Saturday, September 19, 2009

SRI LANKA: Loss of GSP Plus could throw ceramics into turmoil

By Mario Andree
Sri Lankan Ceramic Council (SLACC), which represents a large number of ceramic manufactures and exporters, expressed alarm at the possibility of losing the GSP plus facility which would have a negative impact on the industry, Industry sources said.
The sources said that loss of the GSP plus facility would throw the industry into turmoil with Sri Lanka losing out to other competitors and that would in turn force many a ceramic producer to shut shop resulting in an increase in the unemployment rate.
The ceramic industry, with around 15 companies, provides employment to over 5,500. With US$ 42 mn per year in exports it holds less than 01 percent in the global market.
GSP plus is a Tax free scheme that enables Sri Lanka to export to Europe Union countries and it had enabled the ceramic industry to keep a head in the global market. A struggling industry today, Sri Lanka’s ceramic industry faces challenges from low cost manufactures such as China, Thailand, Bangladesh, Malaysia, Indonesia and India.
The EU, unlike Sri Lanka, does not rely on import duties for revenue. The largest revenue is generated from Income tax. The GSP enables the exportation of 6,244 products with minimum Tax while GSP plus enables the exportation of 6,336 products without any duty cost.
For the period 2009-2011, 16 beneficiary countries have qualified to receive the benefits offered through GSP plus. Sri Lanka is in the top 5 beneficiary countries with in the scheme, and has a total export amount as per year 2007 under GSP plus of US$ 49Bn
With Sri Lanka facing the possibility of losing GSP plus, the ceramic industry, which is benefited mainly by it, will be badly affected. The main ceramic export markets are USA, UK, Italy, U.A.E, Germany, France, Greece and Belgium.Tableware manufactures in the ceramic industry will be the most affected with the loss of GSP plus. With the increase of manufacturers, even a slight increase might affect the market. Today, it is a buyers’ market and without the GSP plus Sri Lankan Ceramics might loss its market share in the EU, due to the high price at which the products will have to be sold. Sri Lanka also faces the same problem with other industries which are benefited by the scheme. The Apparel industry, which is one of the main exporters in Sri Lanka, might lose has contracts too. Under GSP plus textiles is one of the top 5 benefited by the scheme. It’s an industry which has a large number of employees. Almost ninety percent are females (approximately 300,000). Facing the same problem the ceramic industry will have the largest negative impact and many jobs will be lost. Almost over forty-five percent are females in the industry.

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