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Thursday, 5 December 2019 00:18 - - {{hitsCtrl.values.hits}}
By Shailendree Wickrama Adittiya
The town of Eravur in the Batticaloa District has been selected for a new fabric processing zone due to environmental factors, Joint Apparel Association Forum Sri Lanka (JAAFSL) Secretary General M.P.T. Cooray said yesterday.
While the Board of Investment (BOI) selected the area almost three years ago, the JAAFSL requested that it be converted into a textile manufacturing zone as the industry has been in need of a new textile mill for years.
“We have been looking at various places, including Seethawaka, but a decision couldn’t be made due to serious environmental concerns,” Cooray said. The location, he explained, needed to have a sufficient supply of water as well as a key outfall so the treated water could be discharged into the deep sea.
“There are serious concerns about discharging treated water into a river because that is the supply of water used for human consumption,” Cooray added.
Eravur, located 12 km away from Batticaloa, does pose certain concerns regarding logistics. However, Cooray said the area was suitable for the fabric processing zone, adding: “Prior to selecting this area, we looked at various factors, including the supply of water and other facilities. All required studies have also been completed.”
The fabric processing zone will be a welcome addition to the textile industry, especially with the possibility of Sri Lanka no longer being eligible for GSP+ in the near future. Awarded by the European Union (EU), GSP+ is a special incentive arrangement for sustainable development and good governance that grants full removal of tariffs on over 66% of EU tariff lines.
“Under GSP+, it is only from India and Pakistan that we can use fabric. We can’t use Chinese or any other fabric,” Cooray stated, adding, “When it comes to cotton woven industries, India is the world leader.”
He explained that Sri Lanka had no monopoly when it came to fabric supplied through GSP+ and this was a present difficulty faced by the industry.
“We have tried to explore the possibility of increasing our own production, which is why we are asking for the Eravur site,” Cooray revealed.
According to Cooray, of the fabric exports valued at £ 1,533 million exported to the EU in 2017, £ 1,529 million worth of goods fall under GSP+. However, GSP+ was granted to only £ 640 million worth of goods.
“That’s roughly 42.5% and in 2018, it was 47.1%,” Cooray said. The reason for the low rate of GSP utilisation, he explained, was the country’s inability to comply with the EU’s rules regarding country of origin.
He went on to state: “It would be much cheaper if fabric is imported from China and exported to the EU after converting it to garments rather than importing fabric from India or Pakistan and manufacturing and exporting to the EU under GSP+.”
Despite large amounts of fabric imports for garment production, the industry has been showing growth rates.
“This is the only sector that is recording a net 6% export growth this year,” Cooray said. “If you take month-to-month rates, there may be variations, but if you take the total, during the last six to eight months, there has been positive growth.”
According to the Central Bank of Sri Lanka’s External Sector Performance Report for September, a 6.6% change in textiles and garments has been reported from January to September in 2019 over the corresponding period of the previous year. The report shows $ 4,186.8 million for textiles in garments in 2019 and $ 3,927.9 million for the previous year. Added to this, Cooray was certain they would be able to achieve the 2019 target of $ 5.5 billion, going on to assert that annual targets were calculated based on the 2025 target of $ 8 billion.
