Sri Lanka has begun to feel the effects of the loss of the GSP plus facility, after the closure of number of factories and reduction of export orders, Daily Mirror learns.

The Generalized System of Preferences (GSP+) Plus is a mechanism that gives preferential access to the markets in the European Union for exports from number of countries.  

However, the European Union excluded Sri Lanka from the list of beneficiary countries on February 16, 2010 due to the non-implementations of certain good governance regulations.  According to the European Union, the GSP Plus was introduced as a mechanism to encourage good governance and strengthen democracy in the world.

After three years, several factories have been closed down due to the inability to maintain their export markets in the European Union.

Organizing Secretary of Inter Company Employees Union B.I. Abdeen told Daily Mirror that 2000 jobs of direct employment had been lost due to the closure of two factories on January 2, 2013 alone.

“Crystal Sweater Lanka Pvt. Ltd is one such company that ceased its operations on January 2,  after a public announcement in newspapers.
“The company has cited the inability to compete with countries such as Bangladesh that enjoy the GSP Plus benefit to access markets in Europe.
“This is a company with 1100 employees. They put up a newspaper advertisement on December 22.  They cannot compete with countries such as Vietnam and Bangladesh enjoying preferential duty free access to Europe,” he said.  

Besides, Firefox Private Ltd, a Chinese company, also shut down its operations in Wattala area. In total 400 persons lost employment at this firm.

The issue was raised in Parliament this week by JVP parliamentary group leader Anura Kumara Dissanayake and UNP MP Dayasiri Jayasekara.

In response to a question by MP Jayasekara, Deputy Finance Minister Sarath Amunugama said the government had given financial assistance of Rs.2000 million to revamp operations of four apparel companies.  However, he said that three of these companies had ceased operation now.

Raising a supplementary question, Mr. Jayasekara said that the government did not listen to European Union to   ensure good governance in the country, and it was an adamant approach.

“In a pompous approach, the government disregarded recommendations by European Union.  Now, factories have been closed leaving their employees in the lurch,” he said.

He said that he was aware of a company that ended operation of its factories, resulting in the loss of 2000 employees.

Dr. Amunugama replied, “The market opportunities in the United States and European Union have shrunk today due to economic recession. Despite that, properly managed companies have succeeded. There are companies doing well,” he said.(Kelum Bandara)