Sri Lanka invites Chinese investors for a fabric processing park

A fabric processing park in Eravur, Batticaloa in the east of the island, is planned by Sri Lanka's apparel industry to attract investors from countries like China in a bid to cut lead times and reduce input costs, an official said. The Joint Apparel Association of Sri Lanka (JAAF), an industry body, is working with the Investment Board on the establishment of the industrial zone. "We are talking to the relevant authorities about allocating a land of about 200 acres in Eravur that we have identified as suitable for setting up this zone," said Rehan Lakhany, who is also the chairman of the Sri Lankan Apparel Exporters Association.

"Foreign textile manufacturers will be invited to set up factories in the area," he said on the sidelines of a forum organised by HSBC, the International Union for Nature Conservation, on Sustainable Financing for Responsible Fashion. One of the target groups would be Chinese apparel manufacturers, who are looking to relocate over a trade war with the US. Sri Lanka, along with with other countries such as India, imports more than 50% of its fabric from China.

A shipment from China takes about a month to reach Sri Lanka, including processes for clearing. "This way, we can save on the time lost in transport and reduce import expenditure," said Lakhany. Sri Lanka can attract more business and boost value-added domestically by cutting one month off our lead time, he said.

The industrial zone will have integrated infrastructure to re-cycle water, such as water treatment plants, which will minimise the cost of setting up for prospective developers. This October, Sri Lanka's exports of apparel grew 6.5 per cent year-on-year and are expected to end this year at a growth rate of seven per cent. Lakhany also said exports to the EU were growing more compared to other major export destinations such as the USA.

OSL Take: The move to expand the Sri Lankan apparel sector as well as inviting Chinese investors is a clear indication of the strength and growth of the country’s private sector. Sri Lanka’s apparel sector has greatly benefited from the many trade agreements as well as trade concessions enjoyed by the state, especially the EU’s GSP Plus facility. Given Sri Lanka’s strong export sector, all these facilities, as mentioned above, have resulted in the expansion of business/investment opportunities in Sri Lanka’s apparel and export sectors.

The government, with its investor-friendly policies, invites potential investors to come in on the PPP investment model to take up these lucrative opportunities, and OSL is ready with detailed project proposals to do the matchmaking exercise. So, call the biz-friendly OSL Team to learn more about the scope and the way forward.

VBS/AT/10022020/Z_TB3