Financial Times - Revival plans for footwear

Most shoe manufacturers use local raw material such as leather and rubber to produce footwear mainly for the domestic market. Sri Lanka has 11 leather tanneries in operation at the moment but the tanneries are in the process of being relocated for environmental reasons and a suitable location is yet to be decided on.

The government has also allowed duty free imports of leather to assist the industry. However, over the last decade exports have been reducing and the industry shrank in size, mainly due to a number of large exporters going out of business. Total footwear exports in 2005 came to Rs 1.3 billion and exports to the US came to only Rs 172 million. Total footwear exports five years ago in year 2000 however, came to over Rs 4.2 billion.

“There were a number of reasons for the reduction in exports. Mainly, the gradual removal of GSP concessions starting from 1995 and the removal of anti-dumping duties on China and Indonesia in 1997. China entering the world trading regime through the World Trade Organisation also contributed to the decline of our exports to the US. Most Chinese goods go to the US and we can’t compete against their prices. Apart from this there were also other reasons for the reduction in exports like some large exporting companies closing down due to management problems,” explained the Assistant Director of the Export Development Board (EDB) Ms S de Saram.

To make use of the current opportunity, the EDB is organising a marketing programme for Sri Lankan footwear manufacturers in the EU. “We are organising a Market Promotion and Business Development Programme as a promotional event in the EU market this September.

It will target the markets in France, Italy and Germany Our main objective is to make importers in these countries aware of the GSP+ concessions given to Sri Lanka and thereby obtain orders and attract subcontract and joint venture opportunities. Although the GSP+ is given by the EU, importers in these countries are not aware that we have this facility,” she explained.

The EDB says that in the current scenario Sri Lanka stands a good chance in the mid level pricing categories in the European footwear markets and says exporters can also leverage the country’s good track record for export compliance.

“We can’t compete on the low end but our producers can definitely supply to the medium end of the market. As fashion trends are changing day by day in the international market most of the orders placed are small orders which our exporters could easily supply,” said Ms de Saram.

Meanwhile the Footwear Association has proposed an industry revival plan to the government where it outlines a strategy to set up 10,000 factories over the next three years. The first phase is looking at setting up 1,000 factories. (DS)