Sri Lankan apparel sector loses $1bn without GSP+

25 Oct '12
2 min read

Withdrawal of the GSP Plus facility extended by the EU to Sri Lanka has caused the Sri Lankan apparel industry to lose around US$ 1billion in exports to the EU markets, Rohan Masakorala, former Secretary General of the Joint Apparel Association Forum (JAAF) has said.
 
He said though it has became apparent that the GSP Plus loss is badly hitting the 30-year-old domestic apparel industry, the Sri Lankan Government is still sticking to the view that removal of the facility has not impacted the industry much. The worse part, he said, is that in spite of recognizing the dire need of the facility, Sri Lankan Government is not keen on re-applying for the same. 
 
Speaking at the technical sessions of the Sri Lanka Economic Association’s Annual Sessions 2012, he said the sector did not feel the pinch of withdrawal of the facility so much during last year, as problems in China and Bangladesh forced importers to source from Sri Lanka. However, the conditions are no more the same, he added.
 
While Sri Lankan apparel exporters are continuously been advised to explore new markets, Mr. Masakorala said it is not all that easy. Particularly, it is quite difficult to gain entry and retain a foothold in Indian and Chinese markets.
 
However, the Sri Lanka apparel industry can still keep itself afloat as it has capability to produce and supply goods on demand more speedily as compared to Bangladesh, but for this too, it requires GSP Plus facility and needs to improve its labour productivity, he added.
 
He said through the GSP Plus facility they are not seeking any concessions, but are ensuring a level playing field in one of the country’s key markets.
 
He further noted that in absence of the GSP Plus facility, which has led to increased competition, enhancing their supply chain efficiency could help Sri Lankan apparel producers to retain their share in the EU market.
 
Loss of the GSP Plus access to the EU markets in August 2010 caused several Sri Lankan apparel firms to close down, as cost of doing business increased significantly.
 
Mr. Masakorala cited an example of a Sri Lankan apparel manufacturer, who was required to invest additional € 25 million to be able to ship products to the EU post GSP Plus loss, but preferred to utilize the sum to move the company’s operations to Vietnam, as it is much easier to export from there.
 

Fibre2fashion News Desk - India

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