of an era
Joy and tears of the TQB allocations
The Textile Quota Board (TQB), the focal point of the era
of textile quotas which brought joy to some and tears to others
in the allocation of quotas, will continue to function even after
the quota era ends this month. The TQB will have three main functions.
It will be the central point for local supplies such as accessories,
will monitor exports and function as a data collection centre.
unit was started in or around the early 1990s in order to manage,
distribute and allocate quotas under the MFA. A manufacturer of
textiles and textile products registered as an exporter with the
Board of Investment (BOI) or with the Ministry of Industrial Development
was eligible to receive textile quotas or apply for textile quotas.
Prior to that quotas were distributed by a unit in the Ministry.
board comprised officials of the ministry and was often chaired
by a senior assistant secretary from the ministry and had representatives
of garment and apparel industry associations.
quotas are issued at the beginning of every year and the old (more
experienced) factories get a bigger slice of the allocation. The
quota depends on the number of machines and workers and if Employees'
Trust Fund (ETF) and Employees' Provident Fund (EPF) have been paid.
The allocation is made at the discretion of the TQB.
balance of the quotas is kept every year in case of an emergency.
This is called the 'pool quota' and is usually given in the September/October/November/December
period to those who have orders but no quotas. Those who wish to
get allotments from the pool quota have to apply for it. A charge
of two rupees is levied for each piece while proof of ETF and EPF
payment are also required to comply with the application.
are two main allotment categories, 'hot' and 'cold'. The 'hot' category
includes the items required by big buyers from countries like the
United States, United Kingdom, Japan and Canada. The 200 factories,
which were opened during the Premadasa regime, were allocated quotas
from the 'cold' category.
'performance quota' decides on the eligibility of getting the same
quota allotment the following year. This depends on the quantity
that is shipped throughout the year and if the quantity shipped
is less than the quota allotment, the quota would be reduced to
90% in the following year, or less, depending on the amount shipped.
This quota could be increased if the factory has performed well
during the year, increasing the number of machines, workers etc
during the year.
and allegations of bribery and wrongdoing in the TQB and those in
the industry have shadowed the operations of this key unit over
the years. The emergence of the 'broker' or the 'go-between' has
benefited many in the industry.
this 'go-between' system, those who have been issued quotas for
free by the TQB, sell their quota share to those who want the shares,
through brokers, enjoying great profits for no investment.
'temporary quota transfer' scheme which was introduced on February
5, 2003, allowed those who had quotas and were not utilizing them
to temporary transfer the quota to someone who had the orders but
didn't have a quota. This scheme was introduced to combat a scheme,
which was taking place between the industrialists.
scheme was the 'ship through' system where one could ship their
goods through another's quota allotment for a lesser price than
the 'temporary quota transfer' scheme.
enabled the quota holder to maintain their performance quota and
also make a profit without any work while the company shipping the
goods is also able to do so without much of a hassle.