Lankan industry’s electricity costs up 18% – apparel exporters chief
View(s):Recent electricity tariff increases have led to an additional cost of electricity of between 17 per cent and 18 per cent for apparel manufacturers, according to Yohan Lawrence, Chairman of the Sri Lanka Apparel Exporters Association (SLAEA).
Speaking at the recently concluded SLAEA Annual General Meeting (AGM), the organisation’s 31st, Mr. Lawrence also commented on a number of other challenges faced by the local apparel sector, including requesting the “removal of the Fuel Adjustment Charge of 15 per cent that is applicable on the IP tariffs under which most of our member companies operate. This was introduced in 2012 as a result of the rise in costs of thermal fuel. With the commissioning of the coal power plants there is now a valid argument for the removal of this surcharge”.
Additionally, Mr. Lawrence also noted that the Sri Lankan apparel sector worked fewer hours than its competitors, restricted by a set of more rigid rules. He added; “As an example, in order to maintain compliance to both the law of the land, and the compliance requirements of our buyers, a factory in Sri Lanka can work no more than 57.5 hours. Our competitor in Bangladesh however can work 60 hours and our colleagues in Vietnam can work up to 64 hours… The fixed weekly holiday for the trade is another example of law that restricts what shifts we can work. Flexibility in deciding the weekly holiday will be a significant advantage to the industry as this allows us to have 24 hour / 7 day shift operations”.
At the same time, Mr. Lawrence was also of the view that growth for this sector would come from new markets such as China. He stated that the “association sees the other BRIC countries, Japan and South Korea as markets which we should be looking to develop. We would particularly request that we look to expediting preferential trade agreements with Japan, and South Korea as early as possible… Whilst we have a FTA with India, this is limited to 8 million pieces of textile and apparel. We have requested further liberalisation of this in order to harness regional strength… Russia is also a strong potential market, and together with the Export Development Board, there is a trade mission in Russia this week. Based on the findings of that mission we will be evaluating options for developing that market. Brazil is also a possibility and this is being looked at as well”.
Elaborating on the current exports to existing markets, he indicated; “In spite of, or perhaps as a result of, factors in the world outside of us, the decline has stopped and exports today stand about 2 to 3 percentage points above that of last year. What’s interesting is that within this, there’s a 9 per cent increase in our exports to the US. With a bit more of a push we should hopefully reach the $4 billion level this year”.
(JH)