Apparel sector’s major concern ‘not addressed in budget’

Sri Lanka’s apparel stakeholders say they are disappointed that the latest budget has not addressed their key industry concern with regard to the non-implementation of the Exports Development Rewards Scheme (EDRS).

“We are disappointed that the biggest concern of the apparel sector which was the non-functioning of the EDRS was not addressed in the budget,” Sri Lanka Apparel Exporters Association (SLAEA) chairman Rohan Abayakoon told The Bottom Line.

The sector, which is presently going through a recovery phase following heavy slump in orders following the global recession and the withdrawal of the GSP plus facility offered by EU nations, with effect from August 15,2010, had expected that the government would recommence its promised EDRS scheme to compensate those firms which complied its regulations.

He said most of the garment factories had incurred further losses during 2009 as a result of complying with the EDRS in the hope of receiving rebates as compensation but the scheme had failed to keep to its promise.

“As you know the scheme has not paid its dues after Quarter 1 of 2009 onwards,” he reiterated.
Lokuhetty, who is also the chief executive of Penguin Sportswear Ltd, however, commended that the 2011 Budget presented in Parliament last week has mostly been very progressive and development-oriented.

“We are glad that there is opportunity for everyone in the Budget. The onus is now greater on the private sector and the outcome would also depend on how far the private sector performs,” he pointed out.

Meanwhile, Sri Lanka President Mahinda Rajapaksa, who is also the country’s Finance Minister, said in his budget speech that more facilities will be arranged to promote entrepot trade involving imports, processing and re-exports as well as transshipment business in apparel clothing.

“Incentives have been given to promote textile, apparel and leather product related high value added activities. As such, machinery and equipment to manufacture textile, leather, footwear and bags will be exempted from import duties and VAT,” the President said.

The government also plans to attract leading buyers to establish their headquarters in Sri Lanka for management, finance, supply chain and billing operations, and proposes to exempt foreign exchange earnings from such activities from income taxes.

“In order to promote these activities, the exchange control requirements and Custom procedures will be simplified,” the President mentioned in his speech.

Sri Lanka’s apparel sector, which accounts for nearly two-thirds of the island’s manufactured exports, is facing heightened competition from lower cost producers and declining demand. According to reports, apparel exports to the European Union has slightly contracted for the period from January – August 2010 to US$986 million compared with US$1077m earned during the same period in 2009. (AR)

http://www.thebottomline.lk/2010/11/28/page5.html

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