Is Sri Lanka's garment industry a great alternative to the one in Bangladesh?
Healy Consultants Group PLC
18 May, 2015
Multiple global brands use Bangladesh as a powerhouse for cheap garment and clothing production. This industry is very important for the developing economy and has fuelled the economy in the past four decades.
The textile industry accounts for the majority of Bangladesh's exports. The main export in Bangladesh is men's suits, followed by t-shirts. To support this industry, the country's imports are mostly raw materials used in this industry, namely cotton.
The Government supports large brands and conglomerates setting up in the country with a favourable tax burden imposed to publicly listed business. Bangladeshi PLCs suffer a lower tax rate of 27.5% in comparison to the standard 35%. This lower taxation and the overall cost-efficient solutions have lured more than 300 companies in the Dhaka Stock Exchange.
However, with the growing number of incidents involving garment workers in Bangladesh, bad publicity along with poor conditions and safety hazards force large businesses to look for a better alternative. Is Sri Lanka the cost-efficient solution to this problem?
Sri Lanka offers the following business advantages to foreign garment and textile oriented entrepreneurs interested in investment the country:
- Sri Lanka is one of the safest places to do business in Asia. Furthermore, the country has signed double tax treaties with 38 countries and has investment agreements with 28 countries;
- Investors who aim to incorporate a Sri Lankan company for the purpose of export activities are eligible for a reduced corporate tax rate of 12%, which is significantly lower than the rate in Bangladesh;
- The new Government aims for peace, growth and stability, increasing transparency. President Maithripala Sirisena, said:
"We expect to begin a new journey to promote reconciliation, cohabitation, brotherhood and friendship among the people of Sri Lanka, and to win over international opinion on these issues."
- USA investors will enjoy strong trade relationships in Sri Lanka. The US is the largest importer of Sri Lankan goods, amounting to 70% of the total textile exports;
- Sri Lankan nationals are often fluent in English, making communication easy;
- Sri Lanka boasts low business setup requirements with no travel required for new, quick incorporation.
For any inquiries related to investment or incorporation in Sri Lanka , please visit this expert country guide: http://www.healyconsultants.com/sri-lanka-company-registration/
For any further questions related to investment in Bangladesh, visit this webpage: http://www.healyconsultants.com/bangladesh-company-registration/
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