Bad news for apparel after the holidays
At least 30 per cent of Board of Investment (BOI) companies are downsizing and many are unlikely to re-start operations after the New Year holidays this year and 40 per cent of those in the SME sector are also on the brink of downsizing and closure.
As a result of the global economic downturn factories are facing closures as a result of lack of orders and the only orders that are available are mostly shifting to other regional states due to the pressures in Sri Lanka’s economic recovery.
Sri Lanka is losing its competitive advantage due to the rising cost of production which means the country is about 25 per cent more expensive than other countries, newly-appointed Manufacturers Association (MA) Chairman Dhammika Fernando told the Business Times.
He noted that the logistics concerns have also made it unfavourable for Sri Lanka as a result of which the Ports and Shipping Minister Nimal Siripala De Silva is said to be reversing the gazette issued concerning the imposition of new additional charges on freight costs and providing sweeping powers to the Minister to impose these charges.
The Minister brought about these changes last year October and now it is learnt to be in line to be reversed.
However, in addition to these developments it was also noted that the taxes cause concern to exporters as the newly imposed ones are specifically targeting the exporters.
Mr. Fernando also noted that the MA condemns the attack carried out on one of the investors who had arrived in the country recently indicating that incidents of this nature must be avoided as much as possible as they are likely to send the wrong signals to the international community.
He also said that about 30,000 – 50, 000 jobs are likely to be lost in the first half of this year and although some sections of the business community believe the conditions will improve in the second half.
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