Boosting apparel: Needs FTAs, consistent state policies
Mr. Yohan Lawrence
Sri Lanka’s apparel industry wants trade ties with China and India to boost its existing exports to the EU and US and a firm commitment by the government for a consistent economic policy to retain foreign investments.
As an industry the apparel sector is not likely to venture into new markets, on the contrary the Free Trade Agreements (FTAs) with China and India is where they are looking at in a bid to generate US$8 billion by 2025, the Joint Apparel Association Forum (JAAF) Secretary General Yohan Lawrence said in an exclusive online interview with the Business Times on Thursday.
Entering the Chinese market would mean building a process of trust among their customers that is not achievable overnight; but the Chinese market is significant to the apparel sector, he said.
With India the industry is trying to push for the existing eight million pieces to be increased up to 12 million pieces, he noted.
With India with its affluent market that values brands, the apparel industry needs to connect their growth strategy with the growth strategy of their brands, Mr. Lawrence explained adding that countries like Bangladesh are already involved in trade in these areas.
GSP+ trade concessions with the EU will be reviewed as the term ends in 2023 and currently authorities are engaged in discussions with the EU since concerns were raised regarding human rights violations in Sri Lanka that are directly linked to these benefits. The apparel sector uses 50 per cent of the GSP+ trade benefits to gain access to the EU. Sri Lanka lost these concessions in August 2010 and regained it in 2017.
Sri Lanka also wants the EU to re-look at the rules of origin and increase the 75 per cent rule as
Sri Lanka can never become a major supplier of fabric and will be compelled to import it.
Sri Lanka is also looking at engaging with the UK for a bilateral arrangement in time to come but at present the same concessions the country gained under the EU GSP+ is said to continue. “If we can get to an FTA with UK then it will overcome the rules of origin with the EU,” Mr. Lawrence said.
Stable policies
A consistent economic policy is vital, “What the industry needs is a clear roadmap and what we have to pay in taxes and any form of ad hoc taxes are problematic particularly when you have foreign companies that need a stable environment and need to know what their tax liabilities are.”
In this respect, retrospective taxes were not a welcome move he noted referring to the super gains tax imposed by the government.
Labour priorities
The apparel industry is back to hiring workers and the constant shortage of labour that existed during the pre-pandemic era has now returned, it was noted.
During the pandemic there was a number of layoffs as a result of the drop in orders but this has now turned around. Layoffs were said to be not on the floor level but at senior level, it was noted.
In addition, Mr. Lawrence noted that the industry needs to work towards recruiting staff numbering nearly, 400,000 if the industry is to grow.
“The priority for us in the short term is worker safety,” he explained adding that they were able to engage in a massive vaccination roll-out thanks to the government and now they want to ensure people get their booster shots as well.
Due to the pandemic there was better social dialogue and as a result an MOU was entered into with the trade unions and JAAF has also tied up with Better Work that is a part of the International Labour Organisation (ILO) and on gender diversity.
Mr. Lawrence noted that ensuring workers are allowed to form trade unions within the factories is a requirement that is in the Constitution and in this respect it will be illegal to disallow them.
Back to work
The apparel sector also wants to ensure that the thriving SME sector is strengthened by assisting them through training and other forms of activity.
All operations in factories came to a complete halt in February 2020 when the pandemic struck and now the industry is making a comeback. But since then the industry started to move on. Things have picked up in terms of order books as people are back at work and COVID-19 though still an issue is less of a concern than it was about eight months back, the new Secretary General said. In fact the basic PPE equipment that the industry was manufacturing at the height of the pandemic died down by the end of 2020, Mr. Lawrence explained. But the demand for the glove market has gone through the roof. Still the numbers are a 10 per cent off the pre-pandemic period but 2022 is likely to go beyond and ensure the industry makes a comeback.
Industry targets of $5.1 billion for 2021 will be achieved and this year the outlook is to achieving $6 billion with a 20 per cent increase from the previous year. “It’s tough but we are going to go for it.”
New focus
The industry is currently looking at sustainability through recycling which is the next phase of the industry, Mr. Lawrence noted adding that “it’s very much the focus today.”
It is an extension of recycling where you use waste as a raw material for design like recycling plastic bottles to develop yarn and designing things with a view of recycling garments as well.
“As an industry we are looking at faster and quicker than everybody else,” he said adding it will bring new value so customers will stay with us.
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