Economic ExpertSpeak: Mauritius boosting exports by reaching out to new markets
Amédée Darga, Chairman,
Amédée Darga, Chairman,
Edited excerpts from an exclusive interview:
Enterprise Mauritius is entrusted with the responsibility of connecting Mauritius to the world markets by aggressively promoting and facilitating exports from Mauritius.
First and foremost, it is the constant growth in exports. The latest figures released by Statistics Mauritius for January to September 2014 shows a growth of 2% in domestic exports and 12.5% in total exports. This is the result of the combined effort of enterprises and Enterprise Mauritius. EM supports more than 350 companies to export.
The true value of EM’s crucial role has been highlighted in the National Resilience Fund’s commissioned GOPA M&E Consultancy Report delivered in May 2014. The report highlighted that “Enterprise Mauritius’s impact is a strengthened export base of SMEs” and that “one can gather that participants in events credit EM with contributing to about 50 percent to orders that can be related to an EM-supported event – the other 50 percent are credited to own efforts of the supported SMEs”.
As the national Trade Promotion Organisation, we constantly review our actions and adjust our strategies in the light of evolving market conditions and emerging opportunities. This is one of the strengths of EM which was duly recognized this year by the International Trade Centre which awarded us the Best TPO for Excellence in Export Development Initiative in the Small Island Development State (SIDS) category at the 10th TPO Network World Conference and Awards, held in Dubai from 3 – 5 November 2014. EM has won this award for the 3rd time.
What have been the major achievements of Enterprise Mauritius in 2014?
EM has many successes to its credit. To mention a few:
In the agro-industry cluster, we are targeting a new market segment in the nice market of private labelling. We accordingly participated in 2 events dedicated to private labelling in Amsterdam and Chicago.
Mauritian rums have gained international fame due to sustained promotional activities by EM, including the launch this year of a coffee table book of cocktail recipes using Mauritian rums.
Finally, we successfully organized the 3rd edition of MAITEX this year which is clearly establishing itself as a key event in the region. MAITEX 2014 has brought almost a billion rupees worth of orders to Mauritian enterprises.
Enterprise Mauritius led 9 Textile & Apparel operators to Texworld USA, held in New York from July 22nd to 24th, 2014. Taking into consideration that Texworld USA is a very important platform in the US for buyers to source products from domestic and international apparel manufacturers, what hasbeen the benefit of the last 6 years’ participation in regard to trade relations and cross border investment?
There are two imperatives for participating in key strategic fairs for whichever sector or on whatever market: the first is to maintain visibility on the market for the country as a sourcing destination. The adage of “loin des yeux, loin du Coeur” is very true for international trade. The second is about increasing exports to that market. Texworld is one of the platforms used by EM for the promotion of the textile sector. We have attended this event since 2009. As many as 43 companies have participated in this event which has generated exports in excess of Rs. 175 million. Overall, our domestic exports to the USA grew from Rs6.46 billion in 2012 to Rs 6.90 billion in 2013. For the first semester of 2014, our exports to the USA have grown by 24% compared to the corresponding period in 2013.
EM has planned to participate in several events in the USA next year for the textiles, food and jewellery sectors respectively. The USA remains one of our major export markets.
Spurred by the global financial recession, we note that Mauritius is diversifying from its traditional market, Europe, to new markets in Asia and Africa. What have been the major challenges of this shift and what is Enterprises Mauritius doing to help SMEs cope with it?
The diversification is already happening. Mauritius now expor
We organized for the first time trade missions to Turkey, to the Gulf region (Dubai & Bahrain), to Zambia and to the Seychelles. We have also seen an impressive tenfold growth on the Japanese market where our exports rose from Rs. 39 million for the first semester of 2013 to Rs. 362 million for the same period in 2014. Similarly, our exports to China have grown from Rs 128 million in 2012, to reach Rs 193 million in 2013 and Rs 360 million for the period January-September 2014.
Diversification involves also enhancing our capacity to obtain and provide to the business operators the specific quantitative and qualitative market information and intelligence, and the right market penetration strategy.
Another challenge is our capacity to react and adapt to the requirements of the markets we are targeting.
Accessing African markets is also a major issue. In this regard, we have introduced the Freight Subsidy Scheme to Africa which provides a refund of 25% of freight cost per container exported to selected destinations in Africa to improve our competitiveness vis-à-vis our competitors.
With regards to SMEs, EM is now in the 2nd year of the “Go-Export” Project, which aims at building the export readiness of twenty new exporters every year. The results of this project are very encouraging indeed as fifteen companies that participated in the training programme last year have already registered their first export orders.
EM also offers the “Participation in International Fairs Grants Scheme)” which aims at providing financial support to SMEs for their participation in international promotional events. This year we have assisted 199 SMEs to the tune of Rs. 24.5 million.
One of the main challenges in the way of increasing exports remains the need for expanding production capacity of the manufacturing sector and widening the range of products on offer, besides meeting ever-changing customer needs. What strategies are being devised by Enterprise Mauritius to boost export?
Indeed, a two prong strategy must be pursued. The first is to maximise the export potential of existing products. This is what EM has done with rum, for example. Three years of sustained work with rum producers has now 124,000 litresof agricultural rum for about Rs 27 million. This may seem a miniscule value, but consider the following: we are also exporting a volume of 6,640,000 litres of other rums for a value of Rs 223 million. While we are obtaining Rs 33.5 per litre for the other rum, we are getting Rs 217.00 per litre for agricultural rum. Lesser volume, but 6.5 times higher value. Similarly, we have worked on developing footwear production. From 10,000 pairs of shoes exported in 2012, we are now exporting 125,000 pairs and reaching South African and UK markets.
For the very first time in Mauritius, a complete Census of Manufacturing Products was carried out by EM this year with a view to have a complete list of Mauritian products being manufactured in Mauritius. Around 1,743 products were identified. This provides now a very good base for Mauritius to come up with appropriate measures to turn a few of them into exportable products.
The second axis is to promote investment into more manufacturing sectors for more range of products. Here two categories must be actively sought. On the one hand, knowledge intensive high value products such as the emerging medical devices cluster which the Minister has successfully attracted. We already have eight enterprises doing such products. On the other hand, we need to attract investors particularly from Asia to produce consumer and intermediate products in Mauritius with a view to capture Rules of Origin qualification through value addition for preferential entry on the COMESA and SADC markets.
A 2013 survey by international market research firm Gartner disclosed that 54% of industry respondents are not ready to face the challenges of new supply chain prerequsistes which go above traditional operational issues. According to you, what can be done to overcome this problem?
This is not a problem but a challenge. International trade conditions are ever changing. Challenges are a constant. Many Mauritian enterprises have constantly risen to such challenges. We need to understand how we can take more advantages of the opportunities of the prevailing supply chain conditions. The National Export Strategy presently under preparation has already underlined that Mauritian industry has weak integration in the global supply chain. The public-private sector consultations in the NES process will soon address this challenge and provide some clear strategic directions for action. A number of factors will need to be taken into consideration:
First the larger economies like China and India are now more oriented towards their internal markets.
Second, new geography of regional integration and preferential trade agreements such as the Transatlantic Trade and Investment Partnership, ASEAN, NAFTA, COMESA-SADC-EAC Tripartite and the recent China Australia FTA among others.
Third, the emergence of e-commerce which stresses on speed to market poses challenges and opportunities to Mauritius.
Fourth, the emergence of country specific standards and norms as well as customer specific norms with regards to labour laws, health and safety regulations, environment sustainability and Corporate Social Responsibility.
These challenges will require four lines of action: (a) government support to entreprises to help them acquire the tools and other means for improved and sustained competitiveness, (b) a strong international trade and economic diplomacy, (c) EM will need to put more resources for the provision of market intelligence to exporters and (d) the setting up of a standing cross institutional coordinated capacity for response when exporters hit against NTBs on different markets.
What, in your view, should be done by Mauritius to become a focal point for regional procurement?
The Mauritian Freeport urgently requires more conducive business operating conditions which hopefully will be forthcoming in the new national budget and forceful promotion. Multiple opportunities must be captured. African imports are growing exponentially. Though Mauritius cannot supply the majority of the machinery and transport equipment that is driving the growth of imports it can take advantage of opportunities to export food and beverages, household goods and a range of manufactured items offering its domestic products and products customised for the market that are re-exported from the Freeport.
There are huge opportunities for the Mauritius offerings in tertiary education and training, health care service, ICT and financial service providers. Professional service providers should urgently get organised to go on the regional market and abandon their individualistic approach to market.
The development of Port Louis as a bunkering hub will undoubtedly contribute both to the domestic economy as well increase the attractiveness of the country as a warehousing and procurement platform.
Finally, as trustee of Mauritius-Africa Business Club, please give your views on the Extended Africa Strategy and how it can be expected to reap dividends for Mauritius.
That Africa holds immense opportunities for Mauritius economic growth is evident to all stakeholders now. The Mauritius – Africa strategy has already put up a number of valuable tools to be leveraged on. The strategy has been enhanced in the last few years with additional ways and means. Mauritius is already reaping some good benefits in terms of its exports (now 16% going to Africa), in terms of dividends from outward investment in the region (some companies are reaping 50% of their profits from the region), and in terms of global business and financial services. However, we need to further strengthen the Africa strategy of Mauritius. Particular focus to that effect must be on:
a) Strong formal and informal diplomacy to prevent rolling back of gains specially on DTAAs.
b) Good corridor work to open doors for public sector procurement opportunities in the region.
c) Open air access to induce African airlines to service Mauritius to bring in African shopping tourists, African health service seekers and reduce costs of business travel for operators.
d) More effective use of the Mauritius – Africa Fund both to open doors for professional service providers with African governments and to capture strategic value economic assets.
Mauritian enterprises and exporters. However, a lot more needs to be done as from 2015 to put the economy into higher gear, ensure that Mauritius becomes a high income economy and many of what I have mentioned earlier are essential strategies and actions to achieve that.