Sri Lanka Mission Report
October 30, 2017
GRIPS Development Forum
Duration:
Members:

October 9-14, 2017 (working days)
Kenichi Ohno, Akemi Nagashima (GRIPS Development Forum, Tokyo)
Kidanemariam Berhe Hailu (Policy Study and Research Center, Ethiopia)

The Ethiopia-Japan Industrial Policy Dialogue, implemented jointly by the GRIPS Development
Forum (GDF) and the Japan International Cooperation Agency (JICA) on the Japanese side, waslaunched at the request of Former Prime Minister Meles Zenawi and is currently in its third phase.
One of the key components of this intellectual interaction is international policy comparison wheredevelopment policies and economic outcome of a large number of Asian and African countries arestudied and used as an input to Ethiopian policy formulation with selectivity and adjustments to fit
the local context. Sri Lanka was chosen as one of the countries to be thus researched1.
Sri Lanka was selected because (i) many Sri Lankan apparel firms are arriving in Ethiopia
recently, and three of such operations were visited by our team earlier this year. We need tounderstand their reason(s) for coming and the merits and demerits of Ethiopia as an FDI destinationfrom the perspective of Sri Lankan apparel firms; (ii) we want to analyze the past and present statusof the Sri Lankan apparel industry which combines product quality and high ethical standards; and(iii) we want to assess the developmental path of Sri Lanka which reached middle income withstrong apparel as a manufacturing core (rather than by the Flying Geese pattern of East Asia) andextract its lessons for Ethiopia. To have more representation of Ethiopian researchers in our policy
dialogue, we invited Dr. Kidanemariam Berhe Hailu, lead researcher at PSRC and former studentof Kenichi Ohno, to join our mission.
The mission successfully fulfilled these purposes. Ethiopia as a latecomer aims to attain middle
income by 2025 by becoming a leading nation in light manufacturing in Africa. Sri Lanka, anadvanced apparel exporting country, can teach many useful lessons to Ethiopia as building blocks
for its future policies and institutions.
Many people assisted this mission in information collection and mission preparation as well as
during our stay in Sri Lanka. We are greatly indebted, among others, to Mr. Nobuhito Hobo (Former
Japanese Ambassador to Sri Lanka), Mr. Kiyoshi Amada (Former Chief Representative of JICA Sri
Lanka), Mr. Fusato Tanaka (Chief Representative of JICA Sri Lanka), Mr. Tatsuya Iwasaki (JICA Sri
Lanka), Mr. Kazuhiko Obama (Resident Representative of JETRO Colombo), Ms. Haruna
Yamamoto (JETRO Colombo), members of JICA Headquarters and JICA Sri Lanka, and JICA
experts Mr. Hideo Horiguchi and Mr. Shunichiro Honda. Furthermore, special thanks go to Mr.
Dayasiri Warnakulasooriya, who made great contribution to Japan-Sri Lanka economic and cultural
exchange over the years and who took a great care of us during the mission, especially on the final
day. The GRIPS Development Forum assumes full responsibility for this report, except the lastsection of the report was mainly drafted by Dr. Kidanemariam.

1

Sri Lanka is the fourteenth country to be visited for third-country policy research in the framework of the EthiopiaJapan Industrial Policy Dialogue. Other countries visited are Uganda (2009); Singapore, Korea, Tanzania (2020);
Taiwan (2011); India, Mauritius, Ghana (2012); Malaysia (2013); Indonesia, Rwanda (2014); and Thailand,
Cambodia (2015).

1

1. Overview
Sri Lanka achieved independence from the U.K. in 1948. Subsequently, ethnic friction between
the Sinharese and the Tamil led to an internal war which lasted for 26 years from 1983 to 2009.
The current population is approximately 21 million. Despite the past internal conflict, the economy
continued to grow and reached per capita income of $3,780 by 2016 (World Bank data). By theWorld Bank criterion, a country steps up from lower middle income to upper middle income at the
per capita income threshold of $3,955, which Sri Lanka will soon realize. Recently, economic
growth peaked at 9.1% in 2012, then slowed down to 3.4%, 4.9%, 4.8% and 4.4% during 20132016, which is rather low for a middle income country2. People are well educated and labor quality
is high. However, many prefer to work in service outlets and offices rather than in factories.
Moreover, engineers and professionals often migrate abroad in search of suitable and high-paying
jobs. The unemployment rate stood at 4.4% in 2016. Sri Lanka is no longer a labor surplus country;labor shortage is particularly severe in and around Colombo.
Economic management has featured socialist ideas and labor protection, a tendency which still
remains today. Nevertheless, the current government seems to introduce more market-oriented
measures. The exact mix between inward and outward orientation in economic management
depends on each administration. Regarding economic sectors, there are traditional products suchas tea, rubber and spices as well as newer activities such as apparel, tourism and IT. Withinmanufacturing, apparel is dominant while other subsectors are less visible. Manufactured products
accounted for 77% of total export in 2016, of which an overwhelming part (47% of total) was apparel.
This is unusual for an economy soon joining the upper middle income group. Labor migration fromagriculture is absorbed mainly into services instead of manufacturing.
The inflow of foreign direct investment (FDI) is relatively low compared with Thailand, Indonesia
and Vietnam. Although we need to take note of different population sizes, these ASEAN countries
absorb tens of billions of USD in FDI each year, while Sri Lanka received FDI amounting to $1.6
billion in the peak year of 2014 and only $800 million in 2016. Chinese FDI was behind the increasein 2014 but it slowed down subsequently. As for Japanese FDI, there were historical landmarks
such as Noritake (1972), Onomichi Dockyard (1993) and YKK (2000), but the total number remains
small and few are coming in recent years3. Sri Lanka is not on the Japanese investors’ radar screencompared with India and Myanmar which are very popular.
Thus, the economic development of Sri Lanka has been quite different from the FDI-led Flying
Geese pattern of East Asia. On the one hand, a small number of domestic apparel firms attainremarkable results. On the other hand, the rest of manufacturing—and material, component andindustrial service subsectors that support it—are weak. Greenfield investments by Japan, Taiwan,
Korea and the advanced economies in ASEAN have not reached Sri Lanka in any significant way,
and gradual broadening and upgrading of products and industries through FDI and regional divisionof labor, a hallmark of East Asian economic development, is hardly visible in Sri Lanka.
2

It is said in Indonesia that any growth below 6% will worsen unemployment and social instability. Vietnam also
targets similar growth rates and usually attains them.
3 As of 2017, the number of Japanese FDI firms in Sri Lanka is about 130, of which 68 are members of the JapaneseChamber of Commerce and Industry in Sri Lanka. Among them, 21 belong to the manufacturing sector (JETRO
data). In comparison, the Japanese Chamber of Commerce in Bangkok has 1,748 corporate members and theJapanese Chambers of Commerce in North and South Vietnam jointly boast over 1,600 corporate members. In
both countries, actual numbers are higher as some Japanese firms do not join the chambers. Moreover, member
firms are strongly increasing in Thailand and Vietnam.

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The civil war ended eight years ago and the new government came to power two-and-half years
ago, which caused administrative confusion which is gradually subsiding. Even so, the generalbusiness climate is poor and policies remain unstable in Sri Lanka. In 2016, Sri Lanka ranked 110th
among 190 economies in the World Bank Doing Business. This is worse than the countries
regarded as business-unfriendly in ASEAN such as Vietnam (82nd), Indonesia (91st) andPhilippines (99th) though it is better than India (130th), Ethiopia (159th), Myanmar (170th) and
Bangladesh (176th).
Colombo is a modern and stylish city, but its transport infrastructure including roads andrailroads are traditional and low-capacity. Public transport is underdeveloped. As a result,increasing automobiles and a swarm of three-wheelers and motorcycles is generating severe traffic
congestion. This must have been caused partly by the delay in infrastructure construction due tothe civil war. Currently, Colombo sees vigorous construction of skyscrapers and commercial
complexes. The entire nation is full of public investment projects such as ports and highways, oftenwith foreign cooperation. The construction boom seems to support growth. Land inflation, risingincome and heightened growth stimulated by strong construction demand is a phenomenon
observed in many countries. However, this type of “growth” rarely improves the nation’s industrial
competitiveness, and often leads to fiscal crisis and trade deficits. Sri Lanka may have been
trapped in this situation even before the construction of infrastructure has been completed.
2. The apparel industry—achievements and issues
The history of Sri Lanka’s export-oriented apparel industry dates back to at least 40 years ago.
Initially, the country was practicing an inward-looking import-substitution strategy. In 1977, in a great
policy transformation, the government abolished all regulations (except those pertaining to labor)
and adopted free trade and free FDI policy which allowed 100% foreign capital. The Katunayake
Export Processing Zone (KEPZ) was established next to an international airport. Sri Lanka in thosedays faced low wage and high unemployment, but literacy was high (80-90%) and workers spoke
English. This prompted many foreign manufacturers, including textile and garment makers, toinvest in KEPZ. With respect to apparel, Sri Lanka was subjected to MFA quotas4. Infrastructure
construction and tax incentives provided by the BOI law attracted FDI which brought global bestpractices. This was combined with strict domestic labor laws and regulations to produce a uniqueapparel industry which boasted top performance in quality and productivity as well as workers’
rights and protection. Subsequently, EPZs were spread all over the country and, under the 200
Garment Company Plan, new employment was created also in rural areas.
The next challenge was to boost upstream production (textile). Textile, an input to apparelproduction, was initially protected by high tariffs which rendered downstream apparel uncompetitive.
Around 1997, the government decided to abolish textile protection to boost apparel production. Asa nation, Sri Lanka chose knitted products instead of woven fabric which was regarded as more
capital-intensive and environmentally cumbersome, and also to import cotton and cotton yarns
instead of domestic production. Over time, seven knitted product manufacturers with international
4

The Multi Fiber Agreement (MFA) was effective from 1974 to 2004 as a quota system to regulate textile tradefrom developing countries to advanced ones. It was intended to prevent excessive export of developing country
products, but some producer countries may have benefited from it by increased output and FDI if rival countries
had already exhausted their quotas. After the expiration of MFA, textile and garment trade was determined more bycompetitiveness than political allocation, and economics began to rule over international competition as well as
domestic competition among exporting firms.

3competitiveness emerged.
MFA was to expire by the end of 2004. Sri Lanka began to prepare for this a few years inadvance. The World Bank and the Asian Development Bank predicted that Sri Lankan apparel,
which was not vertically integrated (i.e., without cotton or cotton yarn), would decline in the postMFA period. To prove them wrong, and even to double apparel export in five years, a five-year
strategy for apparel was drafted under the leadership of the MAS chairman. The Joint Apparel
Association Forum Sri Lanka (JAAFSL), which began operation in 2002, implemented the strategy .
Eight initiatives including taxes, backward linkage, labor market, etc. were executed, and the targetof doubling export in five years was almost achieved (increase of 97%). The second five-year
strategy followed. Through these activities, a mechanism was established where the apparelindustry moved as one instead of separate actions by individual firms or different processes, andwhere the private sector led the government. The private sector did not ask for subsidies but
demanded that the government implement policy actions requested by private firms. According to
JAAFSL, emergence of such private sector-led public-private partnership generated great successin the expansion and value creation of the Sri Lankan apparel industry. At present, there are roughly
300 apparel firms in Sri Lanka, of which about half (165) are SMEs.
Sri Lanka received “GSP Plus,” a duty-free export privilege with the EU5. This was suspended
in 2010 but resumed this year (2017). It is clear that GSP Plus, which gives duty-free access to EU,
is crucial for Sri Lanka. At the same time, it is also quite certain that a country soon graduating toupper middle income will not forever enjoy this privilege. The EU will review GSP Plus annually andrestrict its application as much as possible. Under these circumstances, the apparel industry istrying to develop new and more diversified markets to reduce heavy reliance on GSP Plus. Sri
Lanka has partial FTAs with India and Pakistan only. The FTA network has to be broadened toinclude China, Singapore and others to secure more overseas markets with zero or low tariffs.
Sri Lankan apparel serves high-end and niche segments such as ladies’ brand underwear rather
than the Bottom Billion or the Volume Zone. As a producing country that strictly adheres to both
quality and ethical standards, it has secured a strong position as an OEM supplier to European andAmerican buyers who are seriously concerned with labor rights and environment protection6. Sri
Lanka is perhaps the only producer country in the world that can satisfy both standards very well.
There are problems, however. First, as previously noted, trade privileges will become harder tocome by as domestic income rises. Second, multifaceted diversification is required in products,
markets and production sites to create more value and reduce risks. Third, there are labor shortage
especially in urban areas, workers’ preference of service and office jobs, wage pressure andfrequent job hopping. These compel Sri Lankan manufacturers to shift to more mechanized andautomated production methods. Fourth, the big names that lead the industry are MAS, Brandix,
Star Garment and Hirdaramani, especially the first two. The industry is already mature, and market
dynamism such as new entries and innovators, change of players and challenging winners havebecome rare. The same faces continue to dominate the industry.
Sri Lankan apparel firms have established factories in India, Pakistan, Bangladesh and other5

Sri Lanka has multiple privileges in the EU market including EBA, GSP and GSP Plus, but GSP Plus is the mostimportant. EBA and GSP Plus are similar in their commodity list even though the former is mainly for low income
countries and the latter is for countries observing labor and environmental standards. Meanwhile, GSP offers lesszero-tariff privileges. The rule of country origin is also somewhat different among these schemes.
6 The principal markets of Sri Lankan apparel have been the US and the EU. Japanese buyers do not source
apparel from Sri Lanka on a regular OEM basis. Compared with Western buyers, Japanese insist less on ethicalstandards but demand far stricter product quality standards than the US or the EU, and impose third-party inspectionof all products before shipment from the factory.

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foreign countries. More recently, they are also arriving in Ethiopia. Based on our interviews withvarious stakeholders, the reasons for their overseas expansion are as follows. Domestically, labor
shortage and the fear of losing trade privilege in the future drive firms to go abroad (the pushfactors). Many African countries, including Ethiopia, enjoy duty-free access privilege in the EU(Everything But Arms, or EBA) and in the US (African Growth and Opportunity Act, or AGOA). On
the Ethiopian side, low wage, trainable workers, cheap electricity (one-third of Sri Lanka) andpolitical stability are the attraction (the pull factors). From a broader perspective, it is probably
natural for Sri Lankan apparel makers to maintain advanced domestic production but
simultaneously build new factories abroad. This will enable them to combine capital-intensive andlabor-intensive production as appropriate, make use of more trade privileges, minimize risk by
diversifying markets and production sites, and explore the possibility of teaching ethically correct
production to other countries.
3. Official organizations of Sri Lanka
Prior to the mission, we interviewed the Former Japanese Ambassador to Sri Lanka, JETRO,JICA and JICA experts who were well-informed about Sri Lanka. During the mission, we visited the
National Planning Department of the Ministry of National Policies and Economic Affairs (MNPEA),
the Ministry of Development Strategy and International Trade (MODSIT), the Ministry of Industry
and Commerce (MIC), the Export Development Board (EDB), and the Board of Investment (BOI,
see next section). Meetings with these official bodies are summarized as follows.
MNPEA explained that the five government agenda were a million employment, revenue
enhancement, modernization of agriculture and rural economy, creation of middle mass, andsecuring industrial land. For these, key documents are Vision 2025, the Prime Minister’s statements
in 2015 and 2016, and the Public Investment Program 2017-2020. As export and FDI are falling, it
is critical to improve the World Bank Doing Business ranking in particular and investment climate
in general.
MODSIT is a new ministry and has recruited only 50 staff up to now (of which 11 are professional
staff). It is to act as a coordinator of trade and FDI policies among various related ministries.
Workload is equally divided between document preparation and inter-ministerial coordination. The
government wants to boost export and FDI. For this, MODSIT drafted Sri Lanka’s first National
Trade Policy (NTP) which was approved in September 2017. NTP features domestic reform, tax
reform, market access, macro balance and other policy pillars. The Harvard University teamassisted with formulating these policy pillars7. For the government, FTA negotiations with India,
China and Singapore, improving the World Bank Doing Business ranking, regulatory reform andrevision of the immigration law are top priorities.
MIC consists of such divisions as Apparel & SMEs, Industrial Development, Policy Development,International Trade, International Cooperation, SOE Reform and others. It has eight regional offices
as well as external Departments and Institutes. MIC received Mr. Kenichi Kohata (JICA expert) ten
years ago but has no contact with JICA at present. Apparel occupies 40% of Sri Lankan export but
its global share is only 1%. Its strengths are high quality and high compliance with labor standards.
For effective value creation, Sri Lanka concentrates on ladies’ underwear and knitted products.
Domestic labor shortage drives Sri Lankan firms to go abroad including Vietnam, Bangladesh and7

We were told that NTP had four policy pillars but were given six items, and told there was one more. Undoubtedly
some of the items belong to one pillar. With limited time, we were unable to fully grasp the key structure of NTP.

5

India. The way forward includes becoming a knowledge hub, mechanization, producing special
garments and product diversification. SLITA (apparel institute, see section 6) is under MIC. In lightof the importance of SMEs, MIC produced Sri Lanka’s first SME policy. It also studied Malaysia’s
SME Corporation as a model. The SME policy was already approved, and MIC will act as animplementer and coordinator for concerned ministries8.
EDB is an implementing body for export promotion with 250 staff (200 in Colombo and 50 in theregions). It has no overseas branch. It consists of five divisions which are Industrial Products,
Agricultural Products, Export Services, Market Promotion and SMEs. We inquired about concrete
activities of each division.
4. The Board of Investment and Katunayake EPZ
The Board of Investment (BOI) is an implementing body of FDI attraction under MODSIT. BothMODSIT and BOI Headquarters are housed in the World Trade Center in Colombo Fort. BOI
Headquarters has about 130 staff while the rest are dispatched to various EPZs, with a total of
about 1,300 staff. The headquarters has four divisions: Investment Promotion (15 staff), Investment
Appraisal (75 staff), Project Implementation (20 staff) and Project Monitoring (20 staff).
Headquarters staff are assigned to both country and sector. Priority countries which have individual
country desks are US, China, India, Japan, UK, EU and Singapore, and priority sectors include
apparel, IT, services (tourism, golf, commercial complexes, etc.), medical service (Ayurveda) andconvention business. Priority countries are selected where policy importance and business demand
meet. A person who studied in Japan is in charge of Japan Desk, and a JICA investment advisor
supports training of BOI’s young staff and Japanese FDI attraction. In future, to reduce dependence
on the US and EU markets and GSP Plus, FTAs will be concluded with China, India, Singapore,
Thailand, Pakistan, etc. To curtail trade deficits, BOI strongly welcomes manufacturing FDI inautomotive components, medical equipment, mineral-based materials (paint, silica, etc.) and solar
panels. The tax regime is changing, and corporate income tax exemption and reduction forinvestors will be removed. The corporate income tax will have a simple structure of 14% (priority),
28% (standard) and 40% (alcohol and tobacco). Capital allowances will remain. Sri Lanka alreadypermits 100% foreign capital and 99-year land lease, which are additional advantages for FDI.
Sri Lanka has 12 EPZs under BOI. The Katunayake EPZ (KEPZ), established in 1978 next toBandaranaike International Airport, was the first. It now is home to 87 tenant firms (as of October
2017). The mission visited the BOI Office at KEPZ. Thanks to the superb access to Colombo andthe airport, KEPZ attracts more FDI projects than other EPZs (Germany 9, Hong Kong 7, Japan 6,
UK 6 and so on.) Two of the Sri Lankan firms in KEPZ have factories in Ethiopia. KEPZ welcomes
all sectors but, in reality, main customers are apparel (18 firms) and machinery, electrical andelectronics (12 firms). KEPZ has a bank, an insurance company, a logistic service office, a medical
clinic, and there is a plan to build a TVET center. It also offers equipment maintenance service(including generators and air-conditioning), tax and customs duty assistance and trouble-shooting
in labor and accounting as well as 24-hour medical and security services. Water is supplied by the
National Water Supply and Drainage Board (7,500m3/day), and underground water is also available(1,500-2,500m3/day). Waste water is treated at each factory (primary treatment) then further treated8

Additional Secretary Mr. M.A. Thajudeen, whom we met at MIC, doubles as the chairman of SLITA. He is theauthor of the new SME policy and explained the apparel industry and the SME sector to us in detail and withcompetence. He must be the right person if Japan wants to discuss and/or cooperate in these policy areas.

6

at the KPEZ treatment plant (secondary treatment). The capacity of this plant was expanded a few
years ago to 3,200m3/day. Treated waste water is used for watering trees and plants inside KEPZ.
The power supply capacity is 63MVA. Problems over water or electricity are rarely heard fromtenant firms. KEPZ has completed its third phase and is now expanding to the fourth—and final—
phase (total of 300.54 acres or 122 ha). It aims to become a manufacturing site of high-end products
as well as a South Asian regional hub of firms operating in India, other Asia, Europe, Middle East
and Africa. Additional infrastructure such as a laboratory and e-services is planned to be installed.
5. Private firms
At present 22 Sri Lankan firms are in KEPZ, of which two are already operating in rental sheds
at Hawassa Industrial Park in Ethiopia. Hirdaramani is one of them. It was founded as a retail outlet
in 1890 and has grown to become one of the largest apparel firms in Sri Lanka. With stable
management and ample profit, it does not have to borrow from banks. It supplies T shirts,
sportswear, shirts, etc. under manufacturing contracts for major brands mainly from the West such
as Adidas, Marks & Spencer, Levi’s, Tesco, Amazon and Asics. Hirdaramani imports and keeps alarge stock of cotton fabric in its warehouse, and produces garments following detailed design
instructions from buyers. The premises has a health clinic and a canteen for workers, regular breaktimes are observed, and female workers can have an overnight accommodation for free of charge.
The factory we visited are reasonably clean, music was played for workers (though a bit noisy to
our ears), and other features showed that the management has made a serious effort to improve
working conditions.
Isabella, another firm that operates a factory in Hawassa, Ethiopia, produces socks for Westernmarkets. The mother factory at KEPZ was originally under German management which waspurchased by the present owner to become a Sri Lankan company9. It buys cotton yarns, rewinds
them for socks production, dyes, knits and washes to manufacture final products. Isabella is about
to replace old knitting equipment with latest ones for more computerized and capital-intensive
production, and existing ones will be transported to Hawassa. General Director Mr. Hemantha
Perera had heard about Ethiopia by chance, visited Ethiopia several times, was convinced of the
future possibility of the country and decided to invest there. Two reasons for his decision are as
follows: (i) Ethiopian workers have an uncontaminated “free mind” and can endure hardship, whichmakes them easy to train; and (ii) stable power supply at Hawassa is attractive to socks production
which is capital intensive. On the other hand, he pointed to the delay and irregularity in roadtransport to and from Djibouti as the biggest problem with Hawassa. As the Sri Lankan pioneer toinvest in Ethiopia, Mr. Perera encourages and helps other Sri Lankan apparel makers, including
Hirdaramani, to follow him to Ethiopia. Some firms have decided to go to Mekelle at his advice. Mr.
Perera plans to continue to act as a promoter of Ethiopia in the foreseeable future.
MAS Holdings is the largest apparel group in Sri Lanka. It not only strictly observes labor andenvironmental codes but also conducts human resource development and product marketing withinternally developed systems. The company leads the apparel industry in Sri Lanka. It has about
90,000 employees over 17 locations around the globe and produces high quality garments throughdesign, weaving, cutting and sewing. 60-70% of its production takes place in Sri Lanka and9

In October 2016, then Senior PM Advisor Dr. Arkebe and EIC Deputy Commissioner Belachew of Ethiopia visited
Isabella in Sri Lanka, together with PVH’s DDG Mr. Green, and inspected the factory and KEPZ. A group photo washung at the entrance of the factory office.

7

products are mostly exported to North America. To upgrade its global business strategy, MAS isstrengthening technological and innovation capacity. During the interview with one of its top officials,
the mission could feel the pride of a leading company that delivers product quality and moral value.
The official also informed us about the overall history of the Sri Lankan apparel industry. It started
with KEPZ where country girls who knew nothing about money or city life were hired to produce
garments. Some of them, dubbed “JUKI girls,” lost decency and caused a social problem. The bad
image of female apparel workers still lingers on. Subsequently, EPZs spread to rural areas with thegoal of building “200 apparel factories” (actually, one hundred and a few dozen factories), which
generated employment opportunities across the nation so rural girls no longer had to migrate tocities to find jobs. The MAS official stressed the importance of preventing a similar social problem
from arising in Ethiopia10.
Features common to the three firms above are concentration of markets in the US and the EU
as well as strict adherence to the labor and environmental standards required by these markets.
More generally, Sri Lankan firms operate under the safety, hygiene and welfare standards forworkers set by the Labor Ministry and BOI, and must also comply with ILO’s international labor
rules. This makes them very good observers of laws and regulations far above competitors fromother Asian countries. They are rarely found guilty of any violation by inspectors dispatched bybuyers or the government. Operations of Hirdaramani and Isabella in Hawassa Industrial Park also
comply with the same standards as in Sri Lanka and have received no complaints from Ethiopian
workers.
YKK, a Japanese company, was founded as a fastening device producer and seller. Currently
its business is divided into (i) fastening business (production and sales of zippers, buttons, snaps,etc.); (ii) equipment manufacturing headquarters (R&D and production of fastening machines forinternal use); and (iii) architectural products (production and sales of construction materials). TheYKK Group has 111 operations in 71 countries (as of March 2017), and collectively engages in the
production of materials and final products as well as the production and maintenance of fastening
machines used within the Group (these machines are not sold outside). No other fastening
companies have integrated production such as this including materials and production equipment.
Chinese firms are potential rivals, but they are engaged only in downstream processes.
YKK Lanka, the local entity of YKK, opened in December 1999, and started operation one year
later, as a manufacturer of fasteners. The office is in Colombo and the factory is located in
Seethawaka EPZ (SEPZ) which is two hours’ drive from Colombo11. The office has about 40 staff
and the factory about 250. Four Japanese expats manage and supervise in both places. YKK Lanka
only assembles fasteners, and machinery and materials are purchased (imported) from other firms
in the YKK Group. In principle, it produces fasteners for customers operating in Sri Lanka supplying
800,000 pieces per day or 100 million per annum. If Sri Lankan apparel firms also have factories
in Bangladesh, Vietnam, Jordan, Egypt, etc., YKK Lanka may supply fasteners to such overseas
locations directly or indirectly. YKK fasteners are purchased either because Western buyers specify
YKK as supplier in the OEM contract with Sri Lankan apparel firms or because Sri Lankan firms
10

In other countries, problems associated with garment production usually include labor exploitation, low wage,
dormitory and commuting, health and hygiene, trade union, wage demand, labor disputes as well as the mindset,
low skills and job hopping of workers. We rarely observe a direct linkage between garment production and anunmoral behavior of female workers. The JUKI girls in Sri Lanka may be a quite unique case.
11 SEPZ is home to 35 tenant firms of which eight are apparel manufacturers. Jay Jay Mills, which invested in Bole
Lemi I Industrial Park in Ethiopia, is one of them. YKK Lanka supplies fasteners to Jay Jay Mills (both are in SEPZ).
YKK Lanka also supplied button making equipment to Jay Jay Mills in Bole Lemi I, and YKK Lanka staff has visited
Ethiopia for maintaining the equipment.

8themselves select YKK as a fastener supplier for contracted products.
Midaya Ceramic, established in 1968, is a manufacturer of high quality ceramic products.
Materials are mostly locally procured. The firm has integrated production from design, material
processing, molding, firing, painting, packing and shipping. Its sophisticated handmade products
find few domestic competitors. Buyers include western ceramic companies as well as brand productdealers and hotels in Sri Lanka. Many customers approach Midaya by word of mouth. The company
produces both contracted items as well as own products. Quality handmade ceramics require highly
skilled labor. The premises is clean with seiri and seiton. Mr. Dayasiri Warnakulasooriya, chairman,
studied ceramic making in Seto, Japan then returned to Sri Lanka to start this firm. Currently his
two sons manage this factory and an associated packing material factory. On another occasion, Mr.
Dayasiri learned Japanese management through AOTS training. He adopted it in his factory andhas spread it to the rest of the country through the Japan-Sri Lanka Technical and Cultural
Association (JASTECA), a bilateral organization that teaches quality and productivity in Sri Lanka.
6. Industry-supporting organizations
The mission visited several private and public organizations that support the Sri Lankan apparelindustry or industry in general. Six such organizations are reported below, of which the first two aretechnical training institutions.
The Sri Lanka Institute of Textile and Apparel (SLITA) was created in 2009 by merging two
technical schools—the Textile Training and Service Center and the Clothing Industry Training
Institute—which were established with World Bank assistance in 1984. The Institute belongs to
MIC and its chairman is Mr. Thajudeen, Additional Secretary of MIC in charge of the apparelindustry. It is financially independent and does not receive government budget. It has six divisions:laboratory, apparel, textile, leather, footwear and product development. It has about 100 staff (1525 with MSc, 30-40 with BSc and 45 are support staff). SLITA has three functions, and the firstfunction is training. It offers two-year Diploma courses, customized courses for corporate customers,
short-term courses and dispatch of Sri Lankan instructors abroad. Since 1984, the cumulative
number of trainees has reached 100,000, with annual training of about 5,000 students (of which
two-year course students are about 100) at present. SLITA is the Asian regional hub for textile andapparel training, providing by dispatching experts such customized services as fashion design fora Vietnamese company, training for the Export-Import Institute of Bangladesh, joint research on
banana fiber with the Philippine Textile Institute, etc. Trainees also come to SLITA from abroad.
The second function is material and safety testing for textile and other products requested bybuyers, which is conducted by the SLITA laboratory at low (cost-base) fees. The third function isconsultation with local apparel firms to introduce lean production, Toyota Production System andthe like. Regarding R&D, SLITA previously studied automation and current research is the use of
banana stem fibers for textile materials. SLITA owns 4 ha of land on which there are about ten onestory structures. There is a plan to introduce a four-year Degree course by rebuilding some of thesestructures with multiple floors (SLITA has land and money but cooperation is needed to buy new
equipment). It had JICA cooperation during 1996-2001 and 2001-05 which included equipment,
training in Japan and an arrangement to train Indian, Vietnamese and other foreign technicians at
SLITA. There is no contact with JICA now. The mission made a tour of SLITA which was equippedwith sufficient space and facilities as a textile and apparel training institute. It may be a good idea
for the Ethiopian TIDI to study SLITA as a model or even have a twinning arrangement with it.
9The Ceylon-German Technical Training Institute Moratuwa, Sri Lanka (German Tech or CGTTI
for short) is a metal and mechanical training institute with automotive emphasis. It is located along
Galle Road in the south of Colombo near SLITA and a Brandix factory. It has a dozen or morebuildings on 5 ha land. German Tech was established with assistance from West Germany as amaintenance center for the Mercedes bus fleet of Colombo City, with 60 initial students. The
capacity was expanded to four courses and 150 students in 1974. The supervising ministrychanged from the Transport Ministry to the Ministry of Skills Development and Vocational Training
in 2004. Currently, German Tech has 11 courses12 and accepts full-time (3-4 years), part-time(evening) and short-term (1-2 days) students. It also offers customized training, technical services(maintenance and repair of vehicles by students instructed by instructor) and skills tests. It
specializes in training and does not engage in research or enterprise consultation. Students’ age
ranges from 16 to 22 years and classes are conducted in both English and local language. Thereis high demand for German Tech graduates. Firms wanting to recruit students are provided with
relevant student databases and asked to approach candidates by themselves, but not all places
can be filled (we incidentally heard that OJT and job recruitment for the welding course are mostly
done with Colombo Dockyard). Consequently, German Tech is popular with students. It annually
receives 3,000 applications for the full-time student quota of 600, who are selected by written examand interview. Sri Lanka offers free education, so German Tech charges no tuition and even offers
commuter bus services and monthly stipends to its students. Government allocates 220 million
rupees per annum to German Tech (80 million for equipment and 140 million for current
expenditure). Students from rural areas often rent apartments. The school has a plan to build adormitory (allocated budget is 1,100 million rupee). In the first year, students are required to
produce basic metal works and, after a test, proceed to specialized courses from the second year.
There is an OJT (internship) in the final year at one of the 120 partner companies. Companies
happily receive OJT students to secure future recruitment. Non-fulltime students are charged withfees, many of whom study evening classes while working in enterprises or military. During a tour of
all workshops, the mission had the impression that German Tech was very successful as a basic
TVET organization even though it is not equipped with many latest machines. While it enjoys aseller’s job market, the majority of graduating students go abroad to find jobs. They often first go to
the Middle East and, after a few years, migrate to Australia or New Zealand, their favorite
destinations (working permits for the latter require at least three years of waiting). This is not a very
good result for the Sri Lankan manufacturing industry.

Visiting SLITA’s Classrooms and Labs

German Tech’s Millwright Fitting Workshop

Auditorium at JASTECA (Sasakawa Hall)

The Joint Apparel Association Forum Sri Lanka (JAAFSL), mentioned above, is a joint public12

The 11 courses are automobile, millwright fitting, tool machinery, power electrical, air-con and refrigeration, auto(car) electrical, welding, diesel pump mechanism, mechatronics, auto body and auto air-con.

10

private forum created to cope with the disappearance of MFA at the end of 2004 with the leadershipof the MAS chairman. It started to operate in 2002 and officially inaugurated in 2003. It has 14
members13. As noted earlier, JAAFSL is a very active body that not only proposes policy actions
but also studies details, decides and implements such policies and request needed actions to thegovernment. It is in a sense the Sri Lankan apparel industry itself and in another sense a private
initiative that designs and executes policies which is normally the responsibility of relevant
ministries of the government.
The Ceylon Chamber of Commerce (CCC) was established in 1839 during the British colonial
period. It currently boasts 551 corporate members and has 19 Business Councils including Export,
Construction, Trade and Tourism. It conducts various business matching among which Business
Investment Conclave, started last year where over 100 foreign firms are invited to Sri Lanka forbusiness negotiations, is the largest. According to a CCC executive, the most important goals of
the Sri Lankan government at present are revitalization of export and FDI as well as expansion of
manufacturing 14 . This requires solving several concrete issues. First, the World Bank Doing
Business ranking, currently 110th, is targeted to improve to 70th by 2020. Rankings for licensing
and dispute settlement are particularly low. However, CCC wants not just a higher ranking but amindset change and substantive results for the business community. Second, there is an acutelabor shortage. Third, Sri Lanka must cope with high wage, high electricity tariff, high material costs
and high non-tariff charges associated with imports. Fourth, policy remains unstable—but
improvement is expected as the current government stabilizes. Fifth, a new tax law is being
prepared to make taxes business-friendly (enactment expected in April 2019). It aims to simplify
and clarify the tax regime in place of randomly accumulated exceptional measures. The corporate
income tax rates will be 28% (normal) and 14% (priority). Privileges for underdeveloped Northernand Eastern regions will remain. CCC was happy to participate actively in this revision process.
The government listened to CCC, and it met the President and the Prime Minister four times. One
problem, however, is the slowness of decision making at ministries and BOI. They were fast andpolicies had real impact in the 1990s, but they have become more bureaucratic. CCC considers Sri
Lanka’s strategic location (a gateway to India and the Indian Ocean region) and skilled humanresource as its two great advantages. The mission was recommended to meet CCC Chief
Economist Anushka Wijesinha, who works closely with the government, if it wanted to discuss the
Sri Lankan economy more deeply (he was absent on the day due to his commitments at MOF).
The Institute of Policy Studies (IPS), an economic policy thinktank, was founded by aparliamentary law in 1990. It belongs to the Prime Minister and MNPEA. The IPS building, though
not large, is modern and stylish unlike Ethiopia’s EDRI or PSRC. The Dutch offered an endowment
fund for establishment and Canadian funds and fees collected from international organizations alsofinancially supported IPS. From 2005, IPS is financially self-standing except annual receipt ofgovernment budget which covers 10-15% of the running cost. IPS offers research, policy advice
and international cooperation. It has seven units in charge of macroeconomy, trade, investment
and industry, environment, agriculture, labor and poverty. The staff size is about 50, of which
researchers are 20-25. Each unit consists of a few researchers who are generally young but
competent. Most of them hold master degrees while PhD holders are few. Some are going abroad

13

Mr. Tuli Cooray (MP), whom we interviewed, previously were at the Finance Ministry to abolish textile protection.
He has served as Secretary General of JAAFSL since 2002.
14 Sri Lanka does not have a clear policy on outbound FDI by domestic firms. It is neither encouraged nor
discouraged, as the decision of overseas investment is entrusted to individual companies.

11

to get PhDs. BA level staff are research assistants. IPS research is done either as an official project
where the government specifies the topic and ministries are involved, or by IPS writing proposals
for competitive research funds of international organizations or foreign countries. It also represents
Sri Lanka in international cooperation among thinktanks. Research results are disseminated via
working papers, policy papers, academic journals, publications of international organizations,books and newspapers (fees are charged for IPS papers). Recent works include a feasibility study
on FTAs with India and China, climate change and agriculture, and a review of FDI policy since1977. As to the burning problem of the day, Sri Lanka routinely faces economic cycles of overinvestment in infrastructure and debt crisis. After the civil war ended in 2009, aggressive public
investment pushed up growth to 8-9% which led to balance-of-payments difficulty and the IMF’s
EFF program in 2015-17. It would be ideal if FDI and domestic private investment replaced public
investment, but FDI is declining due to policy inconsistency and budget crisis. Sri Lanka allows
foreign bank branches, and a new law is being prepared to further liberalize capital mobility. It also
negotiates with India, China, Singapore, etc. for FTAs, and new ports are constructed in Colomboand Hambantota. These are positive developments. Keys to Sri Lanka’s future growth are tariff
privileges (though GSP Plus may not be available in the future), private dynamism and FDI. MAS
and Brandix are the only outstanding domestic apparel companies. Meanwhile, the IT industry is
growing strongly. The nation needs to shift to high-value products and diversity export markets.
The Japan-Sri Lanka Technical and Cultural Association (JASTECA) was established in 1984.
It promotes HIDA/AOTS networking and cultural exchange, and teaches Japanese management,
Japanese language, 5S, kaizen, etc. It also selects Sri Lankan people fairly and rigorously todispatch to Japan for technical training with funds on the Sri Lankan side. Approximately 3,900
such trainees have been sent to Japan, with follow-up upon return. JASTECA also gives the
Akimoto 5S Award to firms that successfully adopt Japanese management (Mr. Taiki Akimoto wasdispatched by the Central Japan Industries Association (ChuSanRen) to Sri Lanka in 1995 andspread 5S and the kaizen philosophy in the country). Other activities include B-to-B matching, fairs
and exhibitions, and donations to the victims of the Great East Japan Earthquake. JASTECA’sbuilding was given by the Sasakawa Foundation but its operation is self-financing. The Sasakawa
Hall houses offices, classrooms, an auditorium and meeting rooms as well as the Sri Lanka Nippon
Educational and Cultural Center (SNECC), JASTECA Institute of Management and the Japanese
Language Education Association. The Japanese Association, the Alumni Association, the Japan
Culture Club and the Sri Lanka-Japan Business Co-operation Committee also use the Sasakawa
Hall for events and meetings. JASTECA’s remaining problems include the continuation andrevitalization of various ties with Japan, creation of new-generation JASTECA leaders and therelocation and expansion of the headquarter building (the main problem is finding a suitable plot of
land rather than money)15. Mr. Dayasiri Warnakulasooriya, Vice Patron of JASTECA who assisted
our mission, has greatly contributed to the dissemination of Japanese management and Japanese
language in Sri Lanka as well as promotion of bilateral friendship. His activities continue even today.
7. Assessment of industrial strategy

15

Mr. Nobuhito Hobo, Vice President of GRIPS Alliance and the former Japanese Ambassador to Sri Lanka,
attributes JASTECA’s success to (i) affinity of Sri Lankan and Japanese cultures, (ii) enhanced networking by alumni
who succeeded in business, (iii) the availability and independent management of the Sasakawa Hall, and (iv)continued support and relationship with Japanese stakeholders.

12Japanese people whom we interviewed prior to the mission were generally negative in theirassessment of the current Sri Lankan industrialization strategy. The main issue was the lack ofconsistency and predictability. Problems include frequent re-arrangements of ministries and theirmandates, absence of inter-ministerial cooperation and ambiguity as to which organizations are
truly responsible for the formulation of each major policy. More concretely, problems include thefollowing.
 The President emphasizes internal policies while the Prime Minister is more liberal andoutward-oriented. Some say the two are incompatible while others expect the two leaders tobring balance.
 Vision 2025 is general and without implementation documents. It is unclear whether concrete
policies can be generated and executed with effectiveness.
 The Prime Minister and MNPEA are assisted by Professor Hausmann’s team from Harvard
University. Will it be able to provide pragmatic policy advice for industrial promotion beyond
academic analysis and empirical studies?
 While EDB and BOI are the implementation bodies of export promotion and FDI attraction
respectively, it is unclear who designs these policies and how. A group of elite technocrats is
not yet visible in Sri Lanka, at least to us.
 The SME policy drafted by MIC contains standard measures which are comfortable to us16.
But the question is organization, budget and staff for implementation. Do they exist? Is the
SME policy recognized as top priority by national leaders and other ministries?
 Under the IMF program and the new tax law, taxes will be simplified, and exceptions, including
corporate tax exemption for EPZs, will be eliminated. On the other hand, FDI attraction is a top
national priority. Are these mutually consistent?
The content and methodology of Sri Lankan policies are quite different from the successful
cases of the East Asian Flying Geese, or Ethiopia where every official can at least explain what
GTP II (five-year plan) tries to do—apart from its desirability or implementability. How should we
evaluate the current industrial strategy of Sri Lanka?
The optimistic view may argue that the current policy inconsistency and fiscal crisis are only
temporary, that there is balance between domestic consideration and global orientation, and theapparel industry is far more advanced than that of Bangladesh. The private sector (at least apparel)is dynamic, labor is educated and skillful, and a new export-oriented IT industry is emerging. For
Japanese, Sri Lanka is a far more comfortable place to live compared to India, and Sri Lankans
are kinder and not so aggressive. Even if government policies are imperfect, now-peaceful Sri
Lanka is likely to grow driven by strong value creation of the private sector. Many of our Sri Lankaninterviewees, while admitting to remaining problems, expressed such optimism. Among them, we
did not detect any apprehension that the nation was trapped in middle income and might face low
growth in the foreseeable future.
A more pessimistic view points to the narrow industrial base of the private sector and the low
policy capacity of the government, even though Sri Lanka is soon transiting from lower middle
income to upper middle income. In the private sector, the outstanding performance of a small
number of apparel firms and several other bright spots are not shared widely by the entire economy.
Sri Lanka does not in any significant way have electronics assembly, automotive production,
machinery and equipment, construction materials, broad-based food processing (not just tea) and
16

Ministry of Industry and Commerce, National Policy Framework for Small and Medium Enterprise (SME)
Development, 2015; and attachment Action Plan.

13

consumer goods production, which are normally available in a middle income country (Vietnam,with only half the income level of Sri Lanka, has all of this), or material and “supporting” (i.e.,
component) industries that supply to them. In the government sector, basic policy orientation isfairly clear with all ministries and agencies explaining similar policy directions. However, muchdoubt remains over the implementability and effectiveness of proposed policies. Many interviewees
seemed to suggest that strong economic growth would be possible once fiscal soundness andpolicy consistency were realized. This may be too optimistic.
Additional words are in order on this last point. There are two fundamentally different ideas
regarding industrial development. For a poor country which just overcame a war or social turmoil,
igniting growth is relatively easy. All it has to do is to invite international aid, create new laws andinstitutions, liberalize the economy and join the international economy. The previously suppressedprivate sector and FDI will soon bring high growth, taking the nation to middle income. But the climb
may not be so easy beyond middle income. The market-princile advocates would argue thatmaintenance of free and open business climate would do the job nicely. Meanwhile, the East Asianway is to install a proactive government which, through pragmatic and effective public-private
partnership, actively and concretely upgrades industrial human resource and produces champion
companies that can generate great value, without which high income and technology could not bereached.
In the Sri Lankan context, it must be asked whether sound budget, policy consistency, FDI
attraction and expansion of overseas markets are sufficient as a national strategy to proceed to ahigher stage of industrial development (it must also be admitted that even these four goals are notso easy to attain). We sense that the current Sri Lankan government has no intention of introducing
an industry policy of the East Asian type. The mission would like to express the doubt whether Sri
Lanka can raise its long-term growth trajectory without properly introducing value-creating policy.
Ethiopia, still a low income country, has firmly embraced the East Asian approach and madesignificant effort to learn and implement proactive industrial policy. The purpose of this mission has
been to provide the Ethiopian government with concrete information that may help its policy
learning.
8. Summary and lessons for Ethiopia
At the end, we would like to list up the major findings of this mission from the perspective ofclient, namely, the Ethiopian policy authorities. Ethiopia’s manufacturing sector in general andapparel sector in particular are still underdeveloped. The experience of Sri Lanka’s apparel industry
can offer useful lessons to Ethiopia in several ways.
(1) The leading role of the private sector
In Sri Lanka, the private sector has a leadship role in the apparel industry. The Sri Lankan
government has played a vital role in creating business environment conducive to the private sector.
Apart from this, however, the degree of government involvement in the industry is minimal.
Historically, the private sector has been the driver of growth as well as the manager of the apparelindustry. It assesses the global trend of apparel, identifies challenges the industry faces, comes up
with policy ideas and recommendations and presents them to the government for discussion anddialogue. A case in point is the Joint Apparel Association Forum Sri Lanka (JAAFSL) which acts asa voice of the industry. It serves as a bridge between industry and government and has been
14

instrumental in the development of the industry. As the apex body over several apparel associations,
JAAFSL designs and implements strategic plans and guides the industry towards the world’s No.1
apparel sourcing destination with quality and conscience. JAAFSL pushes the government tocreate conducive environment for investors including revision of the incentive structure. The
government is open to discussion and seriously listens to JAAFSL’s ideas. So long as suggestions
are convincing and credible, the government accepts and implements them. The government also
invites JAAFSL to trade negotiations with other countries.
(2) Ethical practices
Ethical practices in the Sri Lankan apparel industry have unique characteristics. Labor
standards and employment relations are strictly regulated and monitored. The Board of Investment(BOI) through its Industrial Relations Department facilitates labor-management cooperation andharmony, and provides advisory service and guidance to employers and employees. Garments are
made with care and conscience by ensuring workers’ rights and ethical working conditions;absence of child labor, forced labor, discrimination of any kind and sweatshop practices; and bycreating opportunities for education and personal growth. Employers must strictly adhere to local
and international labor standards, and workers have the right to collectively bargain through tradeunions. This maintains a healthy and harmonious industrial relations conducive to efficiency andproductivity. Such ethical practices are the root cause of the success of the Sri Lankan apparelsector. Moreover, Sri Lanka is known for environmental excellence and won many awards for green
manufacturing such as LEED Platinum and Gold Certified. This unique characteristic has attracted
many world-renowned brands such as Victoria’s Secret, Gap, Nike, Tommy Hilfiger, H&M, M&S
and many others which have built longstanding partnership with Sri Lankan apparel companies. Sri
Lanka has become the world’s top ethical apparel sourcing and manufacturing destination.
This offers an insight for Ethiopia. There is an increasing global pressure to improve conditionsin the workplace, especially from the end users of garments in Western countries. Consumers areconcerned with labor and environment conditions in developing countries where garments are
manufactured, and require international sellers to purchase from manufacturers which adhere toacceptable standards and legally binding international conventions. Consequently, buyers also
insist the same and implement tough inspection procedures. Furthermore, workers themselves now
demand better working conditions. In this regard, Ethiopia will be no exception. Given the pressure
from consumers, buyers and workers, Ethiopia has no option but to adopt proper ethical standards.
However, sticking to these standards should not mean disregarding quality. There are also otherbuyers, including Japanese, whose prime concern is high quality. Hence, Ethiopia needs to prepare
itself to meet both challenges.
(3) Export promotion
Sri Lanka established the Export Development Board (EDB) in 1979. It is an executive arm of
the Export Development Council of Ministers, a policy-making body headed by the President.
EDB’s export promotion activities include organizing buyer-seller meetings, annual trade shows,fairs and expos, providing information to foreign and local entrepreneurs and assisting theformulation and maintenance of quality standards. It conducts marketing research, feasibility
studies and seminars for understanding the Sri Lankan marketplace and how to best utilize its
business opportunities. The board of management of EDB comprises representatives from bothstate and private sector organizations.
15

(4) Sector-specific incentives
Sri Lanka has in the past provided incentive package such as tax incentives, concessional
financing, export credit insurance and other instruments to promote investment. These incentives
were designed to be sector-specific17. Sectors that were designated by the government as priority
were given more attractive incentives compared to non-priority sectors. Such a strategy contributed
to the development of key sectors, particularly the apparel sector. In Ethiopia, incentives are lesswell-structured. Priority sectors receive additional incentives in the form of income tax holidays andexemptions from customs import and export duty. However, other important incentive schemes
such as credit, finance and subsidies for value-creating activities are not yet provided.
(5) Design of industrial parks
To promote investment, Sri Lanka has invested in Export Processing Zones (EPZs). In addition
to physical infrastructure, facilities at EPZs include the office of the Industrial Relations Departmentof BOI, a customs office, a bank, a post office, medical service, freight and port services, etc. EPZs
welcome enterprises from all sectors including apparel, electric, metal products, footwear, precious
stone, food processing and others. The advantage of this strategy is to economize infrastructure
and other facilities for all sectors. If industrial parks are set up separately for specific sectors, alarge number of specialized parks are needed and it would be more difficult and costly to provide
adequate infrastructure, facilities and other services to all of them.
(6) Producing skilled industrial manpower
To attract private investment, the Sri Lankan government has made efforts to produce humancapital with skills required by the apparel industry in particular and the industrial sector at large.
The Ceylon-German Technical Training Institute (CGTTI) is a leading institute for training
technicians in the field of automobile engineering and allied trades. Its programs cover automobile,
tool machinery, power electrical, welding, millwright fitting, and others. The institute owns wellequipped training workshops and modern laboratories. All training courses comprise 80% practicein workshop and laboratory and 20% theory in classroom. Heavy emphasis on practice leads toproficiency in required industrial skills. Graduating students are highly demanded locally andinternationally. Gulf countries, Australia and New Zealand are the most popular destinations ofgraduates from CGTTI.
The Sri Lanka Institute of textile and apparel (SLITA) is a provider of skilled manpower to thetextile and apparel industry. It offers various competency and career development programs at the
diploma and the certificate level as well as short-term courses. Similar to CGTTI, it offers practiceoriented courses to prepare students for technical and managerial positions in the textile andapparel industry.

Attachments:

Mission schedule
Organizations/persons visited17

As discussed earlier, Sri Lanka is now adopting a simplified tax structure by removing specific incentives.
However, this does not negate the value of specific incentives in the early stage of industrialization, as the past
success of Sri Lankan apparel testifies.

16

Attachment 1

Mission Schedule (8-15 October 2017)
1. Mission Members
Kenichi Ohno

Professor, National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan

Akemi Nagashima

Research Associate, National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan

Kidanemariam Berhe Hailu

Lead Researcher, Policy Study and Research Center (PSRC), Ethiopia

2. Mission Schedule
DATE
8

TIME
Sun

PM
AM

9

ACTIVITY
Arrival in Colombo
JICA Sri Lanka Office
JETRO Colombo OfficeMon
PM

Department of National Planning (Ministry of National Policies and Economic Affairs)
Institute of Policy Studies of Sri Lanka (IPS)
Katunayake Export Processing Zone (KEPZ)

AM
10

Tue

Isabella Socks Manufacturing PLC (in KEPZ)
Hirdaramani Garment PLC (in KEPZ)PM

Joint Apparel Association Forum Sri Lanka (JAAFSL)
Ministry of Development Strategies and International Trade (MODSIT)

AM
Oct

11

Wed

Board of Investment (BOI)
Export Development Board (EDB)PM

Ministry of Industry and Commerce (MIC)
Japan Sri Lanka Technical and Cultural Association (JASTECA)

12

13

Thu

AM

YKK LANKA PVT LTD (in Seethawaka EPZ)PM

Sri Lanka Institute of Textile and Apparel (SLITA)AM

Ceylon-German Technical Training Institute (CGTTI)MAS Holdings

Fri
PM

The Ceylon Chamber of Commerce (CCC)
Departure to Addis Ababa (Kidanemariam Berhe Hailu)

14
15

Sat
Sun

AM

Midaya Ceramic Company

PM

Departure to Tokyo (Kenichi Ohno & Akemi Nagashima)

AM

Arrival in Tokyo

17

Attachment 2

Organizations/Persons Visited
Official Organizations of Sri Lanka
Organization

Name
Sanjaya Mudalige
Malarmathy GangatharanDepartment of National Planning (Ministry of National Policies and T.M.J. Bandara
Economic Affairs)
A.K. Gunasekara
R.D.A. Maithreerathna
Shunichiro Honda
Ministry of Development Strategies and International Trade Board
S.W.C. Jayaminiof Investment (MODSIT)
Prasanjith Wijayatilake
Board of Investment (BOI)
Dhammike Basnayake
Hideo Horiguchi
M.K.D. Lawrance
Katunayake EPZ
Himali S. Urugodawatt
D.M.P. Dissanayake
Upul Akmeemana
Sepalika Jayawardhana
Export Development Board (EDB)
Apsara Chandani Arampath
Dammike Jayawardne
Akila Dishan
M A Thajudeen
A.H.M.U. Aruna Bandara
Inoka de Alwis
Ministry of Industry and Commerce (MIC)
Samangika Abeysinghe
Harsha Wijewardena
Ishani Abeyrathne
Institute of Policy Studies of Sri Lanka (IPS)
Kithmina V. Hewage
P.V.S. WijayaratheEng. S. Ilangovan
B.L.S.P.Nishantha
Sri Lanka Institute of Textile and Apparel (SLITA)
K. Jegatheesan
B.Sabashini
A.C.S.I. Mumthas
S.P.K. Amarasinghe
Ceylon-German Technical Training Institute (CGTTI)
R.L. Vijitha Kumara
G.Ajilh.G.Nerio

Position
Director General
Additional Director General
Director, Regional Development & Social Protection
Director, Industries & Trade
Assistant Director, Industries & Trade
Strategic Planning Advisor (JICA Expert)
Director for International Trade Division
Executive Director, Investment Promotion
Assistant Director/Desk Officer for Japan, Invest Promotion
JICA Advisor for Investment Promotion
Acting Executive Director (Zones)
Director (Legal) – Industrial Relations
Deputy Director (Regional Development Division)
Deputy Director (Trade Facilitation)
Deputy Director (Industry Products)
Assistant Director, Market Development
Additional Director General, Development
Assistant Director, Export Service
Additional Secretary and Chairman of SLITA
Director (Planning)
Deputy Director (Policy Development)
Assistant Director (Planning)
Director (SME& Textile)
Director (SME& Textile)
Research Officer
Director Operation
Director Training & Technical
Chief Technologist
Chief Technologist
Technical Assistant, Department of Textile Technology
Technical Assistant, Department of Textile Technology
Chief Engineer (Training)
Deputy Chief Engineer (Factory)
Instructor, Automobile

Private Sector
Organization

Isabella (Private) Limited

Hirdaramani Mercury Apparel (Private) Limited
MAS Holdings
YKK LANKA PVT LTD (in Seethawaka EPZ)

Midaya Ceramic Co. Pvt Ltd
Joint Apparel Association Forum Sri Lanka (JAAFSL)Japan Sri Lanka Technical and Cultural Association (JASTECA)NameHemantha Perera
Ravindra Fernando
Saman Abeyratne
K.HerathThushara Fernando
Sampath Senavirathne
Nuwan Herath
Shakthi Ranatunga
Masahiro Kubo
Satoshi Takahashi
Mohamed Rimzan
Dayasiri Warnakulasooriya
Kumudu Warnakulasooriya
Anura Warnakulasooriya
M. P. Tuli Cooray
Dayasiri Warnakulasooriya
Nihal Seneviratne
Athulla R F Edirisinghe
Nimal Perera

Mangala Samarajeewa
Mahindra Saranapala
Dhara Wijayatilake
Anushka Wijesinha

PositionManaging Director
Operations Manager
Supply Chain Manager
Human Resources Manager
General Manager
Senior Manager –Human Resource
Quality Assurance Manager
Director, Group Human Resources
Senior Advisor- Sales & MarketingTechnical Advisor
S&B Sales Manager
Chairman
Director FinanceManaging Director
Secretary General
Vice Patron
President and Managing Director for Vistas Consultancy Services
Past president (Managing Director for Venice Sea Food Pvt Ltd)
Vice President (Managing Director for NTS Interlining Pvt Ltd)
Consultant, Japanese 5S Concept & Kaizen, Former JASTECA
President
General Manager, Sri Lanka Telecom
Past JASTECA president and Director for Kelani Cable PLC
Anttoney at Law, Chief Executive Officer
Chief Economist (recommended, not met)

Name
Fusato Tanaka
Toru Kobayakawa
Akio Nakamoto
Tatsuya Iwasaki
Cabral Indika
Kazuhiko Obama
Haruna Yamamoto

Chief Representative
Senior Representative
Senior Representative
Representative
Senior Project Specialist
Resident Representative
Assistant Director

Premalal Fernando

Ceylon Chamber of Commerce (CCC)

Official Organizations of Japan
Organization

JICA Sri Lanka

JETRO Colombo

18

Position