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GSP hasn’t helped Sri Lanka’ exports much

The EU is Sri Lanka’s biggest export destination, absorbing some 36 per cent of total shipments. The EU has reinstated GSP benefits for Lanka. But even then Sri Lanka’s apparel exports to the EU fell 5.8 per cent in the first five months of 2017 compared with the same period in 2016. Production and labor costs in Sri Lanka remain high compared to many of its competitors’. It’s doubtful if the country will be able to meet its goal of doubling exports by 2020.

Wages in Sri Lanka are typically higher than in Bangladesh and Vietnam, making the country better suited to producing high-end garments such as swimwear, trousers and underwear, including lingerie for top brands such as Victoria's Secret. The minimum monthly wage in Sri Lanka is $120 compared with $70 in Bangladesh. Sri Lankan labor laws also limit factory workers to 57.5 hours per week, with fixed weekly holidays. This compares with Bangladesh's working limit of 60 hours and Vietnam's 64 hours.

Sri Lanka needs to do more to catch up with countries such as Bangladesh, which is now the world’s second largest clothing exporter after China. Bangladesh accounts for 6.4 per cent of global clothing exports compared with Sri Lanka’s 1.2 per cent.