Investors should get ready to ride GSP+ and expand in Sri Lanka: Harsha
ECONOMYNEXT – Businesses should get ready to invest and expand their factories in Sri Lanka with a vote of confidence at the European parliament showing that free trade benefits will be restored to the country, Deputy Foreign Minister Harsha de Silva said.
A motion to deny the restoration of Generalised System of Preferences + free trade benefits to Sri Lanka was defeated by 436 votes to 119 at the EU parliament on Thursday.
De Silva said the formal vote to restore the benefits has to take place by May 15, but he was confident of getting it.
"Now, it is up to the investors to get down to work and get the factories opened to take advantage of totally duty free access to the EU," Deputy Minister De Silva said. "Factories must expand and new ones must open across the island, particularly in the difficult areas recovering from the decades of war."
What we now need to do is to look forward. Investors must take advantage of the 6,600 products the GSP+ concession will apply to.
"So here is a huge opportunity to expand beyond apparels and into higher tech products. Let’s get Sri Lanka connected to the global production networks and get FDI rolling in.
De Silva said Sri Lanka’s exports as a share of gross domestic product has fallen in the last decade from 30 percent to 13 percent.
Part of the reason for Sri Lanka’s low export performance has been protectionism, which pushes up the cost of production, and creates a culture of plunder and fleecing of consumers instead of pleasing them with lower prices and better quality.
Most East Asian countries have seen rapid increases in export due to foreign investments from countries with free trade and consumer sovereignty, where firms are forced to compete to please customers with low prices and innovative products.
Due to the lack of respect for property rights and predatory behaviour by the state, including expropriation, revenge and retrospective taxes, Sri Lanka’s image as a safe investment has weakened.
At the moment, some export factories have had difficulty filling vacancies in existing factories due to low real wages. Sri Lanka’s rupee also collapsed over the last two years, making it more difficult to live in the country and forcing people to look for jobs in the Middle East. (Colombo/Apr27/2017)