SL garment sector concerned that state losing focus
Sri Lankan garment industrialists are perturbed over statements allegedly made in parliament implying that this sector is not as important as before.
These issues were also raised at this week’s Exporters’ Forum headed by Rishad Bathiudeen, Minister of Industry and Commerce, where a representative from the Apparel Exporters Association urged that Sri Lanka should explore new areas for garment exports.
He said Sri Lanka should capitalize on the rising labour costs in China, a cheap apparel exporter where labour costs has increased to around US$ 250 per month per person.
But, he pointed out that while Sri Lanka’s labour cost would be less, the major issue is that the apparel industry is unable to fill many vacancies and suggested that maybe cheap labour could be imported.
Various government officials appeared to dominate the proceeding and many of the exporters who brought in their grievances were at the mercy of these officials. At one point even Mr. Bathiudeen commented on the negative attitude of some officials.
The overall attitude of the officials also demonstrated that the government is keener to collect taxes wherever possible than helping exporters to reduce their cost component to be competitive in the international market.
A major constraint faced by exporters is the VAT refund. Some of these exporters said that they are facing serious cash flow problems due to their fund tied down in VAT. The Inland Revenue Department (IRD) has to dispose the VAT refunds by three months but there were some cases where the refunds are pending beyond this time period.
Even though large amounts of VAT refunds are cleared by IRD one of the issues for the delay has been not rectifying the IRD Computer systems.
The Lanka Fruit and Vegetable Producers, Processors and Exporters Association(LFVPPEA) pointed out that a 25 per cent cess is imposed on import of greenhouses and as it is part and parcel of the cultivation process the Forum was requested to waive it. The LFVPPEA representative pointed out it is not a building but an enclosure for the plants to grow.
They also requested to revisit the approval procedures adopted by the BOI with respect to investments into export of primary products such as spices without value addition which is detrimental to local exporters. They requested to extend the tax and other incentives given for new foreign investors to the existing local companies who want to add value, expand and upgrade their operations.
The Floriculture Produce Exporters’ Association and two other companies requested to provide electricity at an industry rate for tissue culture labs. They pointed out that agriculture and floriculture are also industries that make use of modern technology.
One industrialist was concerned about electricity tariffs going up constantly.
A representative from the Ceylon Electricity Board, in response, said that Sri Lanka is one of the few countries that supply uninterrupted power supply. But the industrialist contested the issue saying in the area his factory is located some days power goes off 12 times and due to these power failures they make major losses.