GSP + to figure in US$500m plus sales for apparel
The Sri Lankan apparel industry is likely to achieve US$500 million increase in sales within one year of regaining trade concessions to the European Union, a key official said.
Sri Lanka Apparel Exporters Association (SLEA) President Felix Fernando told the Business Times that the industry was expecting an increase in sales by $500 million within one year of regaining GSP +. Total exports were now at $5.4 billion. The European Union this week finally approved the return of GSP + concessions to Sri Lanka.
When Sri Lanka lost the trade concessions in June 2010 the country “really slowed down the growth we had,” he said.
This concession would mean 13 per cent of the benefit to the customer buying from apparel exports from Sri Lanka. However, he explained, “We will not be able to get any benefit directly but it will go to the customer,” adding that demand for Sri Lankan products will increase.
Going forward the benefits to workers could be passed down, he noted, only if there is a direct benefit to the manufacturer. Trade unions have been vociferous that the apparel manufacturers need to spruce up their act and increase union activity on the factory floor and have demanded increased pay and improved working conditions once GSP + is regained.
Despite regaining GSP + concessions, Mr. Fernando observed that Sri Lanka will not be able to increase its prices. When Sri Lanka lost the concessions it was expensive to buy from Sri Lanka and so most customers went to Bangladesh or Vietnam but other who continued to buy wanted a discount on the price. So today these prices could not be increased, he noted.
An expansion in the existing factories and the possibility of new ones opening up in the provinces going by the government’s plan to provide capital allowances to those moving industries to the least developed districts might also happen.
Moreover, the Small and Medium Enterprises (SMEs) are expected to grow in the wake of regaining GSP + as these were the worst hit, it was noted.
Sri Lanka is currently faced with a shortage of 40,000 workers and an additional 20,000 jobs is expected to arise out of the increase in demand from buyers in the EU, Mr. Fernando said.
Further, the government has planned promotional activities through the Export Development Board (EDB) in the EU that is expected to kick in orders to Sri Lanka from existing customers, the SLEA President said.