Apparel exporters concerned over EDRS halt

By Azhar Razak

Sri Lanka Apparel Exporters Association (SLEA), the trade association representing apparel exporting firms in the island, says the government’s failure to fully implement the promised Export Development Rewards Scheme (EDRS) for the sector has hampered relations between policy-makers and apparel exporting stakeholders. The newly-appointed SLEA chairman, Rohan Abeykoon, however, says he is confident the upcoming budget will help apparel exporters mitigate some of the immediate challenges since a comprehensive five-year industry strategy has been handed over to the government.

“The industry faced the biggest challenge in 2009 when the global recession was at its peak with many apparel exporting firms making huge losses. During the time, the government which promised to help the exporters by introducing the EDRS has, however, failed to implement its pledge until to date,” Abeykoon told The Bottom Line in a recent interview.
He said the EDRS had promised to pay a five percent or a three percent rebate (depending on the category) if the exporters had not cut workforce and maintained a minimum of 80% of exports effected in first quarter of 2008, in the first quarter of 2009. 
 
The scheme had also said that for the next three quarters of the year 2009, the exporting firms should maintain a minimum of 90% of exports effected in the corresponding quarters of 2008 to become eligible to apply for the scheme.
 
“Although, lots of companies had complied with these conditions and applied for the scheme, the rebate was only paid for the first quarter of 2009, and that too with a maximum ceiling of Rs.10 million per factory,” Abeykoon pointed out.

He said that although the authorities accepted applications for processing for the second quarter of 2009, none of the exporters had received any payments.
 
“For the third and the fourth quarters, applications are not even accepted,” he highlighted.
 
He said that although this issue has been taken up with various authorities for the umpteenth time, the exporters have not had any positive response.
 
“We need our government to honour their commitments when they have been signed and sealed as decisions, which could determine the destiny of the companies who follow these directives. The infamous EDRS is one case in point which has led many of the companies who complied at great cost into struggling to survive as a result,” he said adding that they were not asking for any preference but only support, understanding and commitment when the Government makes promises.
 
Meanwhile, Abeykoon, who addressed the recent SLEA annual general meeting, said key issues which were taken up in two of the previous SLEA AGM’s of 2008 and 2009 still remain as major challenges facing the industry.
 
Referring to speeches made by the Past President of SLEA, Kumar Mirchandani in 2008 and in 2009, he said issues such as VAT refunds, non duty levies on capital goods, EDRS, appointment of a port and shipping regulator, eradication of ad hoc wage increases, realistic exchange rate to help exports, a re-look at excessive holidays, fiscal support to remain competitive, good investment incentives to encourage new investment and growth, and enhancing and improving multi-lateral and bi-lateral trade ties still remain.
 
“I would have to say, with all due to respect to all of Kumar’s efforts, that the industry has not been able to make any tangible and sustainable progress over the past two years in making this wish list close to a reality. In fact, some of these issues have become so contentious, it would appear we are hitting our heads against an iron wall,” he pointed out.
 
SLEA is pioneer Association of the apparel export industry in Sri Lanka inaugurated in 1982.
The combined export earnings of the members of the association account for 70% of the value of total apparel export earnings of the country.
 
Sri Lanka’s apparel industry brings in annual revenue of US$3.2 billion and accounts for almost 45% of the total export revenues earned.
 
The government has, however, targeted to increase the industry’s revenue to US$5 billion by 2015.

http://www.thebottomline.lk/2010/11/14/page6.html

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