Apparel industry eyes free access to key markets
A once-thriving apparel industry in Sri Lanka is today hoping the government can enter into agreements with India, Japan, China and Australia to generate business as the country’s risk indicators are pushing buyers to other neighbouring states.
Omega Line CEO Felix Fernando said that Sri Lanka has not attracted any new investors and unlike Bangladesh and India “nobody wants to look at Sri Lanka to invest.”
Since the disruptive events of last year in Sri Lanka, buyers are conscious and most are going to India, he said.
Sri Lanka needs to engage with other countries to carry out increased trade and thereby improve the order books and in this respect, the industry has requested the government to look at Japan and Australia as well in a bid to open up trade in apparel.
He noted that so far they have received a positive feedback from the government. Carrying out bilateral trade negotiations between countries is likely to take time and the industry in Sri Lanka is struggling as they continue to operate on 3-4 days per week with workers receiving only the basic salary.
The SME sector is currently struggling as orders continue to decline and most retailers having stocked garments in the US and EU.
The apparel industry believes orders in the second half of this year will improve. “They are trying to get new buyers and new vendors but the risk factor is not good for Sri Lanka,” Mr. Fernando said. Original Apparel Chairman and former President of the Sri Lanka Exporters Association (SLEA) Rehan Lakhany said that Sri Lanka is also looking at improving its trade with India and China based on the Free Trade Agreements.
He noted that progress on the negotiations is slow more so since the local industry is also of the opinion that the FTA opening up will create increased competition for the home industries.
But with the government realising that it is imperative to implement these agreements the FTAs are likely to go ahead.
Mr. Lakhany pointed out that generally the FTAs open markets step by step and sometimes the duty components can be adjusted with time.
In fact, the industry hopes to obtain duty free access to India to become more competitive and ensure the quota is removed. India is Sri Lanka’s second largest trading partner.
Sri Lanka and Australia have entered into a Trade and investment Framework Arrangement in 2017 that allows for easy market access between the two states with the total two-way trade between the countries valued at US$1.3 billion in 2021.
Japan has been the largest supplier to Sri Lanka until the late 1990s and is a beneficiary of the Japan GSP scheme granting preferential access to its market since 1971 and this was further extended up to March 2031. Sri Lanka’s exports to China in 2020 were valued at
$266 million.
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