An unprecedented basket of exports from Sri Lanka is now smiling big as a result of the recent GSP plus eligibility-even more so is the promise of FDI.
"The enhanced market access that Sri Lanka gets from EU GSP+ is very significant" said the Minister of Industry and Commerce Rishad Bathiudeen on 28 June.
Minister Bathiudeen was responding to New Delhi based Tunisian Ambassador to Sri Lanka Nejmeddine Lakhal who was making his first courtesy call on the Minister at the Ministry of Industry and Commerce on 27 June, and who inquired from Minister Bathiudeen of joint venture potentials between private sectors of both countries. Joining the discussion was Honorary Consul General of Consulate of the Republic of Tunisia in Colombo Mukthar Marikkar and officials of the Department of Commerce.
"Tunisia-SL trade far below its potential and it is time we take a close look" said Tunisian Ambassador Lakhal, and added: "We both have similar trade and investment challenges and we can work for win-win. Tunisia can partner with Sri Lanka in joint ventures, exports for Asian and African markets."
"Tunisian investors can benefit from joint ventures with Lankan firms exporting to EU, especially since our recent GDP Plus eligibility. Tunisia is closer to EU therefore Tunisian manufacturers cannot go for South Asian markets but by setting up JVs here they can solve this" responded Minister Bathiudeen and added: "They can use Sri Lanka's FTAs with India and Pakistan to export 8000 products tariff free to these two countries. Our government is also working on FTAs with China and Singapore. Therefore the increase in market access is huge, and the bigger surprise is increased FDI appeal for Sri Lanka. I and my Ministry are ready to extend our fullest support to Tunisian investors setting up here to exploit these trade facilities. This can also help kick-start the non-existent bilateral trade between Tunisia and Sri Lanka which though small, shows strong growth trend. Therefore I believe it is time to commence our trade in a stronger way."
The two way trade between Sri Lanka and Tunisia in 2016 was a mere US $ 2.13 Mn and therefore both countries are virgin markets to each other. Despite the low volumes, trade showed a growing trend, doubling from 2015's $1 Mn. Nearly half of Sri Lanka's exports to Tunisia last year was Ceylon Tea. Main imports from Tunisia to Sri Lanka were electric switches and transformers.
Responding to Tunisian Ambassador Lakhal's query on new potentials from recent EU GSP Plus, Minister Bathiudeen explained: "The enhanced market access that Sri Lanka gets from EU GSP Plus is not small but very significant. In fact, according to the Department of Commerce under me, 6200 products from Sri Lanka are benefitting from EU GSP Plus. The 6200 can be exported duty free to EU. The other benefit is Sri Lanka in return need not give similar zero tariff for any EU products since it's a unilateral concession from EU to us. This makes the GSP facility, a very attractive opening for our exporters, manufacturers and more importantly, for international investors setting up here-including Tunisian. EU is Sri Lanka's biggest exports destination. Two thirds of export tariff lines to EU are now duty free, among them textiles and fisheries. We believe the increase in annual export revenue from GSP plus to be $ 350 Mn or more. We are also excited of the FDI potential due to GSP since studies show bigger FDIs possible from GSP Plus."
International studies on the economic effects of EU GSP Plus have shown a 30% surge in exports for the beneficiary. As for FDIs, the potential of increase for the beneficiary (post-GSP Plus) is more than double the pre-GSP Plus FDI quantum-a 213% increase to be exact.