Business

Joint Apparel Association Forum : ‘Maintaining GSP+ is critical to Sri Lanka’s apparel sector’

Published

3 years ago

2023/06/10

With the current GSP+ regulation set to expire by the end 2023, it is imperative that Sri Lanka takes measures to secure concessionary access to the European market. Securing GSP+ depends on Sri Lanka upholding the already ratified conventions spanning human rights, labour, environment and governance. If Sri Lanka is to lose GSP+, the combined loss for the apparel sector is estimated at USD 494 million, which is 79% of the estimated trade loss.

Secretary General of the Joint Apparel Association Forum Sri Lanka, Yohan Lawrence spoke on the critical need to retain GSP+ post-December 2023. In this interview, Lawrence shares his perspectives on the importance of trade concessions for Sri Lanka’s apparel sector and the economy, the potential consequences if revoked, and the apparel sector at present.

What is the current state of Sri Lanka’s economy, and how does it impact the apparel sector?

Sri Lanka’s overall economic outlook shows slow but steady signs of recovery, especially after the Sri Lankan Government reached a staff-level agreement with the IMF for a 4-year Extended-Fund Facility programme (EFF) earlier this year. This is critical to inspire investor confidence and attract much-needed foreign direct investment (FDI) to the country.

With that being said, the country was able to achieve over USD 1 billion in March in exports for the first time in 2023; however, in apparel exports specifically, there has been a 15-25% drop in orders as a result of the global economic slowdown caused by the increase in interest rates to combat high inflation in the West specifically in major exporting countries including the US, UK and Europe.

Recent data shows apparel exports declining by 14.95 per cent Year-on-Year (YoY) to USD 1.18 billion in the first quarter of this year compared to the same period last year, which is the lowest since the first quarter of 2013. The industry projects it could be five to six more months before it sees a recovery in global demand.

Can you explain the Generalised Scheme of Preferences (GSP+) and why securing it is essential for Sri Lanka’s apparel sector?

GSP+ is a trade incentive granted by the European Union (EU) to developing countries, eligible to import items to the EU market, guaranteeing increased trade with the EU. It has also been observed that the EU’s GSP+ helps developing countries alleviate poverty by generating employment across vulnerable communities specifically, adding skill, knowledge and technological know-how to a pool of resources and creating jobs based on international values and principles.

Latest data shows that EU imports from Sri Lanka amounted to about €2.55 billion in 2021, of which approximately 54% benefitted from reduced tariffs under the GSP+ arrangement. Moreover, 85% of Sri Lanka’s current exports are eligible for tariff reductions under the GSP+ scheme. Such preferential access granted through GSP+ provides Sri Lankan apparel exporters with an advantage of diversification and exploring new export opportunities.

It is important to note that the apparel industry has experienced a rapid decline in demand (15%-25%) amidst an ongoing dip in apparel exports in the first quarter of this year. Securing GSP+ within the two-year period post-December 2023 becomes critical in this context, as the apparel industry cannot absorb a further reduction in orders with the loss of the concessionary scheme nor the Sri Lankan economy bear the loss of essential foreign exchange inflows and investment incentives the GSP+ scheme underwrites.

What can the global apparel industry do to help Sri Lanka secure GSP+?

GSP+ concessions are conditional on qualifying countries ratifying and effectively implementing 27 international conventions spanning human rights, labour rights, the environment, and good governance. Therefore, at this point, the onus is on Sri Lanka to ensure that the required criteria are met.

We must understand that over 30% of Sri Lanka’s apparel exports are to the EU and having GSP+ in this current economic environment is critical. Apparel factories in the north and east regions, for example, export at least over 80% of their products under this scheme. Sri Lankan apparel was the very first large-scale manufacturing sectors to enter the region and remains the single largest sector in those areas today. This has infused much-needed investment into the community and providing employment opportunities, especially for women in the North and the East (the majority of whom are breadwinners), following the end of the civil war.

Therefore, concessionary schemes like this help Sri Lanka to be price competitive within the EU market.

Is JAAF in talks with the European Commission at the moment? If so, how is that going?

As an industry body, we do not engage directly with the EU Commission regarding GSP+; as it is a matter dealt with from Government to Government. On the other hand, whenever a delegation visits our country, we make every effort to arrange a meeting with them in our capacity as the leading authority representing the apparel sector, as and when necessary.

However, we work closely with relevant Government authorities and the newly established International Trade Office to ensure the importance of GSP+ is recognised and that Sri Lanka makes its application within the required timeline, abiding by protocol.When can we expect to receive the report by the European Commission that was due to be released in early 2023?

While we do not know the details, our understanding is that this is imminent, and we are confident that the Government is fully aware of the importance of the continuity of GSP+. A cabinet paper was recently submitted highlighting the importance of securing the trade scheme.

Earlier this month, talks were held between the Ministry of Foreign Affairs and the EU Joint Commission, with the visiting delegation providing a brief on the new cycle of the EU GSP+ Regulations to be adopted for 2024 – 2033.

Will this make it challenging to secure GSP+?

We do not see it that way because, as stated earlier, the onus is on Sri Lanka to ensure the required criteria are met. But availing of GSP+ will positively impact worker earnings, which is why it becomes critical to ensure that we obtain this benefit to safeguard workers’ livelihoods.

Throughout Sri Lanka’s economic crisis, many global brands showed their support for Sri Lanka’s apparel sector – is this continuing, and is there any concern over the potential loss of GSP+ at the moment?

It is heartening to know the support we continued to receive from major brands throughout the economic crisis and the trust placed in Sri Lanka’s ability to deliver. This continues to this day. These brands have acknowledged that the talent and skills of our employees have played a significant role in displaying the country’s resiliency.

This was only possible with the Government’s support and other entities including the Export Development Board to ensure our plants could operate unhindered during the fuel and energy crisis. More than concerns about GSP+, global brands and local manufacturers are working together to power through the global economic slowdown and cushion the impact of the global economic downturn on the sector. We hope to see a turning point at the end of the year.

What could happen to Sri Lanka’s apparel sector after 2023 if GSP+ is not secured?

If GSP+ concessions are withdrawn, Sri Lanka will not only severely lose its competitive edge, risking the sustenance of the apparel industry but will also lose USD 494 million worth of exports, at a time when the country’s priority should be in reaching as many diverse markets as possible. The Institute of Policy Studies also indicated that the apparel industry would be among the worst-hit sectors if Sri Lanka is to be withdrawn from the GSP+.

Other sectors that would be affected include tobacco, seafood, and rubber. With Sri Lanka being identified as a country with the least use of its preferential market access among all GSP+ countries, the loss of preferential access will halt the industry’s drive to increase the current utilization rate (63%) and efforts to expand Sri Lanka apparel’s market share in the EU.

What is JAAF’s plan for Sri Lanka’s apparel sector if GSP+ is not an option? Will you be looking to grow the country’s market share outside Europe?

The EU market is integral to Sri Lanka Apparel. We have a number of European investments in the sector, some going back 40 years and protecting this market is one of our key objectives. That said, we acknowledge the need to have a wider base of exports and have been actively engaging with top Government and Foreign Ministry officials for some time now, to expedite negotiations on Free Trade Agreements (FTAs) outside the EU and the UK.

At a time when the country’s economy is in a critical state, securing new FTAs can help export diversification and reduce barriers for Sri Lankan apparel exporters. Furthermore, it will generate much-needed foreign exchange for the country. Therefore, securing an FTA with China is one of our key priorities.

There is also great potential within the Indian market with the Indo-Sri Lanka FTA. Under the current arrangement, the country can only export 8 million ready-made pieces annually, but Sri Lanka has the potential to export much more. Beyond this, we also see potential in countries like Canada, Japan, South Korea and Australia and continue to push for better market access to these countries.

If the apparel sector is to successfully diversify its markets and, in the process, increase its resilience and secure the jobs of the untold hundreds of thousands, earning a living through this sector. The strategic vision of the Sri Lankan Government and the coordinated actions of its diplomatic missions will be most important.

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Business

Inflation curbed by govt. fuel subsidy introduction and surcharge on vehicle import tax – CBSL Governor

Published

22 hours ago

2026/10/1

Sahan Weerasooriya

CBSL Governor Dr. Nandalal Weerasinghe

By Hiran H. Senewiratne

The government’s decision to introduce the fuel subsidy and the surcharge on the vehicle import tax helped curb inflation to a great extent, Central Bank Governor Dr. Nandalal Weerasinghe said.

‘The government this week approved a Rs. 40 billion fuel subsidy for the next three months on top of Rs. 57 billion provided from April-June, Governor Weerasinghe told the media yesterday at the Central Bank head office in Colombo at the CBSL’s monthly monetary policy review meeting.

‘If not for fuel subsidy and surcharge on the vehicle import tax, the inflation would have been higher than the current level, the Governor said.

‘There could have been higher imports and reserve building up would have been difficult. Inflation has risen beyond the Central Bank’s upper band of 7 percent since July, he said.

‘The country’s inflation hit a 37-month high of 8 percent in August after the government raised fuel prices more than 50 percent following the Middle Eastern escalation by end February, Dr Weerasinghe said.

The Central Bank’s inflation target for the past three years have been 5 percent with lower band of 3 percent and higher band of 7 percent, Governor said.

The Governor added: ‘The government provided Rs.57 billion as a fuel subsidy mainly for diesel. The latest Rs.41 billion has been allocated only for diesel as it is used for public transport.

‘The government also imposed a temporary 50 percent surcharge on Customs Import Duty on new personal vehicles on May 16 and has extended it until December 31, a move that will help to prevent outflow of foreign currency.

‘The Central Bank also tightened the monetary policy in May, raising the key monetary policy rate by 100 basis points, to curb excess demand in the economy to control demand-driven inflation.’

Meanwhile, head of the CBSL’s Economic Research Department L.R.C. Pathberiya said, ‘Credit growth has slowed to 24.5 percent year on year in August from a higher level of 30 percent a few months ago, after the Central Bank’s monetary policy tightening in May.

‘However, the Central Bank is optimistic about the current credit growth, he explained.

Pathberiya added: ‘The credit to the private sector from commercial banks has slowed, but we believe it is sufficient for economic growth.

‘The nation’s economic growth slowed to 4.2 percent year-on-year, its lowest in 11 quarters’’.

Business

PM warns Sri Lanka’s waste crisis is a ‘disaster waiting to happen’

Published

22 hours ago

2026/10/1

Sahan Weerasooriya

The third ICPIES being addressed by Prime Minister Dr. Harini Amarasuriya.

By Ifham Nizam

Prime Minister Dr. Harini Amarasuriya warned that Sri Lanka’s worsening waste-management crisis, particularly the uncontrolled accumulation of plastic waste and poorly managed landfills, was a “disaster waiting to happen”, urging scientists, researchers and policymakers to help the government find practical solutions before the problem reaches a critical point.

Addressing the launching of the Open University of Sri Lanka organized, ‘International Conference on Plastics, Innovations and Environmental Sustainability’ (ICPIES 2026) as Chief Guest, at the Cinnamon Lakeside Hotel yesterday she said waste management, waste reduction and recycling had become national priorities, with the government placing greater emphasis on the issue in its preparations for the 2027 Budget.

‘This is becoming a critical issue and something that, at any moment, if we don’t manage it properly, could become a huge disaster. It’s a disaster waiting to happen, Dr. Amarasuriya said.

She said unregulated and poorly managed landfills, particularly in and around Colombo, posed serious environmental and public risks, while increasing urbanisation was extending the waste-management challenge beyond the capital to other parts of the country.

‘As a member of Parliament for the Colombo District, I can tell you that one of the biggest challenges we are facing is waste management and actually managing the recycling of waste, and particularly of plastic products. This is something that we are battling every day, she said.

The Prime Minister said the government could not regard economic development as meaningful if it came at the expense of the country’s environment and natural resources.

‘If we are to speak of a beautiful life, we must first ensure that the air we breathe, the water we drink, the soil on which we live, the food we eat is clean and secure, she said.

She pointed to the scale of the global plastics crisis, noting that around 400 million tonnes of plastic waste are generated worldwide each year, while between 19 and 23 million metric tonnes of plastic waste enter natural ecosystems annually.

Plastic waste eventually breaks down into microplastics, which can enter aquatic organisms and subsequently the human food chain, she said.

Dr. Amarasuriya also linked plastic consumption and environmental degradation to the wider climate crisis, warning that the consequences of climate change were already being experienced by communities around the world.

She referred to devastating floods and landslides in the Himalayan region and said the impacts of climate change demonstrated that environmental damage could have consequences far beyond national boundaries.

Coastal clean-up projects and other waste-separation and recycling initiatives are also being implemented, while the government is working with the Western Provincial Council on a refuse-derived fuel project at Karadiyana.

The third ICPIES, held under the theme “Eco-Driven Innovations,” brings together researchers, policymakers, industry representatives and other stakeholders to examine plastic pollution, microplastics, circular-economy approaches, waste-management policy, technological innovation, artificial intelligence and smart environmental monitoring. The conference ends today.

Senior Professor P. M. C. Thilakarathne, Vice Chancellor of the Open University of Sri Lanka, was the Guest of Honour.

Business

Mention of possible future inflation dampens investor appetite

Published

23 hours ago

2026/10/1

Sahan Weerasooriya

By Hiran H. Senewiratne

Stock investors were worried yesterday following Central Bank Governor Dr. Nandalal Weerasinghe’s mention at the CBSL monthly monetary policy review meet of possible future inflation pressures that may impact the economy.

The All Share Price Index went down by 4.89 points, while the S and P SL20 rose by 16.1 points. Turnover stood at Rs 1.55 billion with four crossings.

Those crossings were; Access Engineering crossed 1.5 million shares to the tune of Rs 119.8 million; its shares traded at Rs 79.60, Sampath Bank 450,000 shares crossed tfor Rs 63 million; its shares sold at Rs 140, Sunshine Holdings 750,000 shares crossed to the tune of Rs 21.4 million; its shares traded at Rs 28.50 and Softlogic Life 290,000 shares crossed for Rs 20.4 million; its shares sold at Rs 70.40.

In the retail market companies that mainly contributed to the turnover were: Access Engineering Rs 150 million (1.9 million shares traded), JKH Rs 113 million (six million shares traded), Softlogic Life Rs 80 million (one million shares traded), Softlogic Capital Rs 64.7 million (6.7 million shares traded), Lanka Realty Rs 64.3 million (1.3 million shares traded), Colombo Dockyard Rs 53.7 million (452,000 shares traded) and Sierra Cables Rs 50 million (1.43 million shares traded). During the day 58.9 million share volumes changed hands in 13536 transactions.

It is said that mixed market reactions were noted especially in manufacturing while banking, insurance and FMCG sectors performed well. Further, construction sector counters, especially Access Engineering, and banking sector counters, especially Sampath Bank, performed well.

People’s Leasing & Finance PLC announced its allotment basis for 100 million listed debentures it issued to raise Rs 10 billion, after receiving applications for the full amount.

Yesterday the rupee was quoted at Rs 330.68/75 to the US dollar in the spot market from Rs 330.70/90 the previous day, while bond yields were quoted steady to lower, dealers said.

An auction of Rs 80,000 million Treasury bills was ongoing.