- Cites recession fears and inflation as key reasons for drop in demand in main exporting markets such as US and EU
- Cuts industry export income forecast to US $ 5.5bn, from US $ 6bn
- Says proposed hike in corporate tax to 30%, from 14% is adding to industry woes
Sri Lanka’s apparel exporters are forecasting a 30 percent drop in export orders with the main export markets, gripped by inflationary pressures, plunging into a recession.
Sri Lanka Apparel Exporters Association’s (SLAEA) newly-elected Chairman Indika Liyanahewage noted that the apparel exporters are forecasting around 30 percent decline in orders during the November-December period.
Sri Lanka’s main apparel exporting markets, the United States (US) and European Union (EU), are currently facing economic recissions coupled with inflationary pressures stemming from Russia’s invasion of Ukraine.
Liyanahewage expects these global headwinds to impact Sri Lanka’s apparel exports in the coming six months.
In addition, he cautioned that the removal of the dual corporate tax rate structure, which is set to increase the corporate income taxes on exports to 30 percent, up from earlier 14 percent, also threatens the competitiveness of the country’s exports, in particular when competing with countries such as Bangladesh and Vietnam.
“We are willing to pay taxes. It’s not a problem. The problem is that how competitive we are in the global market. We need a level playing field in the world market,” he added.
Further, he feared that the proposed changes to the personal income tax structure could also fuel brain drain from the country, further impacting the industry.
“Our competitive advantage is knowledge and innovation. We are already struggling to retain our skilled workforce under the current economic environment. We are a very efficient sector. We work hard and earn. If our tax money goes to pay someone who is not efficient, we are worried,” Liyanahewage said.
According to SLAEA immediate past Chairman Aroon Hirdaramani, the apparel exports are expected to reach US $ 5.5 billion at end of this year, up from US $ 5.4 billion recorded last year, however, below the industry forecast of US $ 6 billion.
Despite turbulence ahead, Hirdaramani outlined 2022 as a record year for Sri Lanka’s apparel exports.
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