Regional
apparel hub in Sri Lanka
By
Feizal Samath
While most low-cost garment producing countries worry about
the end of the quota era in 2005, Sri Lanka's garment industry
is determined to turn a potential crisis into an opportunity
and pitch the country as a regional apparel hub.
"We
must not look at the end of the quota regime as a crisis.
We must look at it as an opportunity and we are taking many
steps towards meeting the challenge," said Ashroff Omar,
managing director of the Mast Lanka group and a senior council
member of the Sri Lanka Apparel Exporters Association (SLAEA).
Mast Lanka along with the Mahesh Amalean-led MAS group are
the biggest garment exporters in the country.
A host
of activities complimented by an official delegation flying
to the United States next week to pursue a free trade agreement,
is underway. Plans are being prepared to bring all associations
connected with the lucrative garments industry under one apex
body.
Many associations
represent big and small manufacturers in an industry that
involves close to one million people, with differences of
opinion emerging on the way forward for this once-backward
industry. But Omar believes there is a need to "stop
fighting" and unite in meeting the challenge of 2005.
"We need to speak with one voice."
The industry
is recovering from one of its worst-ever years mainly because
of a recession in the US and Europe that shattered sales and
saw Sri Lankan garment revenues slump by US $ 400 million
last year. Last July's Tamil rebel attacks on the Katunayake
airport and the September crisis in the US adversely affected
the industry but the crisis had already began in early 2001
with factories closing and employees being laid off.
Omar said
he had presented a paper to the government on behalf of SLAEA
on a game plan to tackle the quota-free era in 2005 in which
several steps have been listed for attention and action. Some
of it like minimizing bureaucratic controls on fabric imports,
so that delays are minimised, has received a favourable response
from the government.
Industrial
Enterprise Development Minister Prof. G.L. Peiris along with
Omar and Malik Samarawickrema, another big garments exporter
and chairman of the United National Party (UNP), will be in
the US from April 15 to 19. The team will meet with US ministers,
officials and industry specialists in canvassing a free trade
deal with the US to allow duty free access for Sri Lankan
exports and increase the country's meager share of the US
market.
The same
thrust is being made in the EU where Sri Lanka wants duty
free access on the basis that if the peace effort succeeds,
there is lot of scope for garment industries and employment
not only in the war-torn north and east but also in the rest
of the country.
Omar said
the end of quotas would result in garment factories in the
Middle East run by Sri Lankans and which employ some 200,000
Sri Lankans closing up and the workers returning home. "
We need to find jobs for them," he said adding that Sri
Lankans had set up factories overseas to make use of quotas
in those countries.
The biggest
goal of the association and the industry is to develop Sri
Lanka as a regional centre for apparels attracting customers
from India, Pakistan and Bangladesh. "Once we open up
and ease restrictions on fabric imports, we would have the
cheapest fabric available in the region and that should see
a huge flow of customers from outside," Omar said, adding
that it was necessary to reduce dependence on traditional
markets and develop a regional market. Already Indian and
Pakistanis find Sri Lankan garments cheaper than their own
products.
Beer
sales set to rise
The beer industry expects the recent cuts in excise duty to
boost sales although it would take some time for an upward
trend in consumption to be evident, industry officials said.
"We
expect a positive impact on the industry," said Ranjan
de Silva, Brand Manager at The Ceylon Brewery Ltd.
The cuts
in excise duty and reduced retail prices should prompt more
people to move away from illicit alcohol, he said. The government
announced in its budget last month that it would remove the
10 percent excise duty on beer and 30 percent duty on hard
liquor. Liquor companies have already slashed retail prices.
De Silva
said he does not expect an immediate impact. "There is
unlikely to be any impact until May or June - it would depend
on the revival of the economy which would put more money in
people's hands and on the bonuses they get," he said.
The Three Coins Beer Company's chairman Chandana Ukwatte said
he "highly commends the government's effort to bring
some order or rationality into taxation of the alcohol industry."
A policy
of harnessing the legitimate liquor industry is a welcome
change, he said.
"We anticipate an increase in sales of beer at least
in the short-term. But we also have to look beyond the bottom-line
at the long-term development of the beer market," he
said.
"A
tradition of responsible drinking is critical to the sustainable
development of the beer market. Cheaper beer will not necessarily
help us achieve this, especially if, as has happened in the
past, it encourages consumers to use beer as a low cost chaser,"
he added.
"The
industry must seek to transform the image of beer as a gastronomic
experience and a wholesome source of stimulation. This can
only be accomplished through product innovation, careful attention
to quality and world-class packaging," he said. De Silva
said the opening up of the northern and eastern markets should
also help to boost sales.
These
are areas where we could not operate freely previously,"
he said. "But it would all depend on the opening of the
road to Jaffna because transporting beer is not easy."
SLT
eyes mobile phone market
Sri Lanka Telecom (SLT) is looking at entering the mobile
telephone market and has begun talks with cellular phone operators,
SLT chairman Thilanga Sumathipala said.
"We're seriously looking at the mobile phone business,"
he said. "We're looking at expanding SLT's representation
in the mobile phone market."
SLT currently owns a 40 percent stake in its associate company
Mobitel. Australia's Telstra Corp owns the majority stake
of 60 percent. The joint venture was set up in 1993 with SLT
acquiring its stake in return for giving its mobile phone
operator's license. Asked about speculation that SLT was considering
increasing its stake in Mobitel, Sumathipala said the company
was taking a close look at the mobile phone operator's business
plan.
"We're keeping all options open," Sumathipala said.
In SLT's restructuring plan the company feels "we should
be strongly represented in the mobile market," he said.
Poor
quality teas cause for concern
The Tea Board is concerned about the presence of poor quality
teas at the Colombo auctions and is trying to get producers
to pay more attention to upgrade the quality of their manufacturing
in factories, Tea Board officials said.
Several
lots are regularly withdrawn from the weekly auctions because
of complaints from buyers, they said.
Teas that
were unfit for human consumption should not be auctioned,
they said.
The Tea Board gets complaints about the leaf appearance, chemical
contamination, high moisture content, and of sand particles
and iron filings being found in teas sent for auction, they
said.
"Such
teas are withdrawn from the auction and destroyed," an
official said.
The practice threatens the island's image as a producer of
quality tea, he said.
"The presence of such teas at the auctions means that
the factories which make them are not clean," he said.
"They must upgrade the quality of manufacture in their
factories.
"We need to create more awareness among producers that
they may lose markets if they send contaminated teas to the
auctions," he added.
"We're
constantly talking to the industry to try to eliminate this
problem," he said. The Tea Board has the option of cancelling
the licenses of brokers who regularly place poor quality teas
at the auctions but this is an extreme measure and rarely
resorted to, officials said.
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