From Potential to Prosperity Part 2 – 3 Strategies & 5 Sectors to Drive Diversification 2 nd Competitiveness Forum Suriname March 12 th, 2015

From Potential to Prosperity Part 2 – 3 Strategies & 5 Sectors to Drive Diversification

2nd Competitiveness Forum SurinameMarch 12th, 2015

© 2015 - ESPartners 2

Converting Potential into ProsperityHow do we drive Suriname’s metamorphosis?

2


Rapid DiagnosticThanks to extractive industries, per capita GDP growth is strong

19751976

19771978

19791980

19811982

19831984

19851986

19871988

19891990

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

GDP Per Capita in Suriname (Constant $USD, 2005)

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

Growth based on extractive sectors

• Sound monetary and fiscal policies

• Strong commodity prices

1975 – 1987Per Capita GDP Growth Rate = -2.20%

1988 – 2000Per Capita GDP Growth Rate = -0.03%

2001 – 2012Per Capita GDP Growth Rate = 4.10%

3


Rapid DiagnosticHowever, this growth has not been shared equally…

-20% 0% 20% 40% 60% 80% 100% 120%

40

42

44

46

48

50

52

54

56

58

60

Suriname

Colombia

VenezuelaGuyana

Ecuador

Trinidad and Tobago

Barbados

Honduras

Jamaica

Costa Rica

Dominican Republic

Haiti

Economic Growth, Size and Disparity: LAC

GDP Growth % (2010 - 2014)

Gini

Coe

fficie

nt

= $100 Billion GDP 2013 (Current $USD)

Source: World Economic Outlook Database of the IMF, May 2014; Quandl Gini Coefficient Database 2014

Equality & Growth

Disparity & Decline

Avg. Gini = 49.52

Avg.

Gro

wth

% =

3.0

6%

Disparity & Growth

Equality & Decline

Suriname is a regional economic growth over-performer and an equality underperformer.

How?

4

© 2015 - ESPartners

Rapid Diagnostic…and future growth is threatened by declining market sharesSuriname 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

Growth of national supply and international demand for export products of Suriname - 2012

Ann

ual g

row

th o

f wor

ld im

port

s be

twee

n 20

08 –

201

2, %

Annual increase of Suriname share in world exports between 2008 – 2012, %

Suriname must re-balance its sector portfolio away from a natural resource-based economySource: Trademap Data, 2014. 5


Rapid DiagnosticMoreover, a reliance on natural resources leaves nations poor

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% $-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$782 $1,528 $1,964 $2,003 $2,382 $2,938 $3,638 $3,996 $4,388 $4,705 $5,440 $5,650 $6,054 $7,346 $7,490 $8,288 $9,900 $10,612 $10,685 $10,771 $11,603 $11,687 $12,460 $13,091 $13,586 $14,301 $14,527 $15,174 $15,738 $15,888 $16,144 $16,655 $17,642 $17,997 $21,099 $21,506 $21,897 $22,705 $23,184 $24,195

$29,086 $29,495 $30,600 $34,694 $35,006 $36,074 $37,479 $38,104

$40,588 $40,658 $42,453

$50,791 $50,859

$57,045

$62,858

$71,080 $71,475

Total natural resources rents (% of GDP)

GDP

per c

apita

, PPP

(con

stan

t 201

1 in

tern

ation

al $

)

Natural Resource Rents as % of GDP compared to purchasing power, 2012

Countries that are dependent on natural resources tend to have the weakest revenues per capita

Source: WDI, 2014.


Moving from today to tomorrowThe beginning of a transformative process…

7

Suriname Today:

• Heavy dependence on commodity exports

• Limited innovation and new product development

• Product based economy

• Growing inequality

Suriname Tomorrow:

• Diversified, sustainable export-led economy

• Skilled workforce & specialized training

• Constant learning, innovation

• Increase in services• Prosperity for all

The Upgrade Process

• Customer & demand driven.

• Active participation from the public & private sectors.

• Shared Vision


Moving from today to tomorrowAn iterative process leveraging data + “wild cards”

8

Suriname’s Current Export Basket

Regional Peer Export Basket

Global & CARICOM

Import Markets

80% structured brainstorming leveraging TradeMap data…… combined with 20% “crazy ideas” to ensure nothing is

overlooked


Long List of ClustersHS 2-digit level100+ Clusters

Upgrading Suriname’s Export SectorAchieving 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.

In this process, we move from broader buckets and categories to more specific products, making tough choices along the way

Prioritize & Validate 10 ClustersHS 2-digit level

Develop long list of ~20 products at 4 or 6 digit

HS code level

Identify 6 products at 4 or 6 digit HS code level

Where we are now

Process: • Build database of

all priority clusters at 2-digit level, including products and services

Resources: • TradeMap

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 stakeholdersResources: • TradeMap• Stakeholder Consultations

Process: • Based on validated

cluster groups, build database of products at either 4 or 6-digit HS code level

• Eliminate outliersResources: • TradeMap

Process: • Decision maker consultations• Product Sophistication• Employment / Outreach calculationsResources: • Stakeholder Consultations• TradeMap• WDI• FAOSTAT• COMTRADE• UNIDO

9


A Targeted Set of Export NichesTop 20 Products/Services from Shortlisted Clusters

Suriname’s growth requires the strengthening emerging export products and moving stable products toward sophistication. 10

0 5,000 10,000 15,000 20,000 25,000 30,000 35,0000%

100%

200%

300%

400%

500%

600%

Fish fillets and pieces, fresh, chilled or frozen

Crustaceans Wood sawn / chipped lengthwise, sliced/peeled

Fish, fresh, whole

Wood in the rough

Other Other Sea Transport

Bananas and

plantains,fresh ordried

Organo-sulphur compounds

Fish, frozen, whole

Aluminiumoxide (incl artificial

corundum); aluminium hydroxide

Shortlisted Products

Fish fillets and pieces, fresh, chilled or frozen

Crustaceans

Wood sawn/chipped lengthwise, sliced/peeled

Fish, fresh, whole

Wood in the rough

Other Other Sea Transport

Bananas and plantains, fresh or dried

Organo-sulphur compounds

Fish, frozen, whole

Aluminium oxide (incl artificial corundum); aluminium hydroxide

Sophistication (PRODY)

Surin

ame'

s Exp

ort G

row

th

Byproduct of refining, so not likely to create

additional private sector activity.


A Targeted Set of Export NichesUnveiling Winning Products

The attractiveness of clusters are often driven by a select few products with growing global demand and relative sophistication.

11

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

-25.00%

-15.00%

-5.00%

5.00%

15.00%

25.00%

35.00%

Railway or tramway sleepers

(cross-ties) of wood

Plywood, veneered panels and sim-ilar laminated wood

Wood in the rough

Wood sawn/chipped

lengthwise, sliced/peeled

Builders' joinery & carpentry

of wood

Hoopwood; split poles;

piles, pickets, stakes;chipwood

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

Wood, articles of wood and wood charcoal

Railway or tramway sleepers (cross-ties) of wood

Plywood, veneered panels and similar laminated wood

Wood in the rough

Wood sawn/chipped lengthwise, sliced/peeled

Builders' joinery & carpentry of wood

Hoopwood; split poles; piles, pickets, stakes;chipwood

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


Glob

al D

eman

d Gr

owth


The Solution1 – 3 – 5 to Drive Diversification

Export Niches

Cross-Cutting Strategies

Vision1

3

5

A diversified, prosperous and competitive Suriname

Fish Wood Tourism VegetablesGold (Shared Value)

Deepen trade with the Netherlands Open the US Market

Create Shared Value in the natural resource

sectors


The Solution3 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.


A Targeted Set of Export NichesOur preliminary recommendation

Source 2 Digit Cluster

4 Digit Products Rationale

TradeMap Analysis

FishCrustaceansWhole fishFish fillets

• Solid current performance ($70 million)• Huge upside potential in new and existing

markets (only 3% of Netherlands crustaceans market at ½ the price point)

WoodWood in the roughSawnCarpentry / joinery

• Massive renewable resource• Value add potential

Tourism N/A• Among the largest of diversified exports• Huge upside potential based on untapped

markets & regional performance

Gold (Shared Value)

Unwrought or semi-manufactured forms.

• One of the largest current export sectors• $1 billion investment by Newmont• Currently limited value add.

Wildcards Vegetables Fresh or chilledFrozen

• Small current exports (<$5 million)• However, new investment coming online


Suriname’s Opportunity in WoodA potential migration strategy

8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 0

200

400

600

800

1000

1200

1400

1600

1800

‘4418Builders’ joinery & carpentry

‘4407Wood sawn / chip

‘4403 Wood in the rough

Surin

ame’

s Cu

rren

t Avg

. Exp

ort V

alue

/ T

on ($

USD

)



Building competitive sectorsBurundi has the potential to build a transformative fish sector

Av. 08-13 Expansion of Pisciculture

Investment in Cage Farming and Fish Feed

Production

Formalization of Dried Ndagala

Acquisition of Commercial

Fishing Vessel

Improvement of Standards

Processing Packaging & Cold Chain

2019$0

$20

$40

$60

$80

$100

$120

$140

$0.226$5.47

$31.01

$14.95

$24.20$8.62

$30.19

$13.93 $128.55

Reve

nus

($U

S m

illio

ns)

Impact des Actions Prioritaires sur les revenus de l’industrie de peche du Burundi en millions de USD (2015-2020)

Source: Les estimations sont basées sur l’analyse ESPartners, Mai 2014

More high quality fish

Sell to new markets and reduced

wastage

Increase production

Value addition


Moving from Analysis to ActionThe 5 Pre-Conditions for Change

Leadership

Common Objectives

InsightReceptivity

Tension

The 5 Pre-Conditions for Change

Is Suriname ready for change? If not, what are the levers to foster these conditions?

Is there any urgency for change?

Are leaders receptive to ideas & advice from

outside?

Is there strong leadership in

government, the private sector & “others”?

Do leaders have shared understanding of success at the national or sectoral level?

Does the knowledge exist to achieve this vision?

17

Conclusion + Q&A

THANK YOU!

Rob [email protected]

Eric [email protected]

From Potential to Prosperity Part 2 – 3 Strategies & 5 Sectors to Drive Diversification

mailto:[email protected]

mailto:[email protected]

Documents

From Potential to Prosperity Part 2 – 3 Strategies & 5 Sectors to Drive Diversification 2 nd Competitiveness Forum Suriname March 12 th, 2015