Sri-Lanka Factory

Companies looking for alternate sourcing locations to China and Bangladesh, especially for apparel/textiles might want to take another look at the opportunity for Sri Lanka – Sourcing, given it has recently started the process to regain the generalized system of preferences (GSP Plus) status.

An eight-member EU Trade Working Group (TWG) along with a GSP Plus delegation and a senior EU trade official held discussions with Sri Lankan officials in late March in Colombo to begin the process of re-admitting Sri Lanka to the status of GSP Plus under the new GSP regulation. The EU’s Generalized Scheme of Preferences (GSP) allows developing country exporters to pay little or no duties on their exports to the EU, providing them with vital access to EU markets and contributing to their economic growth.

Sri Lanka lost their GSP Plus status in 2010 due to the United Nations Human Rights Council (UNHRC) alleging violations of Human Rights during the civil war. Subsequently, when the EU evaluated Sri Lanka last year it found that the country was not adhering to 3 of the 27 international covenants that a country must abide to qualify for the consideration of GSP Plus.

Outlook for Apparel and Investment

Many analysts are looking at Sri Lanka as a good potential location to invest given greater stability following the end of the Sri Lankan Civil War in 2009 and economic ups and downs. The government has continued to invest in infrastructure, with significant investment in infrastructure coming from the Chinese.

Rishad Bathiudeen, the Sri Lankan minister of industry and commerce commented that the country had lost considerable apparel revenue as a result of losing the GSP plus. The EU is Sri Lanka’s largest export market, accounting for one-fourth of all exports, followed by the United States. They have set an ambitious target of reaching US $ 20 bln in exports by 2020, which would help put Sri Lanka on the map.

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