● Upholds five key policy reforms proposed by SLAEA as a sustainable path to achieving 2025 USD 8 Bn. target
● Supports government in key reforms aiding economic recovery and growth
With the apparel industry aiming towards USD 8 billion in export revenue by 2025, Chairman of the Sri Lanka Apparel Exporters Association (SLAEA) Indika Liyanahewage highlighted five key policy reforms that are imperative for the industry to move forward. Speaking at the recently concluded SLAEA Annual General Meeting, he emphasized the revision of the exorbitantly high corporate income tax of 30%, expansion to strategic markets by securing more FTAs, mandatory dollar conversions to be increased to two months, labour reforms and revision of the newly changed cost structure of freight and shipping charges. “These five areas,” he affirmed, “are crucial to the industry sustaining its commendable performance.”
Chief Guest, Governor of the Central Bank of Sri Lanka Dr Nandalal Weerasinghe stated that while the CBSL is in sole charge of monetary policy, the CBSL stepping into fiscal policy reform would directly breach the mandate of the Treasury and the Parliament.
“The final authority on public finance is with the parliament. Fiscal policy is a choice by the democratically elected government of this country which is why the budget is always passed in Parliament. Hence, given that it is the citizens who elect those in parliament, it is those elected officials who take decisions on behalf of you. But, when it comes to monetary policy, it is not public finance.” The Governor also noted that labour reforms and securing FTAs fall under the mandate of relevant ministries and authorities.
Deputy Chief of Mission U.S. Embassy, Douglas E. Sonnek commended the support the industry has given to the people of Sri Lanka during the pandemic, leading to and during the economic crisis. “During the worst of COVID, the apparel industry led efforts to equip Sri Lanka’s medical professionals to protect thousands,” he said, applauding the industry’s consistent efforts to uplift and ensure worker welfare.
“This year, apparel manufacturers around the country provided for the welfare of their employees whether through pay increases, subsidized lunches or transportation. They looked after the industry and the people ensuring that families are provided for as the country grapples with record inflation and economic turmoil.” Recognising the indispensable role the industry plays in Sri Lanka’s economic growth, Sonnek assured the United States’ steadfast support via stronger bilateral trade relations.
The SLAEA endorses the position taken by the Joint Apparel Association Forum (JAAF) that the proposed amendments to the corporate taxation structure, which moves away from the previous policy of having a dual rate structure with an incentive for exporters, contradicts the intention for Sri Lanka to increase its export base. Moreover, the proposed rate of 30% will place Sri Lanka at a disadvantage over other countries vying for FDIs in the region, which have rates less than 30%. “This will have permeating negative impacts on Sri Lanka’s competitiveness,” said Liyanahewage. “On the other hand, we need to improve access to our key markets with strategic FTAs, which will ensure an increase in our order books and improved integration with global trade. We do welcome the labour reforms proposed in the 2023 budget and anticipate a revision of the new cost structure in freight and shipping charges.”
Image Caption: From left to right: Rajitha Jayasuriya, Treasurer (Director, Corporate Affairs), Aroon Hirdaramani, Outgoing Chairman (Director, Hirdaramani Group), Dr. Nandalal Weerasinghe, Governor, Central Bank of Sri Lanka, Indika Liyanahewage, Chairman (CEO, Eskimo Fashion Knitwear), Deputy Chief of Mission U.S. Embassy, Douglas E. Sonnek, Chairman of the Joint of Apparel Association Forum Sharad Amalean (Co-Founder and Deputy Chairman of MAS), Jeevith Senaratne, Deputy Chairman (Director Operations, Star Garments.