● 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.”
