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Sri Lanka: Apparels proceeding to USD 5bn growth but issues seen as remainingMonday, November 24, 2014 > 09:21:41
'The apparel industry has seen the tangible benefits of the implementation of the anti-competition bill and has returned to double-digit growth, but future growth will have to be built on our own initiatives and entrepreneurship as we lack favourable trading arrangements, tilting the playing field in favour of our competitors, Saif Jafferjee, Chairman, Sri Lanka Apparel Exporters Association said on Wednesday.
"Nevertheless, in the short term,with the current growth momentum we will be on line to achieve USD 5.0 billion by 2015, Jafferjee said.
"Looking farther ahead, under the latest government policy framework 'Unstoppable Sri Lanka 2020', the Mahinda Chinthana Vision for the Future, the industry needs to deliver on the twin goals of US$ 8.5 billion by the year 2020, and being among the top 10 apparel-exporting countries."
"We thank his Excellency the President, Secretary to the Treasury and the respective ministries and departments for the encouragement given to us in the budget of 2015. We can now confidently chart our course towards this vision and the key initiatives already embarked on by the industry need to gain traction and come to fruition to sustain the envisaged 12% growth rate in the next few years, the chairman said.
"Now, market diversification to non-traditional, but potentially large markets, such as, China, India, Japan, Russia and Brazil has to be looked into.
"As a first step we are hopeful that the government will be able to conclude the China-Sri Lanka Free Trade Agreement next year and which will open several new growth opportunities for branded product exports as well as attracting inward investment.
Jafferjee added: "It is also interesting to note that our initial exports of apparel began to the then Soviet Union. As you know, we have a world-class industry that produces for the most prestigious of brands and some of which already have a presence in Russia. Due to tariff and non-tariff barriers the penetration of our apparel exports to Russia has so far been disappointing, and stand at less than 1% of our exports. We seek the cooperation of our chief guest, Russian ambassador Alexander Karchava to help us showcase our apparel industry in Russia and help initiate a policy dialogue between our two governments to obtain preferential trade arrangements.
"Essentially, we need to consolidate and improve our current business competitiveness, investing in automation and technology; and differentiating us as total solution provider with speed to market.
"Switching gear to the concerns we face in the domestic environment, we look forward to engaging with relevant authorities to seek urgent resolutions.
"We applaud the steps already taken by the Sri Lanka Customs, Board of Investments and Sri Lanka Port to introduce e-commerce to facilitate exporters, which is a very important part of our trade facilitation agenda.
"We seek to overcome long-standing issues that have been raised repeatedly by our previous chairman as well. Firstly, we are permitted to work only 45.5 hours per week with respect to most of our other competitors who are permitted to work 48 hours. Secondly, the fixed weekly holiday for the trade restricts a business’s ability to roster shifts in the most efficient manner. As the country is now on a path towards a middle-income country it is high time the authorities re-examined these regulations to be on par with our competitors.
"Finally, the proposed 2% increase on EPF is a major concern that will impact our costs and have repercussions on our competitiveness.
"We wish to also commend the monetary authority for tackling inflation to low single digits, which will reduce the cost of living increases of our employees. The lower inflation has also provided the space to reduce nominal interest rates reducing our cost of financing which is a positive development. However, we watch with concern the competitive devaluation among countries and some examples are the sharp falls in Japanese Yen, Euro and British Pound, diminishing the purchasing power of imported products in these countries.
"By continuing to anchor our currency to the USD, an appreciating dollar pulls up the rupee relative to other currencies making us more expensive and less attractive.
"Traditional retailer channels are being challenged and remain under threat, and many of our current customers may cease to exist in the future."
"It may be time we look at how we can advance our technological tools to drive our own business.