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Chamber of Garment Exporters emphasise vertical integration

01 Sep 2021

  • Points at how it could boost apparel exports to EU
To utilise the fullest extent of the Generalised Scheme of Preferences Plus (GSP+) benefits, Sri Lanka’s apparel industry must increase the value addition to its exports to the European Union (EU) from the current 52% to 65% quickly. Vertical integration in Sri Lanka’s apparel industry is one of the quickest ways to do that, said Sri Lanka Chamber of Garment Exporters (SLCGE) Secretary General Hemantha Perera. Perera, who is also an Executive Member of the Joint Apparel Association Forum Sri Lanka (JAAFSL), shared this speaking at a panel discussion titled “GSP Plus: Past, Present, and Future”, hosted by the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) and the Colombo Chamber of Commerce last week. JAAFSL has been working with the government and companies in the industry to develop solutions to increase value addition into apparel, and setting up the Fabric Processing Park in Eravur is the first step, achieved with consistent government support. An apparel industry veteran himself, Perera noted that certain fabrics used for apparel production are currently being imported from regions that disqualify the manufactured product for tariff reductions under the EU’s GSP+ concessions. He noted that this disqualification could be resolved via local production of such inputs. “Fabric is a key raw material required for apparel production. Synthetic fabric often has to be imported to Sri Lanka, making them ineligible for GSP+ concessions to the EU. However, developments such as the Eravur Fabric Processing Park can change this situation and allow the industry to make greater utilisation of GSP+ to the EU, our second-largest market,” Perera said. “We currently lack infrastructure for functions such as dyeing and printing. These are vital in improving key indicators such as lead times and strengthening the output potential of the industry. Even at present, our competitiveness primarily depends on factors like ethical manufacturing practices, compliances, and the high skill levels of our employees,” he added. At the same high-level forum, several other speakers highlighted the need for Sri Lanka to retain GSP+ concessions to the EU, including Export Development Board of Sri Lanka (EDB) Chairman Suresh de Mel as well as former Sri Lankan Ambassador and Permanent Representative to the World Trade Organisation (WTO) Dr. Dayaratna Silva.  “We need to do our best to retain the existing concessions to our exporters,” the EDB Chairman emphasised. At the same time, Dr. Silva indicated that those who assumed that Sri Lanka could do without GSP+ concessions at this stage were mistaken. Dr. Silva referenced previous studies published by respected academics that highlight that the previous instance of GSP+ withdrawal had a negative impact on the country’s overall economy – with GDP declining by more than 1% – and on employment levels, particularly in the apparel industry. The other speakers at the event included EU Ambassador to Sri Lanka and the Maldives Denis Chaibi and Sri Lankan Ambassador to the EU Grace Asirwatham.

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