Transcript 1 - Competitiveness Unit Suriname

From Potential to Prosperity Part 2 –
3 Strategies & 5 Sectors to Drive Diversification
2nd Competitiveness Forum Suriname
March 12th, 2015
Converting Potential into Prosperity
How do we drive Suriname’s metamorphosis?
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Rapid Diagnostic
Thanks to extractive industries, per capita GDP growth is strong
GDP Per Capita in Suriname (Constant $USD, 2005)
5000
4500
1975 – 1987
Per Capita GDP Growth Rate = -2.20%
2001 – 2012
Per Capita GDP Growth Rate = 4.10%
1988 – 2000
Per Capita GDP Growth Rate = -0.03%
4000
3500
3000
2500
2000
1500
1000
500
0
Post-independence adaptation
• Political transitions
• Dependence on Dutch financial
assistance
Economic Stagnation
• Democratic elections established
• Preliminary implementation of
economic diversification
• Dutch development funds frozen
• Decline of the mining,
construction and utility sectors
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Growth based on extractive
sectors
• Sound monetary and fiscal
policies
• Strong commodity prices
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Rapid Diagnostic
However, this growth has not been shared equally…
Suriname is a regional economic growth over-performer and an equality
underperformer.
Economic Growth, Size and Disparity: LAC
40 Trinidad and Tobago
42
44
Equality
& Decline
Jamaica
Equality & Growth
Guyana
Venezuela
How?
Gini Coefficient
46
Barbados
48
Dominican Republic
Avg. Gini = 49.52
Ecuador
50
52
54
Disparity & Decline
56
58
Haiti
60
-2%
-1%
0%
1%
2%
Avg. Growth % = 3.06%
Costa Rica
Suriname
Disparity & Growth
Colombia
Honduras
3%
4%
5%
6%
7%
GDP Growth % (2010 - 2014)
= $100 Billion GDP 2013
(Current $USD)
Source: World Economic Outlook Database of the IMF, May 2014; Quandl Gini
Coefficient Database 2014
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Rapid Diagnostic
…and future growth is threatened by declining market shares
Suriname is currently losing global market share in its two largest export sectors, and is heavily
weighted in the globally declining sectors of Inorganic chemicals, precious metal compounds &
isotopes
Annual growth of world imports between 2008 – 2012, %
Growth of national supply and international demand for export products of Suriname - 2012
Annual increase of Suriname share in world exports between 2008 – 2012, %
Suriname must re-balance its sector portfolio away from a natural resource-based economy
Source: Trademap Data, 2014.
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Rapid Diagnostic
Moreover, a reliance on natural resources leaves nations poor
Natural Resource Rents as % of GDP compared to purchasing power, 2012
$80,000
GDP per capita, PPP (constant 2011 international $)
Singapore
Brunei Darussalam
$70,000
Norway
United Arab Emirates
$60,000
United States
Saudi Arabia
$50,000
Netherlands
Canada
Finland
$40,000France
JapanKingdom
United
Israel
Korea,
Rep.
Bahrain
Equatorial Guinea
Trinidad and Tobago
$30,000
Bahamas,Estonia
The
Malaysia
Russian Federation
Chile
$20,000 Panama
Bulgaria
Mexico
Brazil
Costa RicaThailand
Colombia
Peru
China
Arab Rep.
TunisiaEgypt,
Suriname
Kazakhstan
Venezuela, RB
Azerbaijan
Turkmenistan
Ecuador
Mongolia
BhutanGuyana
Bolivia
Nigeria
Uzbekistan
Lao
PDR
Yemen, Rep.
Ghana
Papua
New Guinea
Chad
Islands
Burkina Faso Liberia Solomon
$10,000
Gabon
Iraq
Angola
Mauritania
$0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
Total natural resources rents (% of GDP)
Countries that are dependent on natural resources tend to have the weakest revenues per capita
Source: WDI, 2014.
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Moving from today to tomorrow
The beginning of a transformative process…
Suriname Today:
• Heavy dependence
on commodity
exports
• Limited innovation
and new product
development
• Product based
economy
• Growing inequality
The Upgrade
Process
• Customer &
demand
driven.
• Active
participation
from the
public &
private
sectors.
• Shared Vision
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Suriname Tomorrow:
• Diversified,
sustainable exportled economy
• Skilled workforce &
specialized training
• Constant learning,
innovation
• Increase in services
• Prosperity for all
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Moving from today to tomorrow
An iterative process leveraging data + “wild cards”
80% structured brainstorming leveraging TradeMap data…
… combined with 20% “crazy
ideas” to ensure nothing is
overlooked
Suriname’s Current
Export Basket
Global &
CARICOM
Import Markets
Regional Peer
Export Basket
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Upgrading Suriname’s Export Sector
Achieving growth via making difficult choices
In order to upgrade Suriname’s export sector, we must make difficult choices, assisted by a clear
and streamlined process.
Where we are now
Long List of Clusters
HS 2-digit level
100+ Clusters
Process:
• Build database of
all priority clusters
at 2-digit level,
including products
and services
Resources:
• TradeMap
Prioritize & Validate 10 Clusters
HS 2-digit level
Process:
• Collect and process data around peer
country & Suriname Exports, Imports,
Growth for each cluster
• Clean datasets and assign ranks
• Eliminate outliers (too sophisticated,
re-export, etc)
• Build prioritized list from what
Suriname can improve, and from new
opportunities
• Validate choices with stakeholders
Resources:
• TradeMap
• Stakeholder Consultations
Develop long list of ~20
products at 4 or 6 digit
HS code level
Process:
• Based on validated
cluster groups, build
database of
products at either 4
or 6-digit HS code
level
• Eliminate outliers
Resources:
• TradeMap
Identify 6 products at 4 or 6 digit HS code
level
Process:
• Decision maker consultations
• Product Sophistication
• Employment / Outreach calculations
Resources:
• Stakeholder Consultations
• TradeMap
• WDI
• FAOSTAT
• COMTRADE
• UNIDO
In this process, we move from broader buckets and categories to more specific
products, making tough
choices along the way
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A Targeted Set of Export Niches
Top 20 Products/Services from Shortlisted Clusters
Shortlisted Products
600%
Organo-sulphur compounds
Byproduct of
refining, so not
likely to create
additional private
sector activity.
Suriname's Export Growth
500%
400%
Crustaceans
Wood sawn/chipped lengthwise,
sliced/peeled
Fish, fresh, whole
Crustaceans
300%
200%
Bananas
and
plantains,
fresh or
dried
Aluminium
oxide (incl
artificial
corundum);
aluminium
hydroxide
Fish, fresh, whole
Wood sawn / chipped
lengthwise, sliced/peeled
Wood in the rough
Fish fillets and pieces,
fresh, chilled or frozen
Other Other Sea Transport
Bananas and plantains, fresh or dried
Wood in the rough
Fish, frozen, whole
100%
Fish fillets and pieces, fresh, chilled
or frozen
Organo-sulphur compounds
Other Other Sea Transport
Fish, frozen, whole
0%
0
5,000
10,000
15,000
20,000
Sophistication (PRODY)
25,000
30,000
35,000
Aluminium oxide (incl artificial
corundum); aluminium hydroxide
Suriname’s growth requires the strengthening emerging export products and moving stable
products toward
10 sophistication.
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A Targeted Set of Export Niches
Unveiling Winning Products
Wood, articles of wood and wood charcoal
35.00%
Railway or tramway sleepers (crossties) of wood
Wood in the rough
Plywood, veneered panels and similar
laminated wood
25.00%
Plywood, veneered panels and
similar laminated wood
Global Demand Growth
15.00%
Wood
wool; Wood marquetry & inlaid wood;
caskets & cases or cutlery of
wood
wood
flour
5.00%
0
-5.00%
-15.00%
2,000
Hoopwood;
split poles;
piles, pickets, stakes;
chipwood
4,000
Wood sawn/
chipped
lengthwise, sliced/
peeled
Builders' joinery
& carpentry
of wood
Wood in the rough
Wood sawn/chipped lengthwise,
sliced/peeled
Builders' joinery & carpentry of wood
Veneer sheets&sheets for
plywood &other wood sawn
lengthwise
6,000
8,000
10,000
Wooden frames for
paintings,photographs, mirrors or
Railway or
similar objects
tramway
sleepers
(cross-ties)
of wood
Hoopwood; split poles; piles, pickets,
stakes;chipwood
12,000
14,000
Veneer sheets&sheets for plywood
&other wood sawn lengthwise
Wooden frames for
paintings,photographs, mirrors or
similar objects
Wood marquetry & inlaid wood;
caskets & cases or cutlery of wood
Wood wool; wood flour
-25.00%
Sophistication (PRODY)
The attractiveness of clusters are often driven by a select few products with growing global
demand and relative
sophistication.
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The Solution
1 – 3 – 5 to Drive Diversification
1
Vision
A diversified, prosperous and competitive Suriname
3
Cross-Cutting Strategies
Deepen trade with the
Netherlands
5
Open the US Market
Create Shared Value in
the natural resource
sectors
Export Niches
Fish
Wood
Tourism
12
Gold (Shared
Value)
Vegetables
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The Solution
3 Cross-Cutting Strategies to Drive Export Growth
1
Deepen trade with the
Netherlands. Increase
export share via more
volume and higher
value products.
2
Open the US market.
Neighboring countries have
significant exports to the U.S.
while Suriname has almost
none.
3
Create Shared Value in the
local mining sector.
Investment into local supply
chains could reduce imports
and increase the value of
services to the large mining
operations.
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A Targeted Set of Export Niches
Our preliminary recommendation
Source
2 Digit
Cluster
TradeMap Analysis
Fish
Wildcards
Wood
4 Digit Products
Crustaceans
Whole fish
Fish fillets
Wood in the rough
Sawn
Carpentry / joinery
Rationale
•
•
Solid current performance ($70 million)
Huge upside potential in new and existing
markets (only 3% of Netherlands
crustaceans market at ½ the price point)
•
•
Massive renewable resource
Value add potential
•
•
Among the largest of diversified exports
Huge upside potential based on untapped
markets & regional performance
Tourism
N/A
Gold
(Shared
Value)
Unwrought or semi- • One of the largest current export sectors
• $1 billion investment by Newmont
manufactured
• Currently limited value add.
forms.
Vegetables
•
•
Fresh or chilled
Frozen
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Small current exports (<$5 million)
However, new investment coming online
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Suriname’s Current Avg. Export Value / Ton ($USD)
Suriname’s Opportunity in Wood
A potential migration strategy
2000
1800
‘4418
Builders’
joinery &
carpentry
1600
1400
1200
‘4407
Wood sawn / chip
1000
800
600
‘4403
Wood in the
rough
400
200
0
8,000
9,000
10,000
11,000
12,000
13,000
Sophistication (PRODY)
15
14,000
15,000
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Building competitive sectors
Burundi has the potential to build a transformative fish sector
Impact des Actions Prioritaires sur les revenus de l’industrie de peche
du Burundi en millions de USD (2015-2020)
$140
$13.93 $128.55
More high quality
fish
$120
$30.19
Revenus ($US millions)
Increase production
$100
$8.62
$14.95
$60
$31.01
$40
$20
$0
Sell to new markets
and reduced
wastage
$24.20
$80
Value addition
$5.47
$0.226
Av. 08-13
Expansion of Investment in Formalization Acquisition of Improvement
Pisciculture Cage Farming
of Dried
Commercial of Standards
and Fish Feed
Ndagala
Fishing Vessel
Production
Source: Les estimations sont basées sur l’analyse ESPartners, Mai 2014
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Processing
Packaging &
Cold Chain
2019
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Moving from Analysis to Action
The 5 Pre-Conditions for Change
The 5 Pre-Conditions for Change
Is there any urgency
for change?
Tension
Is there strong
leadership in
government, the private
sector & “others”?
Are leaders receptive
to ideas & advice from
outside?
Common
Objectives
Do leaders have
shared understanding
of success at the
national or sectoral
level?
Leadership
Insight
Receptivity
Does the knowledge
exist to achieve this
vision?
Is Suriname ready for change? If not, what are the levers to foster these conditions?
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Conclusion + Q&A
THANK YOU!
From Potential to Prosperity Part 2 –
3 Strategies & 5 Sectors to Drive Diversification
Rob Henning
[email protected]
Eric Kacou
[email protected]