Lanka's apparel industry not badly hit by MFA phase out
by Gamini Warushamana
Sri Lanka's apparel industry has not been severely affected after the
phase out of the multi fibre agreement said the President of the Joint
Apparel Association Forum (JAAF) Tulie Cooray.
Foreign bag manufacturing companies closed during the first phase out of
quotas but local companies were able to absorb the employees. After the
second phase only five or six apparel companies were affected. Apparel
exports are increasing in a competitive market environment but under a very
low profit margin. There is no increase in prices and income, Cooray told a
press conference at the Central Bank to launch a credit guarantee scheme for
the Apparel sector.
Cooray commended the steps taken by the government to prepare the
industry to face global competition. This guarantee scheme is one of the
several initiatives by the government to develop the SME sector of the
industry.
Small and Medium industries need assistance to improve technology,
infrastructure and financial assistance. Under this scheme industries and
financial institutions have been combined and the government has taken the
responsibility and it is very important for the growth of the sector, Cooray
said.
The guarantee scheme was proposed in the 2005 budget to enable the sector
to obtain funds for working capital and investment needs to upgrade the
infrastructure and technology to comply with international standards. It was
expected to allocate Rs. 600 million for the guarantee scheme and raise Rs.2
billion as loans from the banking sector.
The loans will be disbursed by the financial institutions from their own
funds at an interest rate determined by the banks.
The maximum amount of a loan is Rs.8 million payable within eight years
with a one-year grace period.
The government guarantee will cover 50% of the loan amount in the event
of default. |
