‘GSP+ key to developing Sri Lankan economy’

The European Union’s decision to restore the GSP Plus facility to Sri Lanka, would not only help develop the economy but also strengthen democracy, Prime Minister Ranil Wickremesinghe said in Colombo last week.

Addressing a conference on “Sri Lanka The Next Asian Miracle – Resetting Economic Development Priorities” organised by the European Chamber of Commerce in Sri Lanka, in partnership with the Delegation of the European Union to Sri Lanka, the Prime Minister said “GSP + is the linchpin of building our outward looking export oriented economy, which will provide jobs and increase income.”

PM Wickremesinghe said that Sri Lanka was entering the richest consumer market in the world – “A market with which we’ve been dealing with for over 2000 years. The present type or the Greek states and the Roman empire. We are not unfamiliar to each other. We have also been through the Roman empire when trade was open everywhere. The other key factor is, that global trade is going to depend on the EU, China , Japan and India, who are the drivers of this trade. And look at us, as usual we are in the middle. So being outward looking, also mean the hub of the Indian ocean.”

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“The GSP + is a key to us. Because here we have the ability to develop our economy, and to develop and strengthen our democracy. Remember open markets require open societies. And we are committed to both. Now this is the challenge for Sri Lankan domestic investors. How to utilize this opportunity? When we started in the 70s, gaining entry to western market was difficult, so we went through the multi fibre agreement. So our industry got built up on the fibres, the apparels and I remember, I was then the Minister of Education, when I helped one firm called Baganon Lanka to start a factory in Biyagama. And as the Minister of Education, encouraged all the rubber based industries. So that’s the other.These have been our two big industries. One on the multi fibre agreement, the other on natural rubber. But the GSP+ is different. That’s why we went for it in 2003 when I heard of it being discussed. It has a wide range of products. We have to enter there. We threw that opportunity away, I am not going to talk about that here.”

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The Prime Minister said “Today we have 6500 products. I don’t think we can make 6500 products. No one will do that. But what are the other areas we are going to focus on. How do we go ahead? Secondly there will also be foreign investors who are interested in coming to Sri Lanka. And collaborations. Its not only GSP + with it comes the global value chain. So we have to be ready to ensure that our private sector is strong enough to invest. When we look at the global picture, you understand why we want the trade agreement with India, and the agreement with China and also with Japan. So we cover both ends and the center. Its forward looking. But how do you all become competitive? I know there are regulations in the government that make it difficult for people, which are barriers to competitiveness, to productivity. But for me, the Finance Minister, the Minister of Development Strategy and I are taking a re look at it.So that by the next budget, there will be another round of liberalization. I hope to make new statement of economic policy which will be followed by the budget. But where is the space? On one hand, we are having a tight fiscal policy. Because of the debts we have to pay 4.62 trillion rupees. But we have to find the space. And that’s what we are doing. Another place for investments will be, certainly for you all, is the Foreign Exchange Act that will come in. Is the private sector prepared to take the challenge? We have to talk to the banks for funding. So this is what we have to focus on.”

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“Then productivity means competitiveness. Productivity means a work force dedicated to productivity. If it is a work force dedicated to productivity how do we get results? Part of the gains have to be shared with work force. I met with trade unions, both ministers and I. We accept that in principle. Also we have to move towards a minimum total pay including all allowances and benefits amounting 400 USD. Otherwise you can’t compete, there will be more people driving trishaws than in the factory, that is the reality. Because there is large low wage base developing in Bangladesh and Myanmar. We cannot compete with them. We should not compete with them. The world is changing. New technologies are coming in. So where do we want to be? The low end of the T shirt industry or middle part of the 3D printing industry. Tourism, we are opening up for domestic services. I know we have only one direct flight from Europe on SriLankan. But others want to fly, it’s open. So we’ll be calling on you, to discuss with you, how we can expand this opportunity. How we can go ahead to create jobs and incomes for the peoples of Sri Lanka. This is the time that we can do a revolution peacefully through the economy”, Wickremesinghe added.