Apparel exporters keen on new business model | Sunday Observer

Apparel exporters keen on new business model

23 February, 2020

Highlighting the need to introduce a relatively new model of business which will enhance offshore activities, the Sri Lanka apparel industry called for a number of measures including electronic documentation, e-commerce mechanisms and law reforms from the Government.

“These measures are important to boost the industry locally and internationally. The industry has an ambitious target of US $ 8 million in export turnover by 2025, which is double the present performance. Therefore, an improved environment is necessary to move forward,” Chairman, Sri Lanka Apparel Exporters Association, Rehan Lakhany told the Annual General Meeting of the Association in Colombo recently.

“Our confidence levels have improved considerably, and there is hope that the new administration will ensure a proper delivery of decision-making on policy, and action with time-bound implementation plans. The environment will further improve with political stability after Parliamentary elections this year,” he said.

Recalling that the industry faced a destructive environment in 2019 due to domestic political and global issues, and the indecisiveness in decision-making due to “differences between the Legislature and the Executive”, he said that the Government should focus on broadening supply bases locally and regionally.

“This could be done through the offshore management of total supply solutions in collaboration with a regional producer and subcontracting mechanisms. With the framework in place, exporters could create a new flow of export earnings, which could approximately amount to an additional $ 300 million from our sector alone,” he said.

The relatively new model of business should be encouraged by the Government by revisiting current tax provisions. The Joint Apparel Association Forum Sri Lanka (JAAF) has already made submissions in this regard.

Speaking about B2C transitions, he said that a major issue faced by the industry was the absence of a mechanism to receive payments online. The Government should create a mechanism similar to PayPal for this purpose, he said.

There was also a need for a change of regulations, especially in relation to electronic documentation, and the need for the Finance Ministry to take responsibility for this was highlighted. While saying that there was a need to develop local markets, the SLAEA Chairman said international market penetration was a priority, and commented on Sri Lanka’s Free Trade Agreements (FTAs), saying they are not providing enough market access to the industry.

He proposed the continuation of the trade dialogue that commenced in 2013, and added that GSP+, the only available scheme, was not fully used.

“Ony 47% is used, even though we could have claimed 98% if we could meet the country of origin rules,” he said, bringing up the issue of Sri Lanka depending on other sources for raw material. It is for this reason that the move to establish a textile manufacturing zone in Eravur in the Eastern Province is a welcome move.

While the technical feasibility studies have been completed, Lakhany said they expect the Government to develop the infrastructure. “If the completion of the project can be done in one year, we can guarantee that a minimum of three projects will be set up,” he added. Focus was also brought on Brexit and the United Kingdom’s decision to leave the European Union (EU), saying that it would be another challenge the industry will have to face following UK’s transition period.

“We feel that trade dialogue should be directed towards preferential arrangements with the EU and the UK on a high priority basis, followed by the recommencement of negotiations with China and India,” he said, adding that within the Asian region, Japan was also an important market.

Commenting on how Brexit would affect Sri Lanka in terms of GSP+, British High Commissioner to Sri Lanka Sarah Hulton said the UK was looking forward to new opportunities for Sri Lanka and the UK, “Using bilateral trade as an engine for sustainable growth for the mutual prosperity of both nations.”

The UK was the second largest importer of Sri Lankan goods, and that 30% of all apparel exports to the EU go to the UK. However, the apparel industry will continue to be a key sector of focus in UK’s trade investments, she said.

“This is an opportunity to reassure you that Sri Lanka will continue to benefit from the same level of access on its exports to the UK that it currently received through GSP+ during our transition period this year,” Hulton said. She added that all countries that are beneficiaries will continue to be beneficiaries of the EU GSP scheme and will continue to enjoy these preferential tariffs through a UK trade preferential scheme.

“The UK Government has now launched a four-week consultation on a new UK most favoured nation tariff schedule, which will come into being on January 1, next year,” she added.