Business

‘Sri Lanka needs GSP+ now more than ever following the pandemic’

Published

4 years ago

2022/02/11

By Felix Fernando

Much has been said of the potential economic costs to Sri Lanka, of losing the Generalised Scheme of Preferences (GSP) Plus trade concessions to the European Union (EU). While these costs will be high, the social and human costs are likely to be even greater.

Considering official statistics for 2021, available up to end November, the EU was Sri Lanka’s single largest export market for 2021, accounting for nearly a quarter (24.1%) of our total merchandise exports of US$ 11.1 billion.

Given the EU’s importance to Sri Lanka, the loss of preferential tariffs for Sri Lanka’s exports to the EU through GSP+ previously, in 2010, had a substantial adverse impact on our economy. This likely led to an increase in poverty and income inequality as per academic studies (for example, Bandara and Naranpanawa, 2014). At present, given the ramifications of the pandemic, the consequences of the loss of GSP+ could be far more dire, leading to increase in unemployment, poverty, vulnerability and inequality, as well as loss of improvements achieved in female empowerment.

According to the World Bank’s estimates, Sri Lanka’s poverty rate rose from 9.2% in 2019 to 11.7% in 2020, putting more than 500,000 additional people in poverty. The country’s poorest were disproportionately negatively affected. Adding to the woes stemming from the loss of income and livelihoods – especially by informal workers who account for around 70% of Sri Lanka’s labour force – the cost of living has soared in recent times. Inflation was at a 12-year high in December 2021, with food prices surging to levels that have led to fears regarding increase in malnutrition and hunger.

In such a scenario, the loss of GSP+ would be highly damaging. EU is a key market for some of Sri Lanka’s largest export industries including apparel, food exports and plastic and rubber exports. These sectors employ a substantial portion of our workforce and are also characterised by the heavy presence of small and medium enterprises (SMEs). In addition, the EU has been a significant contributor to the growth of some of these exports industries – for instance rubber-based exports and seafood.

For Sri Lanka’s biggest export industry, apparel, the EU is particularly critical, being the single largest market. The EU accounted for $2.2 billion or nearly half (43.6%) of the sector’s total export earnings for 2021. The apparel industry employs 350,000 workers in the country, of which nearly 80% are rural women. Female representation in the industry is more than double the national average, considering the share of women in Sri Lanka’s labour force. Therefore, if GSP+ is lost, vast improvements made in female economic empowerment and overall human capital could also be in jeopardy.

SMEs and family-owned businesses are also likely to be more severely affected if GSP+ is unavailable. Many apparel SMEs tend to depend on subcontracts from larger players, which will dry up if excess orders are not available due to loss of preferential access to key export markets. Earlier, when GSP+ concessions were removed in 2010, there were reports of several SME apparel factories being closed down, which also led to unemployment. Currently, SMEs account for approximately 45% or nearly half of Sri Lanka apparel manufacturing facilities and provide employment to around 50,000 employees.

Many apparel manufacturing facilities in the country are located outside urban areas and industrial zones and are crucial in generating rural employment. SMEs are particularly vital in this regard since due to their relatively smaller scale, which requires less workers, a high percentage of these factories are located in less-populated and lagging regions.

Many other sectors in the country rely on the apparel industry, given its heavy presence across the island. These include logistics and transport providers, raw material suppliers as well as small-scale businesses providing food and refreshments. In addition, several cottage industries, such as producers of carpets and pillow covers, depend on apparel factories in their neighbourhoods for raw material (in the form of waste fabric). If the industry is to suffer a downturn due to loss of GSP+, this entire economic ecosystem too will suffer adverse trickle-down effects.

In addition, the pandemic has led to global re-orientation of supply chains which Sri Lanka’s apparel sector is well-positioned to capitalise on. However, this requires easy access to exports markets, through trade arrangements such as GSP+. Export earnings, which generate foreign exchange, are also vital for Sri Lanka’s economic stability, as well as to meet our foreign debt obligations.

Hence, given these challenges and opportunity costs, Sri Lanka needs GSP+ now, perhaps more than ever before.

In discussions with the Government, the apparel industry and other export sectors have impressed upon the authorities the importance of retaining GSP+. These concerns have been met favourably by the authorities and the industry is hopeful of a positive outcome.

In addition to retaining GSP+ in the immediate future, it is important that Sri Lanka engages with the EU to enjoy the benefits of the new GSP+ facility, which will commence in 2024, replacing the existing scheme. Sri Lanka needs to be prepared to align itself with the 33 conventions of the new scheme, compared with the 26 conventions of the current GSP+ regime. It is critical that the policymakers and the authorities commence these preparations now.

In addition to GSP+, the apparel sector has also emphasised on the authorities the importance of low-tariff or tariff-free access to other key export destinations – such as USA, China, India (to which a quota applies for apparel exports from Sri Lanka), Japan and South Korea. The Government has responded favourably to these concerns and the industry is hopeful of a positive outcome. New Free Trade Agreements (FTAs) can provide a significant boost to expanding and diversifying Sri Lanka’s and the apparel industry’s export markets.

While these are critical at present, it is important to recognise that the apparel industry does not expect GSP+ concessions to remain indefinitely. We are mindful of the fact that the country will lose its trade concessions in the future, as we gradually transition to an upper middle-income nation.

With the assistance of other stakeholders, including the Sri Lankan Government, the apparel sector has commenced a series of concerted initiatives to prepare the industry for the potential loss of trade concessions in the future. These efforts are also aimed at transforming Sri Lanka into a global apparel hub, increase the sector’s competitiveness and diversify its export markets.

The foundation has already been laid in this regard. For instance, Sri Lanka has positioned itself as a leader in sustainable apparel manufacturing. Sri Lankan apparel producers have invested significantly in manufacturing facilities that incorporate the latest environmentally-friendly features – minimising wastage, energy, and emissions.

The apparel sector has also made progress in further strengthening human resource practices. Through the ‘Garments without Guilt’ initiative, many Sri Lankan factories voluntarily submitted themselves to independent audits of working conditions. In December 2021, the apparel industry also signed a historic agreement with trade unions, paving the way for greater transparency in employee control over dispute resolution and grievance handling.

In the long run, these initiatives can strengthen Sri Lanka’s apparel industry significantly and, by extension, the country’s export sector, reducing the need for trade concessions. However, if these concessions are removed now, the social and human costs are likely to be dire. Given the pandemic’s unprecedented impact, GSP+ to the EU is critical for Sri Lanka and its export sectors at present.

(Felix A. Fernando is the CEO of Alpha Apparels Ltd. and Sirio Ltd., and a Group Director of Omega Line, which ranks among Sri Lanka’s five largest apparel exporters. He holds a MBA from the Post Graduate Institute of Management (USJ), in addition to being a Fellow member of the Chartered Institute of Management Accountants, U.K. He has received extensive Executive Education at Harvard, The Wharton School, National University of Singapore and AOTS, Japan. Fernando is also the Deputy Chairman of the Joint Apparel Association Forum Sri Lanka and a Past Chairman of the Sri Lanka Apparel Exporters’ Association.)

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Business

CDS accounts on the increase, crosses one million accounts

Published

12 hours ago

2026/03/7

Thilina Walpola

Central Depository Systems (Pvt) Ltd (CDS), a subsidiary of the Colombo Stock Exchange (CSE), has reached a milestone as total registered accounts surpassed the 1 million mark. This achievement coincides with the approach of the organization’s 35th anniversary in September 2026, marking three and a half decades of providing depository infrastructure for the Sri Lankan capital market.

Since its inception in 1991, the CDS has held the distinction of being the first depository in the South Asian region. In its core capacity as a depository, the institution is responsible for holding a wide array of securities including shares, debentures, corporate bonds, and units belonging to investors in electronic form.

The crossing of the one million account threshold also reflects the aggressive broad basing of the retail investor market over the past five years. This expansion is largely attributed to the comprehensive digitalization of the CSE, which has created accessibility for individuals across the country. Digital tools such as the CSE Mobile App and the “CDS e-Connect” portal have revolutionized how investors interact with the stock market, providing them with real time access to their holdings and a seamless interface for account management. The “CDS e-Connect”, originally launched in 2016 and revamped in 2021, has become a one stop shop for stakeholders, by offering services such as client profile management, real time balance and transaction viewing, eNomination facility, monthly statements and newly introduced dividend payment history viewing option. From 2016, by offering eStatements and SMS alert facilities CDS ensures transparency and security for the CDS accountholders. By decentralizing account openings and introducing online facilities in 2020, the CDS successfully brought the stock market to the fingertips of the general public, moving away from the traditional, paperwork heavy processes that once characterized the industry.

A critical pillar of this 35-year history was the 2011 launch of the full dematerialization drive. This initiative was designed to significantly reduce the movement of physical certificates, which were prone to loss, damage, and forgery. Today, the success of this drive is evident as the CDS holds 97 percent of listed equity and 100 percent of corporate debt in scripless form. This near total transition to electronic records has provided a secure and accessible service environment. The Central Control Unit plays a vital role, ensuring that all functions performed by the depository and its participants align with strict rules and regulatory guidelines. By identifying operational, financial, and market risks early, the CDS maintains the integrity of the ecosystem and fosters trust among both domestic and international investors.

Beyond its primary depository functions, the CDS has significantly expanded its influence through the Corporate Solutions Unit (CSU), established in 2017. The CSU was created to standardize and elevate the benchmarks for corporate action services in Sri Lanka and has since grown through the strategic acquisition of PW Corporate Registrar arm. This diversification allows the CDS to expand registrar services and manage corporate actions for both listed and unlisted companies, providing a holistic suite of services that includes the distribution of dividends, rights issues, and e-applications for Initial Public Offerings (IPOs). The digitization of issuer services has been a hallmark of the CSU’s work, introducing innovations such as eDividend payments, eWarrants, and eNotices. These advancements have streamlined the process for issuers while ensuring that shareholders receive their entitlements promptly and securely.

The strategic outlook for the CDS is now centred on the newly formed Research and Development Unit, which is essential to the organization’s vision for the future. This unit functions as a Project Management Office and is responsible for developing innovative services. By cultivating strategic alliances and international collaborations, the R&D unit ensures that the CDS remains a future forward institution capable of adapting to the evolving needs of the global financial sector.

As the CDS looks toward its 35th year of service, it remains focused on digital transformation, strategic partnerships that power progress, new service offerings and enhanced international relations. The integration of new technologies continues to ensure robust infrastructure for the next generation of market participants.

Head of CDS Nadeera Athukorale commenting on the vision of the CDS, remarked “By balancing its core depository duties with non-core registrar and consultancy services, the CDS has positioned itself for long term sustainability and industry leadership.”

The achievement of one million accounts serves as a testament to the resilience and adaptability of the Sri Lankan capital market infrastructure, demonstrating CDS’ ability to facilitate a growing digitized market while continuing to serve as the backbone of the nation’s investment landscape. (CSE)

Business

TONIK set to become next Sri Lankan hospitality brand reaching the global stage

Published

12 hours ago

2026/03/7

Thilina Walpola

Garfield Bungalow by TONIK

TONIK, a new hospitality venture under Sri Lanka’s Acorn Group, has unveiled its vision to place culture, storytelling and design at the heart of island exploration, positioning itself as the next Sri Lankan hospitality brand to achieve global recognition.

Built on the Acorn Group’s decades of expertise across aviation, travel, logistics and leisure in multiple Asian markets, TONIK aims to elevate Sri Lanka’s tourism by translating the “soul” of destinations into curated experiences. The brand’s philosophy, “Every Stay Is a Story”, treats villas and boutique hotels as “living narratives” shaped by architecture, memory, craft and community.

The venture addresses a key market gap: while Sri Lanka features exceptional independent villas, many struggle with visibility and global reach. TONIK seeks to resolve this by amplifying each property’s unique value proposition – transforming distinctiveness into revenue -generating potential for owners.

“TONIK’s philosophy aligns with the evolution of our industry- where authenticity and meaningful experiences are no longer optional but essential,” said Harith Perera, Partner at Acorn Group. “Sri Lanka’s narrative deserves platforms that elevate its voice globally.”

For property owners, TONIK offers access to Acorn’s intelligence networks across the Maldives, Middle East, Europe and Asia, including insight into High-Net-Worth travel patterns.

CEO Sundararajah Kokularajah said: “By nurturing properties as living narratives, we aim to shape a new chapter for tourism – authentic, future-ready and deeply Sri Lankan.”

By Sanath Nanayakkare

Business

SDB bank relocates Warakapola branch to enhance customer experience

Published

12 hours ago

2026/03/7

Thilina Walpola

SDB bank relocated its Warakapola Branch to a new location with a modern, fresh look and ample parking, further strengthening its commitment to delivering an enhanced, customer-centric banking experience. The newly refurbished branch, located at No. 221/E, Colombo Road, Warakapola, will officially open its doors to customers.

The relocation reflects SDB bank’s ongoing efforts to adapt its branch network to today’s banking requirements, ensuring clients enjoy a refreshed, welcoming, and efficient service. The upgraded branch features contemporary design and improved facilities, providing greater convenience and a seamless banking experience for individuals, entrepreneurs, and businesses in the Warakapola area.

As part of its continuous transformation journey, SDB bank has prioritised innovation and service excellence in reimagining the Warakapola Branch. The new premises have been thoughtfully designed to meet evolving customer needs while fostering stronger engagement with the local community and business sector.

Kapila Ariyaratne, Executive Director / Chief Executive Officer of SDB bank, stated, “The relocation of our Warakapola Branch reflects SDB bank’s dedication to providing our customers a modern and enhanced banking experience with convenience and personalised service. This modern space is designed to meet evolving needs while reinforcing our strong ties with the local community. We remain committed to delivering innovative and customer-focused financial solutions that support regional and national growth.”

The enhanced branch environment is expected to serve both existing customers and new clients in the region, reinforcing SDB bank’s growing island wide presence. Through this relocation, the Bank continues to demonstrate its commitment to sustainable growth, service excellence, and meaningful community engagement.

SDB bank invites its valued customers and the Warakapola community to visit the new branch and experience the enhanced facilities firsthand.

A future-ready bank, dedicated to offering customer-centric and comprehensive support tailored to each individual’s needs, SDB bank is a licensed specialized bank regulated by the Central Bank of Sri Lanka, with a listing on the Main Board of the Colombo Stock Exchange and a Fitch Rating of BB +(lka).

Through the network of 94 branches island-wide, the bank provides a comprehensive range of financial services to its Retail, SME, Co-operative, and Business Banking clients across the country. Environmental, Social, and Governance (ESG) principles are deeply ingrained in SDB bank’s ethos, with a steadfast focus on uplifting local communities and businesses through sustainable practices. The bank is particularly committed to promoting women’s empowerment, sustainable development of SMEs, and digital inclusion, aiming to propel Sri Lanka to new heights.

Ceremonial opening of SDB bank Warakapola Branch

From left to right,

Binesh Aravinda – Head of Branch Banking – SDB bank,.A.D.Walisinghe – Chairman Kegalle Sanasa District Union, Kapila Ariyaratne – Executive Director/ Cheif Executive Officer – SDB bank, Chitral De Silva – Cheif Business Officer – SDB bank