Sri Lankan shoe makers face growing threat of bankruptcy
Some 30,000 workers could lose their jobs in the face of a growing threat of bankruptcy faced by Sri Lankan footwear and leather product manufacturers due to imports of cheap Chinese and Indian Bangladeshi, Vietnamese and Indonesian products taking advanage of the present duty structure, local manufacturers warned
Ten large export companies, 30 medium scale companies and about 3000 small scale manufacturers are currently producing a diverse range of modern shoes like canvass and rubber boots, thongs, sports shoes, leather shoes, etc are produced, using a variety of raw materials.
These manufacturers are on the verge of bankruptcy as they cannot compete with cheap imported shoes and leather products flooding the local market as a result of duty reductions given from the 2011 budget, they revealed.
The duty reduction given for imported footwear from the 2011 budget has exerted an adverse impact on the local shoe industry especially for firms producing high quality, up market footwear, a top official of the Sri Lanka Footwear and Leather Products Manufacturers Association told the AGM of the association recently.
Association President P.G. Nimalsiri noted that in the Pettah wholesale market imported shoes are sold for less than Rs. 600 which is the minimum duty and the cess and that local companies cannot sell their products at such a cheap price.
He made a request from authorities to implement strict inspection at the customs and especially at unaccompanied baggage ware houses, as footwear was imported declaring different H.S. Nos.
He also called on the Treasury to re-introduce the duty of 30 per cent on C.I.F or Rs 100 which ever higher + Rs. 400 Cess on imports of shoes and leather products.
As there is a tendency to use cheap accessories in the shoe and leather goods industry due to the high duty on shoe accessories he requested to permit duty free import of these accessories under the recommendation from the Ministry of Industry similar to the facility granted on the import of leather as there are no footwear and leather products accessory manufacturers in Sri Lanka.