Sri Lanka’s apparel sector is likely to benefit from the new regulations issued by the Finance Ministry of the country.
The regulations cited as the Finance Act - Commercial Hub Regulation (CHR) No. 1 of 2013, will be applicable on all new established enterprises in the country.
Under the regulation, any new enterprise which is established or incorporated in Sri Lanka, where at least 65 percent of its total investment has been from foreign sources, shall be exempted from the application of Provisions of the Customs Ordinance (Chapter 235), the Exchange Control Act (Chapter 423), the Imports and Exports (Control) Act, No. 1 of 1969, and acts referred to in schedule of the Principle Act as amended by the Finance Act, No.12 of 2013.
The enterprises must be engaged in business activities such as off-shore business where goods can be procured from one country or manufactured in one country and shipped to another without bringing the same to Sri Lanka, which includes enterprises in the apparel sector as well.
The regulation was released by President Mahinda Rajapaksa, who is also the Minister of Finance and Planning, under PART IV of the Finance Act, No. 12 of 2012, as amended by Finance Act, No. 12 of 2013.
The regulation also declared the island’s main port in Colombo and second international harbor in the southern city of Hambantota as free ports.
In addition, two trade zones and Sri Lanka’s second international airport, Mattala Rajapaksa Airport, which is funded by China, have been included in the bonded areas.
The latest announcement is expected to increase investment and promote economic growth in the country.
The Joint Apparel Association Forum, the apex body representing the Sri Lankan apparel industry, actively participated in the consultative process of the formulation of the new regulation by the Government where inputs from all stakeholders were considered before the introduction of the CHR.
Post implementation of the new regulations, Sri Lanka’s apparel exports are likely to get a boost, and may rise by around 20-25 percent over the next few years, according to industry analysts.
In 2012, Sri Lanka exported US$ 4 billion worth of textiles and apparel, with around 90 percent of it destined to the US and the EU.