Garments: Uphill Task To Stave Off Competition
Sri Lanka’s apparel industry is apparently caught up in a vortex with no one to turn to for succour but its own.
Joint Apparel Association Forum (JAAF) Chairman Azeem Ismail speaking at a function in Colombo on Tuesday said that regional countries such as India, Bangladesh, Indonesia, Vietnam and Cambodia enjoy preferential duties, but not Sri Lanka.
Sri Lanka till August 2010 enjoyed duty free exports of garments and several other items to the EU, its single biggest export market, but lost this facility after August 2010 for not allowing the EU to investigate alleged human rights abuse committed during the final stages of its war against the LTTE.
As a result, a number of garment factories relocated their businesses in countries such as Bangladesh which continues to enjoy duty free access to the EU, in order to take advantage of this facility.
When this reporter asked Ismail whether Sri Lanka is going to reapply for the GSP + facility, he said that he doesn’t know as it’s a country decision and doesn’t come under the ambit of JAAF.
He appeared to be seemingly evasive on the GSP+ issue when this reporter confronted him over this matter. The Government and its agents adopted the posture that Sri Lanka can do without GSP+. In fact Treasury Secretary D. P.B. Jayasundera speaking at a post budget seminar in November reiterated this position.
Ismail belongs to the island’s minority Muslim population who is under pressure by an extremist Buddhist organization of the island’s majority Sinhala population called Bodhu Bala Sena.
Meanwhile Ismail in his speech further said that the apparel industry is at crossroads today.
Although it’s a US$ ($) four billion industry, the challenges facing it pertain to costs, competition, preferential duties, energy and new markets, he said.
Ismail further said that when the quota system was going out, everyone, especially in the period 2002/3 thought that all was lost. But it rose to become a $ four billion industry due to consistency, fixed thinking and innovation, he said.
“But we need to challenge ourselves and go higher up in the value chain,” Ismail said. He also said that the way forward was automation.
“Labour, electricity, logistics and efficiencies are the major areas that we need to improve on,” said Ismail.
“By 2015 the industry plans to grow to be a $ five billion business, this may be achieved if Sri Lanka transforms itself to a garments hub, taking advantage of its infrastructure such as the port,” he said.
This is how Singapore operates, Ismail told this reporter.
JAAF is the island’s largest apparel sector body, bringing all the apparel associations under its umbrella.
Ismail was speaking at the Apparel Exporters’ Association-200 Garment Factories Programme’s (GFP’s) AGM.
Its newly elected chairman Anis Sattar said that to overcome the labour shortage facing the industry, the government should allow for the import of 10% of the required female labour to meet this shortfall.
GFP was set up during the tenure of President Ranasinghe Premadasa’s regime, ie from December 1988 to May 1992 to provide employment opportunities to the rural youth of this country.
Garment exports after remittances are Sri Lanka’s second biggest foreign exchange earner.