no. Like the private sector, the EDB will exhaust every avenue to get things done,” she says. Malwatte has shown that the EDB can pack a punch better than the private sector when it knocked on Zara’s door.

Excerpts from the interview are as follows:

A lot has changed since the EDB was first instituted 40 years ago. Has it kept pace with the times?
● The country’s apparel exporters, which are among Sri Lanka’s largest firms, had been trying for some time to get a foothold into fast-fashion giant Zara. But, they couldn’t. In early 2016. they came to the EDB for help. We reached out to Zara via our embassies and opened the door. Zara now purchases clothing from Sri Lankan manufacturers. What they couldn’t achieve as individual companies, the EDB was able to, because the country made a request, not an individual business.

There was a lull at the EDB for a couple of years. But now, we’re ready to fly. We are relevant now more than ever, but our role has changed over the years.

The EDB was established in 1979 to help exporters gain access to international markets. Back then, the rallying call was ‘Export or Perish’ and the government realised exports were critical to developing the economy.

Market access is not the problem. Companies must be able to supply the right quantity and quality. Our exports are stagnant because we fail to do this

Some of the large exporters today like Brandix, MAS (clothing manufacturers) and Dilmah (tea) are where they are today because of the EDB. It was difficult for them to reach out to potential buyers and access markets on their own. The EDB did that for them. Today, they are large exporters competing globally on their own. They always credit the EDB for its role in their formative years.

We would expose them to international trade fairs, which was a big deal back then. We trained them on etiquette and presentation skills. The board hired foreign experts on product development, marketing and finance to assist these exporters. That was the kind of attention to detail the EDB gave. Exporters no longer need us to play that role, but small and medium businesses do. They need product-specific assistance, which we can provide.

Large exporters’ needs are different. They want efficient border controls and streamlined procedures to clear goods for import and export. As individual companies, there are many things they can’t get done on their own. They don’t raise their concerns fearing harassment or reprisals. The EDB will become their voice.

At the last budget, the government made demands from exporters to repatriate foreign earnings within 90 days. The EDB lobbied on behalf of exporters to relax the rule. Customs documentation processing is online, but electronic signatures are not recognised. This is an unnecessary encumbrance, so we’re trying to push that through as well.

Exports are declining as a percentage of GDP. Why is this and what’s EDB’s role in turning this around?
● The EDB is working with the National Trade Facilitation Committee to clear goods at the border at the fastest possible time: both exports and imports. To develop trade, we need to encourage exports and imports. Some industrialists  in Sri Lanka don’t believe in this. They have a misguided notion that Sri Lanka can produce everything and anything. But, that’s not the way the world is going. Value chains are global. Even SMEs get a share of global brands. This is why trade facilitation is so critical. We need to connect quickly and efficiently with global markets.

Market access is not the problem. Companies must be able to supply the right quantity and quality. Our exports are stagnant because we fail to do this. The EDB is engaging exporters by
asking them to apply for internationally accredited quality certifications for their products. It’s expensive, but it will get you access to global buyers and enable long-term savings. The EDB is rolling out a scheme where we will reimburse 50% of the certification cost.

There are many non-tariff barriers in India, but we are dealing with them. The Food Certification Institute of India has agreed to recognise six laboratories here, provided they meet the required technical and quality standards. Food export inspections carried out in Sri Lanka will save time and money. Confection exports like biscuits are popular in India, and clearing this hurdle will make a big difference.

The long-term goal is to enter into mutual recognition agreements. For now, we’ll start with six laboratories.  A GAP analysis is ongoing, which will tell us the capacity, competencies and equipment requirements. The EDB is preparing a budget to finance these.

The EDB is also working on a National Export Strategy. We’ll be looking at areas that will help our exporters improve their competitiveness. High energy costs is one such area, and trade facilitation is another.

We’re also in discussion with the government to release unutilised plantation lands for export crops. The Plantations Ministry will initially release 30,000ha.

The EDB will focus on six sectors over the next five years with our support functions: boat and ship building, electronics, food and beverages, ICT, spices, and essential oils and wellness. We will continue to serve exporters who come to us.

The goal is to double export earnings to $20 billion by 2020. We can achieve this if everyone works together.

The EDB will focus on six sectors over the next five years with our support functions: boat and ship building, electronics, food and beverages, ICT, spices, and essential oils and wellness

You built a successful business exporting strawberries to India, a perishable fruit to a difficult market. How has that challenge shaped your role at the EDB?
● I served the EDB for nearly 30 years, and was heading the Product Development Division when I retired. This was an important unit at the EDB, which brought me into contact with corporate leaders and influential public officers.

I joined a fresh food export company soon after. I felt a bit intimidated by the corporate sector, but I took up the challenge. There were targets to achieve and I had to quickly learn to get things done by myself. The company was exporting around half a tonne of strawberries a year when I joined, and I grew the business to 30 tonnes exported to the UK, Netherlands, South Africa, Saudi Arabia, Bahrain and India. Our strawberries were a favourite in India, but exporting there was a challenge – and there were enough challenges here at home!

Because of my long service with the EDB, I knew the right people, so I was able overcome unnecessary delays when it came to quarantine inspections and Customs clearance. We could have lost entire shipments for every time I was told the fax machine at the quarantine officer’s desk was broken or was out of paper or ink. Because I knew the boss, they would deliver the document to Customs, which was close by. They wouldn’t do this for anyone else. If I didn’t make use of my contacts, we would not have been able to export anything.

Now, I’m back at the EDB and I don’t want exporters to go through any of that. My goal is to streamline processes so every exporter can operate hassle-free without depending on government officials. The public sector must learn to give them freedom to operate within the law.

The EDB is here to find solutions for exporters. I tell my staff ‘there is nothing called no. You have to get around problems. Like the private sector, you follow the rules, but exhaust every avenue to get things done’. I was an exporter, so I know what it is. I feel for it. I know when certain policies will work or not. The EDB will lobby the government on behalf of exporters at every turn.