The cost of production at all free trade zone companies has gone up at an alarming rate in addition to the high corporate tax which has almost doubled forcing entities such as Next Manufacturing to wind down operations, said a senior official of the Free Trade Zone Manufacturers’ Association (FTZMA), following the closure of Next Manufacturing, an entity owned by a UK Group.
He said the FTZMA has taken up the high cost of production with all successive Governments including the incumbent regime but to no avail.
“We have brought up this matter on several occasions with the authorities as our member companies have to bear the brunt of a staggering income tax on top of high utility bills and worker benefits,” the FTZMA official said.
A former employee of Next Manufacturing said that the company had given increments of over Rs.10,000 per worker during the past years and provided many other benefits to the staff while paying a high corporate tax.
He said if a company makes a profit of Rs.1 million, Rs. 300,000 has to be set aside for corporate tax. Next Manufacturing, an apparel exporter in the Katunayake Free Trade Zone decided to call it a day, closing its production unit at Katunayake citing high production cost leaving close to 1,500 workers in the lurch.
However, Next will operate its two other plants at Andigama and Nawgaththegama. It will also continue operations of the embellishment and product development plants at the Katunayake Free Trade Zone.
In a statement on the closure, Next Manufacturing Director David Reay said: “After much careful consideration, we are very sad to announce the immediate closure of the Next Manufacturing Katunayake Production Plant, Sri Lanka. This has been a very difficult decision for the Company and has been taken after exploring all alternative options.”
Next Manufacturing (Pvt) Ltd is a leading supplier of quality knitted and woven wear to its parent company, Next PLC UK, one of Britain’s high-street fashion retailers. The company has been in Sri Lanka since 1994 rapidly expanding over the years.
According to workers they were taken by surprise at the sudden decision by the management to close the factory.
