LANKA HAS ACCESS TO WHOPPING 4.5 Billion MARKET – SUJEEWA
WITH RAVI LADDUWAHETTY
State Minister of International Trade and Investment Sujeewa Senasinghe yesterday said that Sri Lanka would have access to a gargantuan 4.5 billion market with the GSP Concessions and the Free Trade Agreements that are in operation and the future ones as well.
He also said that Thai multinationals would set up a 20,000-acre Industrial Zone and Japanese multinationals, Toyota and Honda, have also made inquires to set up plants here to export to India under the Indo-Lanka FTA.
Excerpts of the conversation between the State Minister and Ceylon Today
?Would you please explain the benefits in real terms for Sri Lanka after regaining GSP+
A: The GSP+ has been granted and these manufacturers, all of a sudden, are not ready. There are a large number of factories which have been closed and they have to be reopened. It is very difficult for them to restart soon as they have got into massive debts. There has to be a new mechanism. The Government must also give them incentives not only to restart the closed ones, but also start up new ones.
? So, what are the incentives which the Government is planning to give them?
A: We are going to help them. We are also going to start a fabric park in the North and East. The only issue we would have there is industrial pollution, but it will be managed and things would be all right. This would enable us to export fabric and apparel, which would be under the Free Trade Agreements we have with India and Pakistan. The manufacture of fabric is slightly hazardous and we are talking to the Central Environment Authority and other allied State agencies in the pursuit of this. We are trying to use the GSP+ and export for the optimism benefit of the country.
? Is there is going to be only one Fabric Park for the whole country?
? For manufacturing fabric for the whole country?
? Then, is it true that Japanese motor giants Toyota and Honda are going to establish, manufacturing plants in Kalutara?
A: Both, Toyota and Honda have made preliminary inquiries from me about the possibility of establishing manufacturing plants here. But I am not sure whether they will come here. But, they are aware of the fact that they can establish a manufacturing base for exporting to these markets as they can make use of the Indo-Lanka Free Trade Agreement to do so, which would be duty free, Sri Lanka's FTA with India, would be a huge one for Toyota and Honda, as the Indian market would be gargantuan, and buttressed with the duty free benefits as well.
There would be definitely a Thailand based international company by the name of Rojana which would be established in Kalutara and that is definitely coming. We have earmarked a 20,000-acre block for them.
? So, Rojana is also going to establish a motor car manufacturing factory in Kalutara?
A: No. They are going to establish a large number of factories to manufacture electrical appliances and other consumer goods there. They have a huge Japanese client base and they are encouraging them to manufacture rice cookers, gas cookers, microwave cookers, electric irons, refrigerators, etc.
? Will the products be for the export market or the local market?
A: They would be mostly for the export market, but I guess a small percentage could go into the local market as well. If their selling processes are all right, we could get them to supply the local market as well.
? How will this benefit exports in real terms for Sri Lanka's exports to the EU?
A: Sri Lanka will have the benefit of the of a gargantuan 4.5 billion consumer market with the GSP+ and the Free Trade Agreements that we already have and would have in the future!
? What do you mean 4.5 billion? How did you arrive at that figure?
A: There is a 4.5 billion consumer market North of Sri Lanka, meaning India, China, Japan, Singapore, Pakistan, Thailand, Malaysia and others. We have FTAS with some, while we would be signing FTAS in the future with others. So, it is not only the apparel sector that we have under the GSP+. But, Sri Lankans are a bit resistant to venture out into these areas. The Government would want the Sri Lankans to be a little more adventurous. There are so many items under the GSP+ which Sri Lankan exporters should be exploiting. I cannot remember each and everyone individually, by product category.
? What are the product categories that you envisage will see a dramatic growth?
A: We cannot see a dramatic growth in one year, but there would be an exponential growth in 4-5 years that is certain.
? What are the percentages that you are talking of? Can you give us some figures?
A: We had US$ 11 million in exports. We are exporting it to go up to around US$ 16 billion by 2021.
? Do you see investments coming from the EU as far as joint ventures go in terms of apparel, fisheries et al?
A: You see that coming and the industrial parks are also a part of that. The two liquid natural gas plants and the oil refinery are also parts of that investment plans. There will be two sugar refineries and a cement plant.
The Japanese are going to have an Industrial Park in Trincomalee. I will see that the Thai Industrial Park will start by end 2018.
Otherwise, it will take another 4-5 years, if not for my personal intervention to get the land cleared it would take around 4-5 years. Then, the infrastructure has to be built as well. I meet all the relevant officials every Monday and I give them targets. This is a huge step in the right direction. I have already signed the MoU.
? In 2009, the EU withdrew the GSP+ facility to Sri Lanka for the non-compliance with EU imposed standards. In terms of exports and employment and other indicators, how would you identify the losses, financially and operationally?
A: The losses of the GSP+ are enormous when President Mahinda Rajapaksa took over the Government. Exports were 34% of GDP. Now, after Mahinda left the Government, it has nosedived to 14% of GDP. So, Mahinda has nosedived Lankan exports by 20% in his 10-year presidency. That is became he was not keen on having industrial exports or industrial growth. All he did was to have a concrete sea port and an airport for which he did not have a plan and for which we are now paying interest and capital and the colossal loans that he and his Government took. The Government (the Sri Lanka Ports Authority) is paying
Rs 15 billion per annum as repayment without a single cent as income from the Hambantota. But, in the years 2014, 2015 and 2016, 11, 13 and 15 the ships that docked at the Hambantota Port were those carrying imported cars, which business would have come to the Colombo Port anyway. The 10, 13 and 15 ships were not meant to be in the Hambantota Port.
? On the other hand, the previous Government devalued the Rupee by 5% which is said to have negated the impact of the loss of GSP. How do you see this?
A: We also can bring the Rupee up and the Dollar down artificially, that will bring the economy down. The idea is to have a floating economy so that it will be a true reflection of the economy, having artificial controls on the Rupee will have serious repercussions.
? On the other hand, the GSP+ concessions, those that are given to Sri Lanka, are the same concessions given to as much as 50 countries or more. So, what is the big deal?
A: The big deal is that we have access to the entire market that is the big deal. We have to make the 'big deal' happen without waiting till the 'big deals' falls into our laps. We must have manufacturing capacity and that is why we are having all these agreements signed with other countries. We have the advantages of those markets, which is a 15-20 per cent market advantage.
We must draw the advantage of Sri Lanka's strategic geographical location to attract investors. That amounts to both Tincomalee and Hambantota, so that we could be like Dubai or Singapore, or we could even get ahead of them in the near future.
In addition to the benefit of the 4.5 billion strong export market, we have the benefit of the 'good governance' market as well. We must export the international support we have on that too.
The prestigious Harvard University is giving us Rs 2 billion for our trade policy. That is the mission that I am heading in Sri Lanka.
Over 50 officers from BOI and EDB are bound have been trained under this programme. We are going to increase this to around 100. We hope to increase to around 20 under the programme, they are helping us without trade powers, identifying our strengths and weakness, in addition to training our officials. Then, they would get our people to formulate our policy according to the needs of our country.
George Soros has funded the programme. Then the International Trade Centre is also helping us with another programme on our export policy. Those programmes would be finishing in December, 2017. That programme will also be headed by me.
We have seen an increase of 20% in exports in the first half of this year over the corresponding period last year, a 35% of increase in from exports, a 17% increase in agricultural exports and an 8% increase in industrial exports. All then have been attributed to the solid platform that we laid in the past two years.
? Were the GSP concessions withdrawn for genuine reasons or for political reasons, because of the strained relationships that President Mahinda Rajapaksa had with the West?
A: That is because Mahinda did not handle the GSP+ properly and professionally both before and after the war in 2009.
? What are the counter measures Sri Lanka will adopt some day if the GSP facility is not there?
A: We would not need the GSP+ in another 7-8 years as all our markets would be well established by then.
? What about the alleged HR violations claims against Sri Lanka? Were they real or were they blown out of proportion?
A: There were sporadic instances but we have take reconciliation steps. But one has to accept that these things happen when fighting a war with the most ruthless guerilla group in the world. And, things are not done intentionally. There are instances of this happening even in other so-called developed countries, such as the US and other countries which are paradoxically pointing fingers at us! The Government and the Armed Forces took utmost care to cause minimal civilian casualties. The LTTE used the civilians as human shields!
? What has the present Government done to alleviate those fears and allegations?
A: We are taking the reconciliation process forward and that is why the international community is showing great admiration for Sri Lanka.
? What about the 436 Members of the European Parliament who voted against the motion and those who voted with it?
A: All those are things of the past.
? Is the Government going to have an outreach programme for those who voted with the motion?
A: We have to look at the domestic process before we look at the international process. We have given freedom to the media so much so that the media is conducting a mud-slinging campaign against the Government. The electronic media is bashing the Prime Minister Ranil Wickremesinghe daily. These are the TV stations which got their licences from UNP Governments of which Ranil Wickremesinghe was the Prime Minister! That shows we are a thriving democracy!
? What plans has the government got for procuring funds of the diaspora at least for the development of the North and the East?
A: We are confident that they will invest here with the completion of the Fabric Park and the Trincomalee Industrial Zone.
? Don't you think that there will be moves by the Western Governments to repatriate members of the Tamil Diaspora back to Sri Lanka now that there are no hostilities?
A: I don't think so. They are citizens there now. They will participate in the development process here.
? Now, the EU is in a financial crisis and so are other countries within the region. Don't you think that Sri Lankan exports could benefit under the circumstances?
? Did the negotiations with the EU have implications on Sri Lanka's dealings with China and India?
A: No. Not at all. That was never a problem.
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