Sri Lanka should cut import tariffs to increase apparel exports: World Bank
ECONOMYNEXT – Sri Lanka can increase exports of apparel, its main industrial export, by reducing import tariffs and getting into more trade deals that would widen market access, according to a new World Bank report.
The country should also promote industrial relocation and attract more female workers to relieve its labor shortages, it said.
“As China gradually scales back its apparel manufacturing, Sri Lanka stands to gain market share,” said the report, Stitches to Riches: Apparel Employment, Trade and Economic Development, launched in Colombo Tuesday.
However, it is not able to increase market share as quickly as some Southeast Asian countries, the report noted.
“Comparisons reveal that its apparel prices are higher than competitors, but Sri Lanka produces more sophisticated products, though there is room for improvement on lead times and product range and availability.”
The World Bank suggested Sri Lanka increase integration with South Asia and reduce tariffs for the import of manmade fibers, which accounts for 50 percent of Sri Lanka’s industry inputs, while encouraging domestic growth.
The island could enter into more trade agreements to help diversify export destinations for existing products, such as active wear and intimate apparel, it said.
The report also recommends Sri Lanka expand into new products such as formal wear and high-end outerwear that require higher skills, and position as a regional apparel and textile trade hub taking advantage of its infrastructure advantage.
It needs to also attract foreign investment through adopting clear investment policies, which currently remains at only 2 percent of GDP.
(Colombo/April 26 2016)