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Economic & Market Bulletin
[July 6, 2005

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs
Volume 2:Issue 16 
1st July 2005 

Zero duty for 7200 Lanka products under GSP +

  • The European Union (EU) has decided to grant Duty Free concession to Sri Lanka.  This new General Preference System Scheme (GSP+) will be effective from 1st July 2005 and will remain unchanged until the end of 2008.  This will benefit the country’s garment sector, which accounts for about 50% of the country’s total exports.  

  • The concession GSP Plus Scheme applicable to vulnerable countries with special developmental needs such as Sri Lanka will cover around 7200 products, which can enter the EU duty free.  

  • The Department of Commerce of the Ministry of Trade, Commerce and Consumer Affairs is the administrative focal point for this scheme in Sri Lanka.  

  • The current GSP + scheme will be replaced by a three-tired structure consisting of the GSP Plus Scheme applicable to Sri Lanka, the General Scheme and the Everything But Arms Scheme for least developed countries.  While the GSP Plus enter into effect on 1st July 2005, the other two, General Scheme and Everything but Arms section of the new GSP Scheme as a whole will enter into force on 1st January 2006 and will be operational until the end of 2008.  

  • EU is the second largest garment buyer of Sri Lanka, which imports about 35% of the apparels produced here.  It will help the country face the challenges in the quota free era.  The Duty Free treatment has been offered under the new GSP + Scheme that is reserved for vulnerable countries that signed that are partly to a large number of conventions related to labour and environmental standards.  

Iceland – Sri Lanka Agreement on Development Cooperation  

  • The Government of Iceland and Sri Lanka signed a Development Cooperation Agreement on 23rd June 2005 at the Ministry of Finance. The Icelandic International Development Agency (ICEIDA) will be the link for the Island Government in assisting in the development process.

  • In accordance with the Development Cooperation Agreement signed, the Government of Iceland will provide project aid, technical assistance and training for Sri Lanka. Iceland has allocated Iceland Kroners 25 million (Rs. 40 million) for these activities for 2005.  The Government of Iceland has proposed to open an ICEIDA Resident Office in Sri Lanka.  

  • Iceland pledged Kroners 85 million (Rs. 135 million) of which 50% is through international agencies as humanitarian assistance and the remaining balance of 50% through ICEIDA for reconstruction of Tsunami affected areas.  

  • Iceland has recognized Sri Lanka as a potential development partner and will help to develop the fisheries sector. Sri Lanka is the first Asian country to enter into a development cooperation agreement with Iceland.  

World Bank launches Small Grants Programme 2005

  • The World Bank office, Colombo will disperse grant allocations to 7 selected civic society organizations and officially launch the Small Grants Programme on 28th June 2005.  

  • The theme for this year’s programme is “Social Accountability “. The selected organizations will work with diverse community sectors from Tsunami affected to plantation workers addressing a wide range of pertinent issues.  

SLPA signed TSA with Hanjin 

  • Sri Lanka Ports Authority (SLPA) signed a Terminal Service Agreement (TSA) with the global giant Hanjin Shipping.  

  • According to officials the TSA was part of the SLPA’s focus on aggressive marketing of the Colombo Port whilst offering superior service to its customers.  This strategy coupled with Colombo’s hub status has encouraged global carriers to opt for the Jaya Container Terminal (JCT) hence the TSAs with five other leading shipping lines.  

  • The SLPA was working towards further enhancing the capacity and productivity at the Colombo Port to strengthen Sri Lanka’s maritime hub status in South Asia.

SLAVO meets Ports Minister 

  • The Sri Lanka Association of Vessels Operators (SLAVO) had a meeting with Minister of Ports and Aviation Mangala Samaraweera.  SLAVO delegation headed by its Chairman Vincent Tant.

  • Among issues discussed were the liberalization and high cost of bunkering in Colombo Port, high empty stevedoring costs, the Shipping Development Fund and the South Harbour Development Project.  

  • At the meeting SLAVO commended the improved productivity level at the Sri Lanka Ports Authority managed JCT (Jaya Container Terminal) and its commercial approach towards its clients securing additional volumes and maintaining high standards.

SME Bank to launch disbursement of 10,000 loans 

  • The inaugural disbursement of loans of the SME (Small and Medium Enterprise) Bank was scheduled for June 29 in Anuradhapura.  The Government allocated Rs. 5000 millions as capital from the previous budget to launch the Small and Medium Enterprise Bank.  

  • The objectives of the Bank are to promote entrepreneurship in the country to provide finance and other facilities to entrepreneurs with or without collateral.

  • The main office of the SME Bank is in Colombo.  It will operate with a minimum of staff.   The Bank operates all over the island through the National Savings Bank.  There are plans to operate through the IDB, other State Banks and Trade Chamber Offices in the districts in the future. 

US $ 300 million Chinese loan for Sri Lanka 

  • A Finance Ministry team led by Secretary Dr. P. B. Jayasundera in Beijing, concluded a US $ 300 million highly concessionary loan from the Peoples Republic of China to urgently finance the crucial coal power plant project.  The deal was successfully negotiated with the Export and Import (EXIM) Bank of China by the Sri Lankan team.

  • The loan is to be repaid over a period of 20 years. The interest will be a highly concessionary 2% per year.  

  • The Chinese Government through the EXIM Bank will follow up on the funding for four other projects tabled: the Katunayake – Colombo – Ratmalana Express Rail network, the Colombo – Katunayake Highway, the Hambantota Oil Tank Farm and the Phosphate Fertilizer Venture.

Sri Lankan Cargo Center sets new record

  • Sri Lanka Airlines Cargo Center at the Bandaranaike International Airport handled an all time high 146,883 metric tons of cargo during 2004.  The total easily outdid the earlier record of 127,116 tons set in 2000, and is a dramatic 17% increase over 2003.

  • The record for the most amount of cargo handled in a month 12,078 tons in March, 2003, was broken no less than seven times in 2004, with the highest being in October at 13,949 tons.  This has already been beaten twice this year, and the new high is 14,597 tons, which was achieved in January.  

  • Sri Lankan Cargo Center dramatically increased its efficiency following its adoption of the Japanese 5 S system two years ago, and recently received a Merit Award for the second successive year at the GASTECA Taiki Akimoto 5 S awards.  

BOI Approved Company in Pioneering Environment Project

  • BOI approved Viridis (Pvt) Ltd. is to become the first company in Sri Lanka to process and export, waste plastic materials, using locally available waste. The Company is a joint venture between Viridis (Pvt) Ltd., the UK and InXcess Corp. (Lanka) Pvt Ltd. This project represents an investment of Rs. 66.43 million.

  • The objective of this project is to process waste plastic materials, namely PET (Polyethylene Terapathalate), PP (Polypropylene) & HDPE (High Density Polyethylene) into valuable recycled raw material for the South East Asian market.

  • The company also intends to establish waste material collection centres regionally, enabling micro enterprises to be developed as waste material collection business enterprise.

  • The Company would assist the sustainable development programme of the country for significantly reducing the extent of dispersion of non-biodegradable as solid waste.  



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Last Updated Date: July 6, 2005 .


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