The Sri Lankan apparel sector will benefit from the 2024 national budget proposal to create four more export processing zones. The current operating BOI zones are ‘full’ and the country needs more zones, said Managing Director, Brandix Group Hasitha Premaratne, at the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) organised Annual Budget Seminar yesterday.
Tishan Subasinghe at the event
He however said that the government must also look at developing the Eravul Apparel Zone which is progressing at a very slow pace. He said that they welcome the decision to renegotiate the FTA with India as it will open up more access to export apparels to the lucrative Indian market.
“Currently we can only export 8 million pieces per year and with the Indian middle class growing we can market more quality apparels to India and increase our revenue to around USD one billion in the future.”
He also said that with India – China political tensions, Chinese exports are low to India and Sri Lanka sportswear exports can reap huge economic benefits by exporting to India.
“We hope the 2024 Budget proposed new FTA with India will pave the way for this.”
He also said that allocation of funds for the SME sector is also very good but they should be distributed under the supervision of related chambers. He also said that the Budget assistance provided towards a Green’ economy will open up enormous opportunities. Commenting on the apparel sector he said Sri Lanka export revenue touched the USD 6 billion mark before the C-19 pandemic and this year end it may be around USD 5 billion. Premaratne said that the orders that were shipped out stagnated at international warehouses and people who bought apparel also kept them in their ‘lockers.’ This is because people could not go out due to the pandemic and sales too were stopped for the same reason.
In addition, due to high interest rates in the USA, people also stopped buying. “However we now see this trend reversing and we can predict that apparel exports will almost have a ‘pre COVID level’ revival next year.”
Tax Policy Advisor, Ministry of Finance, Thanuja Perera said that revenue consolidation was among the main aims of the 2024 budget. Acting Commissioner General, Department of Inland Revenue, Upul Jayawardhana, said that the revenue collection was around Rs. 900 trillion and this year up to now have achieved 75% of their target.
Vice President CA Sri Lanka and Chairman of the Faculty of Taxation, Tishan Subasinghe said that the budget had a series of ‘sweet’ proposals but the government must ensure that they are being implemented efficiently.
“Though there are measures proposed to bring efficiency to tax administration, holistically it is not enough. Taxpayer rights need to be further strengthened. An office of Tax Ombudsman and enhanced mediation between taxpayer and administrator could have provided much relief to the taxpayer.”
“The government revenue to GDP projected at 13% can be expected to reach 15% in 2026. In allocating the government expenditure some emphasis has been prudently given on social security aspects which is a dire requirement in protecting a segment of our fellow citizens.”
The insightful exploration commenced with Athula Ranaweera, Managing Partner, Ranaweera Associates, and Sarah Afker, Partner, Tax Services, BDO Partners, presenting the highlights of the National Budget for 2024.
Shirajiv Sirimane