GSP plus offers a critical benefit to a number of sectors including apparel. Maintaining Sri Lanka’s GSP plus preferences is crucial to help sustain the country’s level of exports and ensure that we have an uninterrupted inflow of foreign currency, said JAAF Secretary General Yohan Lawrence.
He said the authorities should take steps to ensure the country continues to benefit from the export concessions safeguarding the democratic rights of all citizens.
JAAF is confident that the new government will work to ensure these preferences are continued to support the apparel sector, a vital cog in the export sector, Lawrence said.
The European Union emphasized the need for upholding the freedom of opinion and expression and individual rights following attack on peaceful protesters at the Galle Face last week. President Ranil Wickremesinghe met the US, UK, Canada, and EU envoys after the attack.
The apparel association forum has been warning Sri Lanka could lose its competitive edge and risk about US$580 million worth of exports if the GSP+ concessions are withdrawn. The GSP Plus trade concession scheme is offered by the EU to encourage development and good governance by offering tariff cuts to developing countries.
JAAF thanked the industry stakeholders for their outstanding resilience and performance despite a challenging domestic and global environment to achieve 30% Year-on-Year growth ofo US$ 446 million in May.
Accounting for approximately 6% of Sri Lanka’s Gross Domestic Product (GDP) and almost half of all merchandise exports, the apparel sector serves as a bulwark of the nation’s economy.
While the sector continues to face significant limitations from continuing disruptions in energy supply and logistics, cumulative export earnings from the sector increased by 16% YoY up to US$ 2.2 billion as at May 2022.
“We are still hopeful of achieving the sector’s target of US$ 6 billion by the end of 2022, however we acknowledge that there are significant obstacles ahead that we will first have to overcome. It is therefore essential that all possible support is provided to the sector to continue operating.
“In addition to ensuring that large manufacturers are able to maintain production, much more needs to be done to prioritize support for SME apparel producers, who are an equally essential component of the industry that is also facing severe challenges in day-to-day operations,” Lawrence said.
Despite unprecedented domestic volatility, unstable global market conditions and escalating raw material and logistics costs, Sri Lanka’s apparel sector has provided extraordinary support to the national economy, including direct surrender of export proceeds to the Government.
“All apparel companies receive payments through the formal banking system, which is visible at all times to the Central Bank. Once they receive these funds, they are permitted to use these dollars to fund raw material imports, which in previous years stood at approximately US$ 2.5 billion annually,” “On a monthly basis, the balance of our industry’s export proceeds are then converted into Sri Lanka Rupees. Once converted, the dollars are then available within the banking system to go towards payments for essential imports such as fuel, gas, food and medicine,” Lawrence explained.
Despite the ongoing crisis, the outlook for Sri Lankan apparel is still considered positive, as evidenced by the continuing Foreign Direct Investment (FDI) inflows to Sri Lanka which have mirrored upward trends in export performance, recording 17% YoY growth up-to June 2022. At present, US$ 73 million worth of investments have been committed for expansions in the apparel sector in 2022, out of a total apparel investment pipeline of US$ 94 million.
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