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Eravur Zone to begin fabric manufacturing by 2Q22

11 Jul 2021

 

  • Upon completion, foreigners can set up factories: BOI

  • Investors to get 5 to 10-year tax holidays 

  • Zone to cut down SL import expenditure on raw material

  By Yakuta Dawood  The proposed Strategy Development Project to establish a 275-acre Eravur Industrial Zone for manufacturing fabrics locally is set to be completed by the second quarter of next year, The Sunday Morning Business learns.  Speaking to us, Board of Investment (BOI) Executive Director of Investment Promotion Prasanjith Wijayatilake said that once the industrial zone is completed by next year, foreign investors with a limited workforce will be able to come and set up factories in the zone.  Explaining how the zone will benefit Sri Lanka, Wijayatilake said: “Currently, we import fabric for value addition and export again to the international market. Hence, with the fully fledged manufacturing zone, the imports will be reduced, local value addition will increase, thereby resulting in the net value of exports (fabric) also increasing.”  Further, he said that since it is a Strategy Development Project, a five to 10-year tax holiday will be given to investors depending on the quantum of investment, and other tariff releases are said to be granted for the projects to be established within the proposed zone.  Meanwhile, Ministry of Industries Co-ordinating Secretary Chaminda Jayasena said that the Ministry has a responsibility to develop external infrastructure such as road development and to provide adequate water and electricity to the zone. “Our responsibility is to finish all the allocated tasks by this year, which is possible considering that the work has already commenced in Eravur, Batticaloa. Unless there is a natural barrier, the work will not be delayed,” Jayasena said.  Likewise, speaking to the media last week, Joint Apparel Association Forum of Sri Lanka (JAAFSL) Secretary General Tuli Cooray revealed that the zone could accommodate about six to 10 fabric factories with a daily output of 300 tonnes of production. According to reliable sources, the industrial zone will increase the country’s utilisation of the Generalised Scheme of Preferences Plus (GSP+) facility in apparel exports to the European Union (EU) in comparison to 2019, as it remained under 53%.  Commenting with regard to the possibilities of Sri Lanka getting suspended from the GSP+ facility provided by the EU, Cooray said that the loss would considerably affect the apparel sector amidst the prevailing pandemic.  He explained: “The cost of operation in Sri Lanka is far higher than the one in Bangladesh, India, Indonesia, Cambodia.” Thus, countries such as Bangladesh, India (while being the largest fabric supplier in the global market), and Indonesia, in fact, would benefit, unlike Sri Lanka, due to the cost of operation being lower than that of Sri Lanka as well as the countries that receive the GSP+ facility.  As a result of the market shift that is taking place with the unstable presence of apparel of Sri Lanka, there is a possibility of losing $ 500 million of trade per annum which is clearly not a bearable burden for the sector, Cooray added.  “It is $ 500-600 million worth of trade that will be exported on a zero duty basis, when the UK is excluded, on apparel alone,” he said, implying the magnanimity of the loss that might erupt if the GSP+ facility is discontinued.

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