Investment Plan for a Garment in Sri Lanka
Introduction
Overview of Garment industry in Sri Lanka
Garment industry has an important place in Sri Lanka’s economy. It has become Sri Lanka’s largest export industry since 1986. It is also the country’s largest net foreign exchange earner since 1992. The garment industry in Sri Lanka expanded rapidly after the liberalization of the economy in 1977. During the 1990s, the garment industry grew at 18.5 per cent per annum. The export-led expansion of the industry led to the replacement of tea by garments as the nation’s largest foreign exchange earner. Moreover, the industry has contributing to the livelihood of nearly 1.2 million people.
When Sri Lanka liberalized its economy in 1977, the country’s garment industry took off immediately, mainly as a result of quota-hopping. East Asian garment exporters who were attracted by the country’s liberal trade system and relocated their already well-established garment businesses to Sri Lanka. This relocation encouraged local entrepreneurs to start their own garment enterprises to exploit markets guaranteed by quotas, assisted by the liberal trade system for importation, and subsequently, incentives were granted by the Board of Investment (BOI) to selected industries. MFA quotas helped Sri Lanka and many other developing countries to develop their export-oriented garment industries by insulating them from direct competition from established producers.
Sri Lanka did not have a well-developed export-quality textile industry base neither did have a base for garment industry accessories. Therefore, from the very beginning, garment production was based on imported inputs and the value added remained around 30 percent. By about the early 1980s, garment exports were growing rapidly and by 1986 garments accounted for the largest share of all exports which was around 27 percent.
Over the past three decades the apparel industry has been focusing on innovation, competent workforce, international reputation for quality and
Overview of Garment industry in Sri Lanka
Garment industry has an important place in Sri Lanka’s economy. It has become Sri Lanka’s largest export industry since 1986. It is also the country’s largest net foreign exchange earner since 1992. The garment industry in Sri Lanka expanded rapidly after the liberalization of the economy in 1977. During the 1990s, the garment industry grew at 18.5 per cent per annum. The export-led expansion of the industry led to the replacement of tea by garments as the nation’s largest foreign exchange earner. Moreover, the industry has contributing to the livelihood of nearly 1.2 million people.
When Sri Lanka liberalized its economy in 1977, the country’s garment industry took off immediately, mainly as a result of quota-hopping. East Asian garment exporters who were attracted by the country’s liberal trade system and relocated their already well-established garment businesses to Sri Lanka. This relocation encouraged local entrepreneurs to start their own garment enterprises to exploit markets guaranteed by quotas, assisted by the liberal trade system for importation, and subsequently, incentives were granted by the Board of Investment (BOI) to selected industries. MFA quotas helped Sri Lanka and many other developing countries to develop their export-oriented garment industries by insulating them from direct competition from established producers.
Sri Lanka did not have a well-developed export-quality textile industry base neither did have a base for garment industry accessories. Therefore, from the very beginning, garment production was based on imported inputs and the value added remained around 30 percent. By about the early 1980s, garment exports were growing rapidly and by 1986 garments accounted for the largest share of all exports which was around 27 percent.
Over the past three decades the apparel industry has been focusing on innovation, competent workforce, international reputation for quality and