Sri Lanka's policy challenges
The need for international understanding:
by Professor G.L. Peiris, Minister of Export
Development and International Trade
Straddling the whole spectrum of Sri Lanka's policy in respect of its
economy is a sharp change of focus from receipt of aid to relationship
involving trade and investment Sri Lanka's economy grew last year by
approximately 6.5%.
One of the most significant growth areas was the export sector. The
improvement with regard to export performance in 2007, as compared with
2006, was about 14%. While this was the case across the board, there
were some specific industries which fared even better. Among these were
apparel, electronics, rubber, wood products and gems and jewellery.
We have every reason to be proud of the performance of some Sri
Lankan companies. Last year the award for the company which earned for
the country the largest volume of foreign exchange from exports went to
Loadstar.
It is a matter of deep satisfaction to us that this company commands
today more than 20% not of the regional market but of the global market
in s particular type of heavy tyres. This is a remarkable example of the
degree of success which can be achieved by imaginative techniques of
value addition.
This company, with an active Belgium partner, has been using high
quality Sri Lankan latex and infusing advanced technology in order to
turn out a product, the quality of which has resulted in an extensive
demand in sophisticated markets in five Continents.
An equally impressive example of a company in the gem and jewellery
sector is Blue Diamonds.
This company has been importing diamonds from Antwerp and other
sources, polishing, refining and cutting the stones in Sri Lanka, and
exporting the value added product to international markets.
Apart from the training and employment opportunities which this has
afforded to a large number of Sri Lanka youth, the success of the
company is indicated by the term 'Colombo Cut' which has now entered the
vocabulary of the trade in many countries.
The outstanding success story is, of course, the apparel sector.
Thirty years ago no one imagined that Sri Lanka would achieve the status
of an undisputed global leader in this field with the termination of the
Multi-Fibre Agreement and the end of the quota protection regime which
this signified, many people believed that the garment industry in Sri
Lanka, far from prospering would not be able to survive at all.
What in fact happened, as the world sees today, is fundamentally
different. This was due in large measure to the vision and sagacity of
the leading companies in this field. They realized that the future lies
not in the production of conveyor belt items, in respect of which our
country could not realistically compete with far larger countries, but
in a sustained emphasis on value added products which are intended for
niche markets.
It is through the pursuit of this phenomenally successful policy that
Sri Lankan companies have been able in recent years to market their
products to the world's leading buyers which are readily identifiable as
household names - for example Victoria's Secret, Speedo and Ann Taylor
in the United States and Markets & Spencer, TESCO and Next in the United
Kingdom.
It is undeniable that a very powerful impetus has been provided for
the growth of many of our industries, including the appeal sector, by
the GSP+ arrangement, the benefit of which Sri Lanka enjoys today with
the European Union.
The effect of this arrangement is to provide, for 7200 categories of
products from Sri Lanka, duty free access into the markets of the
European Union. This arrangement came into being in 2005.
Sweat shoes
It is important to reflect at this time on the reasons why this
concession was extended to Sri Lanka in the first instance. It must be
remembered that Sri Lanka is the only country in Asia to enjoy this
privilege.
Its conferment on our country was principally due to the exemplary
conditions which prevail in our garment factories. There was total
compliance with labour standards. It is to Sri Lanka's credit that we
never had sweat shops; and child labour, prison labour or forced labour
of any kind was never used in our garment factories.
It was readily recognized that the garment factories had brought
about a renaissance in the rural area of the Island. More than any other
single measure, the garment factories were instrumental in reducing
appreciably the divide between the urban and the rural sectors.
For the most part, the workers in garment factories were woman who
became the breadwinners of their families. At the moment about 350,000
persons are directly dependent on the garments industry for their
employment, while the number indirectly dependent on it for employment
is close on a million.
If one takes into account the total number of their dependents, one
is envisaging a segment of almost three million people.
The programme know as garments without guilt, which has been
initiated and vigorously pursued by the Joint Apparels Association Forum
(JAAF), indicates the extent to which the garment factories have gone
beyond mandatory legal requirements to provide their workforce with an
environment in very respect conducive to social mobility and wellbeing
in these factories, in most cases situated in close proximity to their
homes, are given training of a quality and relevance which opens up
vistas of opportunity for social advancement which would have been
considered inconceivable some years ago.
The extent of value addition achieved by the apparels sector today in
our country is at a threshold as high as 55%. What makes this especially
commendable is the fact that this has been achieved without I any way
sacrificing or even diluting the most exacting standards in respect of
preservation of the environment.
This has received explicit recognition at the highest commercial
level in countries of the European Union. We are greatly encouraged by
the decision of Marks & Spencer to select Sri Lanka as the site of the
world's first green apparel plant which is to be opened by Sir Stewart
Rose, Chief Executive Officer of Marks & Spencer, in our country next
month.
The continuity of the GSP + arrangements is now coming up for review
in Brussels later this year. On my way to the United Kingdom, I visited
Brussels last week to have discussions with Mr. Peter Mandelson, Trade
Commissioner of the EU and for External Relations.
In these discussions I set out clearly the point of view of the
Government of Sri Lanka. The purpose of the review being conducted in
Brussels is to decide whether Sri Lanka should continue to have the
benefit of GSP + for a further three years.
All 15 countries (eleven of which are in the Central American,
Southern American and the Andean Region), which are current
beneficiaries of the GSP + scheme, are required to apply in writing
before 31st October this year for extension of these tariff concessions.
The criteria underpinning this process are of multiple nature. Apart
from the technical trade aspects, there are criteria of the more general
nature. One of the principal requirements is that the beneficiary
countries should furnish proof of their ratification and implementation
of 27 international covenants which fall into four basic categories
human rights labour issues, governance and the environment.
Sri Lanka has enacted legislation which constitutes total compliance
with this requirement s postulated by the EU.
Contexual factors
In London, I have had detailed discussions with Ministers of the
Governments as well as with leading personalities int he opposition
regarding the human rights issues.
Contextual factors are of overriding importance in this regard. It
must be remembered at all times that Sri Lanka has a democratic
government grappling with a ruthless terrorist organisation. I do not
have to emphasize to a British audience the vulnerability of a
democratic government in these circumstances.
The Government of Sri Lanka, in its response to the challenge of
terrorism is rightly constrained and constricted by a whole range of
democratic principles, values and procedures which in no way inhibit the
terrorist organization.
This reality is poignantly underlined by the words which were
addressed to Margaret Thatcher by the IRA in the immediate aftermath of
the Brighton bombing. The IRA told Prime Minister Thatcher: Madam, it is
we who choose the time, the place and the opportunity. You have to be
lucky every time. We have to be lucky only once."
It is crucial importance, in the interest of fairness, that
governments and the public in the Western world should be aware of the
excruciatingly difficult dilemmas with which democratic governments in
our region have necessarily to contend.
At the core of policy decisions which they are required to make is a
practical and effective balance between freedom and security. Human
rights are hardly uncongenial to our political culture. One of the
central characteristics of Sri Lanka's heritage and cultural traditions
is that we have evolved over the centuries a caring and compassionate
society which is deeply ingrained in the national consciousness of our
people.
The regrettable reality, however, is that the government of Sri
Lanka, through sheer necessity and certainly not by choice, has to
operate in an environment in which schools, places of worship, markets
and public transport are constantly in need of protection against
attacks which are intended to destroy the lives of innocent persons.
Adequate appreciation of the complexity of this situation is an
essential prerequisite for any objective assessment or evaluation.
Achievements
Credit must be given to the Government of Sri Lanka for its
legitimate achievements in the most challenging situations. Pre-eminent
amongst the government's achievements was its ability to conclude local
government elections in the Eastern Province of the Island after a
period of almost a decade and a half, when there elections could not be
held because of persistent terrorist activity.
101 members of local government institutions were freely elected two
weeks ago to nine local bodies. By any dispassions standard, this was no
mean achievements. It called for considerable political courage and
resolve. Independent organisations which maintained a continuous
presence in the area throughout the election campaign have concluded
that the elections were free and fair.
The government's action, after clearing the Eastern Province by
appropriate military means has made it possible for the people of the
area, after so long an interval, to exercise the most basic of all human
freedoms - the right to exercise their franchise.
This event signifying revival of the electoral process is not to be
looked upon as a single or isolated initiative. If falls into place as
the beginning of a process, the trajectory of which has been denied with
clear time frames.
The next step is the elevation of the democratic process to a higher
tier with the holding of Provincial Council elections in the entirely of
the Eastern Province. Nominations are to be received next week, and the
elections will be held on the 10th of May.
This resuscitation of democratic structures is accompanied by a multi
faceted programme directed towards invigorating the economy of the
Eastern Province. Abundant resources are being utilized for the
development of highways, irrigation systems, health and education
facilities and supporting activity in the agriculture, fisheries,
tourism and industry sectors.
The private sector has responded magnificently to the government call
to participate fully in these initiatives. The appeal sector, for
instance, has announced plans to open three large garment factories in
the area shortly.
The government sees this as a unique opportunity to demonstrate to
the people of a long affected area the reality of the peace divided
which will enrich their lives and transform their livelihood.
This is a convincing demonstration of the pragmatic value of the
peace initiative which is being carried forward by the government in a
manner which will make the maximum impact on wellbeing of the people.
What we require at this point from the audience which I have the
privilege to address on this occasion is empathy and understanding in
respect of these developments which are taking place in my country as I
speak to you today.
Any decision to withhold GSP+from Sri Lanka will result in the
dissemination of poverty, adversity and deprivation on a scale which
cannot but impose intolerable strain on the social fabric. Nothing could
be more inimical than this for prospects relating to the advent of
peace. |