EU exports up after SL regained GSP + concessions
View(s):Exports to the European Union (EU) have risen by 11 per cent in the 12 months since Sri Lanka regained GSP + concessions.
Apparel, which accounts for nearly 60 per cent of these exports, grew by 8 per cent in the past year, according to a media release issued by the Ministry of Development Strategies and International Trade this week, analysing the benefits of GSP + among other developments.
“The last 2 months’ exports have been strong. An estimate of the increase in jobs for the apparel sector alone is at least 7,500… excludes locally sourced fabric. We have already achieved an increase in exports of US$150 million which is 1/3rd of our stated target of $500 million increment for the apparel sector,” the Ministry said.
Other notable growth sectors are fisheries and tyres. The volume of fisheries exports has literally doubled since the removal of the fish ban and regaining GSP + – business links restored and new orders received. Rubber tyres and gloves volume growth is lower than value, suggesting benefits from pricing increases and/or the strengthening Euro.
The restoration of the GSP + to Sri Lanka with effect from May 19, 2017, provides Sri Lankan exports a level playing field with other countries such as its neighbours from Bangladesh and Pakistan, and several countries from Africa and South America who enjoy preferential market access.
The release said that Sri Lanka will continue to be eligible for GSP + as long as the periodic reviews (the first one coming in less than a year) by the EU do not raise any red flags with regard to the implementation of agreed human rights and governance reforms. “Yet, once the country graduates to an ‘upper-middle-income economy’ status (as classified by the World Bank) and remains at that classification for three years, then Sri Lanka becomes no longer eligible for GSP + (with a grace period of around two years). Thus, we should have the GSP + benefit till 2023,” the Ministry added.
Hasitha Premaratne, Group Finance Director of leading apparel exporter, Brandix Goup, said, “The apparel sector promotes inclusive growth and job creation. It is not just the big 3 (Brandix, MAS, Hidaramani) manufacturers that have had an immediate uplift in EU volumes from the GSP concession but many SME manufacturers, local fabric producers such as Teejay and Hayleys Fabric, other participants in the value chain (e.g. trim suppliers, packaging, logistics), and thousands of operators, who we are obliged by the EU to pass on benefits to.”
The Ministry noted that producing higher quality products and following ethical practices will become key strengths for Sri Lanka. Further, Sri Lankan companies are progressively moving towards and practicing sustainable production concepts such as the organic produce, green production, as well as Fair Trade practices which are highly valued by the consumers world over and in particular in the EU. The ability to penetrate the EU market as a strong country respecting basic human rights, rule of law and good governance would send a strong signal to the international investor community which will facilitate the attraction of inward FDI, it said.
The benefits of GSP + status will need to trickle down to Sri Lanka’s rural workforce. Concessions under GSP+ are likely to have assisted the financially less privileged farmers who are engaged in agriculture and fisheries industry in Sri Lanka. New export opportunities will eventually develop the livelihoods and raise income levels of the farmers.
“Sri Lankan exporters can also exploit the potential for agro-based processed food exports in collaboration with European companies through joint ventures and transfer of technology. Small and Medium Enterprises (SMEs) need to be encouraged to work more effectively and be part of the value chains of larger companies,” it said.