EU-Sri Lanka: Increasing Trade Competitiveness of Small and Medium-Sized Enterprises in Regional and European Union Markets

Context

The Government of Sri Lanka has placed export growth high in its development agenda. The country has great export potential with one of the fastest growing economies in the Asia-Pacific region. However, Sri Lanka’s trade balance has remained negative, partly due to oil imports, but also due to supply-side and market access constraints. International competitiveness of Sri Lanka’s export industry particularly the small and medium size enterprises (SMEs) is a key concern especially in the European Union (EU) market, the country’s main trading partner. The Sri Lankan economy also benefits from and is dependent on the rapidly growing India sub-continent and trade with the South Asian Association for Regional Cooperation (SAARC) region.

The Ministry of Industry and Commerce of the Government of Sri Lanka, through its Department of Commerce (DoC) approached the EU Delegation with a request for trade-related technical assistance. Support to the action is considered highly relevant and will be funded under the EU’s Regional Multi-Annual Indicative Program for Asia (MIP) 2014 – 2020. DoC and the EU selected the United Nations Industrial Development Organization (UNIDO) and the International Trade Centre (ITC) for the design and implementation of the project.

The project is timely, after the Presidential elections which took place in January 2015 and the Parliamentary elections in August 2015. The new Government aims to revive regional cooperation in the context SAARC and to rebalance the country’s external focus towards the EU markets. Sri Lanka has required technical assistance support to the EU to ensure SMEs can take full advantage of the favorable market access conditions granted under the GSP (and GSP+) regime to accelerate inclusive trade growth and socio-economic development. Against this backdrop, the initiative enjoys a very strong commitment by country stakeholders. Ownership by country counterparts and beneficiaries, including at the highest level of decision making, has been ensured throughout the design process through an extensive consultative process.

Strategy

The project aims to increase the competitiveness of Sri Lankan small and medium-sized enterprises (SME) in regional and EU markets to support inclusive, trade-led growth. It focuses on export strategy, trade policy and facilitation, national quality infrastructure (NQI) and value chains in the spices, food and information technology (IT) / business process outsourcing (BPO) sectors.

Within the framework of the project, UNIDO facilitates the strengthening of NQI services to meet quality and sanitary and phytosanitary standards requirements at home and abroad and enhances the value chain performance of SMEs that depend on these services. Specific attention is given to strengthening core NQI pillars, which constitute standardization, metrology, accreditation, and conformity assessment, and to enhancing export compliance along the spices and processed food value chains.

Expected Outcomes

  • Improved quality infrastructure services to meet quality and SPS requirements in regional and EU markets
  • Increased SME competitiveness in export-oriented sectors (processed food & beverages / spices & concentrates)
  • Coherent national trade strategy for export competitiveness designed and implemented
  • Enhanced efficiency of cross-border procedures and SMEs’ capacities to comply with cross-border procedures for exporting to regional and EU markets

Cumulative Key Results Achieved (Until 2019 Q2)

Improved quality infrastructure services to meet quality and SPS requirements in the regional and EU markets

  • National Quality Infrastructure Strategy (NQI-S) approved by the Cabinet. Terms of reference for National Quality Council (NQC) approved by NQI-S Advisory Committee. 2 budget proposals approved for fiscal allocation to NQI-S and NQC.
  • 60+ training events for NQI institutions (SLSI / SLAB / MUSSD) and conformity assessment bodies (CAB) attended by 2,000+ participants, including high profile events for quality awareness and training on 7 ISO standards.
  • Of the recommended list of standards for SLSI, 10 of 28 revised, 17 of 40 formulated, and 14 of 22 adopted.
  • SLSI submitted 3 applications for accreditation of product certification.
  • 24 CABs received technical assistance across 27 scopes of accreditation, which would bring online 90+ new conformity assessment services; 3 CABS are near the finish line.
  • For MUSSD, UNIDO is supporting 8 laboratories, of which 3 are close to achieving international recognition, namely time & frequency, pressure, and volume laboratories.
  • The Industrial Technology Institute, the designated national packaging testing center of Sri Lanka, to be launched in November 2019.
  • 5 study tours in total for ITI, SLSI, and SLAB, for which the lattermost institution is able to qualify two peer reviewers by November 2019.

Increased SME competitiveness in export-oriented sectors (processed food & beverages / spices & concentrates)

  • 1 budget proposal for fiscal allocation to National Food Authority
  • 172 regulatory officials trained on regulatory impact analysis
  • 3,300+ trained on food safety & quality (FSQ) assurance; 16 FSQ trainings conducted by extensions officers for 430 SMEs; 167 SMEs trained on organic certification, incl. China Organic Certification; 288 trained across 3 trainings on addressing border control challenges on safe and feasible use of pesticides.
  • 1 budget proposal for fiscal allocation to Ceylon Cinnamon Geographic Indication (CCGI). 1 set of GI regulations approved by the IP Advisory Committee of NIPO. 1 revised Single Document for CCGI submitted to the European Commission, incl. supporting documents: 1 (Product) Specification; 1 Control Plan; 1 blueprint for traceability system for internal control. 1 CCGI Association registration submitted to the Registrar of Companies; 1 revised CCGIA Constitution; 7 awareness sessions on use/promo of CCGI.
  • 1 budget proposal for fiscal allocation to the Cinnamon Training Academy (CTA). Revisions to 4 national competency standards and to 4 curricula for cinnamon field/factory operations. CTA delivered trainings within certifiable to National Vocational Qualification (NVQ) Levels 3 and 4; 371 certified for L3; 34 certified for L4.
  • 100 SMEs enrolled in Export Compliance Program (XCP) to strengthen food safety, quality, packaging, and labelling with bespoke technical assistance to a core group of 30 SMEs aiming for certification.

For more information, please contact:

Juan Pablo Diaz-Castillo
Project Manager
Email

Facebook profile of the project.