• Points out inconsistent government policies as a primary reason Sri Lanka has fallen behind latecomers such as Cambodia in apparel exports
• Says moving to US $ 8bn mark will require more markets and more investments
• Urges Sri Lanka to explore new trade pacts with India, China, Japan, Australia, Canada and South Korea

By Nishel Fernando 

Policy consistency is key to achieving US $ 8 billion in apparel exports next year, up from an estimated US $ 5 billion in 2024, according to the Joint Apparel Association Forum (JAAF). 

The industry body cited inconsistent government policies as a primary reason Sri Lanka has fallen behind latecomers such as Cambodia in apparel exports.

The JAAF noted that largely due to inconsistent policies, Sri Lanka has not attracted any large-scale foreign direct investment in the apparel sector since the late 1990s.

“We need the government’s support to keep policies consistent. Moving from US $ 5 billion to US $ 8 billion will require more markets and more investments,” said JAAF Deputy Chairman and Omega Line Managing Director Felix Fernando. 

“We (Omega Line) came to Sri Lanka from Italy in 1999. I don’t think we’ve seen any large-scale investors enter the Sri Lankan apparel industry since then, even during the height of the war in 1998-1999. The economic environment back then was more suitable and viable for investment.” Fernando made his remarks at the South Asian Apparel Leadership Forum during the Colombo Design Festival, held at Cinnamon Life, last week. As an example of inconsistent policies, he pointed to the previous government’s move to abolish the Simplified Value-Added Tax (SVAT) at the recommendation of the International Monetary Fund (IMF).

“Yes, we understand that there was an economic crisis and the IMF pushed for certain changes. But there’s no leakage from the SVAT, yet they wanted it repealed. We have appealed to the new government and I hope they reconsider this,” he added.

The SVAT repeal aimed to streamline and increase transparency in tax administration by transitioning businesses to a traditional VAT refund system. However, the exporters have raised concerns over the timing and effectiveness of this change, citing potential cash flow delays that could weaken Sri Lanka’s competitiveness in global markets.

Fernando warned that such moves could send the wrong message to the current and prospective investors.

He also stressed the importance of trade agreements in attracting new investments and expanding exports.

“There’s been a back-and-forth approach in government policies on free trade agreements over the past two decades,” he said, urging Sri Lanka to explore new trade pacts with India, China, Japan, Australia, Canada and South Korea.

“What’s the secret behind Vietnam? Despite being run by a communist regime, they secured numerous FTAs, which allowed the buyers to enjoy significant duty concessions. If we establish similar FTAs, investors won’t need tax holidays,” he added.