China could use Lanka as an outsourcing centre

The possibility of China using Sri Lanka as a centre to outsource garment manufacturing was raised when a China investment delegation met Investment Promotion Minister Sarath Amunugama this week.

Dr Amunugama said due to quota restrictions, regulations and other limitations placed on the Chinese apparel industry, there was a possibility that part of the demand could be outsourced to Sri Lanka, “where we do not have the same limitations and regulations.”

He met a a delegation from the China Council for the Promotion of Investment (CCPI) and later addressed the media together with the Chinese team.

Dr. Amunugama, outlined the points of their discussion and the need to further strengthen Sri Lanka’s “longstanding friendship” with China.

“Sri Lanka is best friends with two of the fastest growing economies in the world, China and India,” he told reporters, adding, “We have a very enviable situation in the sense that we (Sri Lanka) are a bridge between India and China.”

He spoke of the giant size of the Chinese apparel industry, reminding everyone that the Sri Lankan apparel industry was originally outsourced from Hong Kong to keep up with the demand.

Further elaborating on how China has benefited Sri Lanka, Dr. Amunugama said that the tourist industry here would greatly benefit by tapping into the Chinese market, seeing as how there is a huge and fast-growing middle class there, and pointing out how doing the same with India has already sharply increased revenue for the tourist industry here. The minister revealed plans to set up a consulate in Shanghai, urging the BOI and the Tourist Board to follow suit and open offices there as well.

He said Chinese companies are very competitive, thus keeping their standards high, and to expect more and more Chinese companies in Sri Lanka.

To illustrate the point the minister reported that the $470 million Norachcholai Coal Power Plant Project, which employs 50 Chinese engineers, will start construction on August 7. Chinese funds are also being sought for the planned Hambantota Port Development project. (FR)