Apparel Exporters blame Govt. for lack of support

By Cheranka Mendis

Apparel Exporters Association Chairman Rohan Abayakoon on Monday bashed the Government for the lack of support given for the apparel industry despite it being a flag bearer in terms of export earnings and employment creation.

Abayakoon, addressing the AGM of the Sri Lanka Apparel Exporters Association, stated that the Government had continued to ignore the concerns of the sector and that nothing had been done to improve Government/industry transparency.

“It is ironic that at many forums the Treasury keeps advocating that they are looking in to the private sector, in particular the apparel industry, to be the engine of growth in reaching the target of achieving 8% YoY for the next five years. At the same time they continue to ignore most of the Government roadblocks erected in supporting such a cause.” Listing out the reasons for his accusations, Abayakoon noted that there had been no progress on the Government’s unilateral decision to suspend the Export Development Reward scheme, which came at a huge cost for many industry stakeholders in the wake of 2009 crisis and then the subsequent loss of GSP+.

“Our pleas to lessen the burden of high utility costs have fallen on deaf years,” he said. This is despite the fact that the industry is facing increases between 25-40% on electricity alone under the guise of an increase of only 8%.

To subsidise the general consumer reflects on how industrialists, viewed as the engine of growth, are not given any hearing at all,” he expressed.

The recent controversial revival of the Underperforming and Underutilised Assets Bill was another case in point, Abayakoon mentioned. Stating that this was like ‘throwing a cat among the pigeons’ the Chairman said: “There are no tangible criteria for same being discussed and debated. This is leading to more uncertainty and confusion among the genuine investors and industrialists in the country.”

With the Government using the point of post war development and opportunities at every given time, one would expect the words to be followed by actions, which is not the case now.

“If we are to believe that the Government is relying on the private sector to drive growth, then I would have to say I cannot see this being followed by acts to convince the industry to believe that this is the actual thinking with the Government.”

On factory workers and image building, he blames the Government for negative publicity: “While the industry is embarking on an islandwide campaign to improve the image of the industry as an employer, we get bashed over and over again by politicians who undermine the value of factory workers.”

It is perhaps the progress made by the industry during trying times that has isolated the industry from the economy, he noted. In the year to date published figures for the current year, apparel exports have increased by 45% YoY; the success has conceivably been the reason for the ‘punishment’ of sorts from the Government.

“There are various discussions in the wake of this incredible performance and while the debate continues, it is not lost on us that it could well be taken as a sign that all is well within the industry and our cries are more ‘wolf, wolf.’”

Despite the Government’s sluggish attention, the industry continues to engage with the party through various proposals to be included in the next Budget. The industry has put forward the idea of using relationships with conducive nations to get increased market access on special terms and to seriously look at exchange rates while being sensitive to the increase in cost of living and not disregard export competitiveness among others.

“Aspirations to be a regional hub for various economic sectors including the apparel industry, create skill advancement funds covering the total solution process of the industry and establishing a sectoral credit guarantee fund especially for the upcoming SME sector to give companies access to capital funding requirements are also part of the plan,” Abayakoon said.

“We have also discussed the completion of some of the proposals included in the previous budget like the Anti Competitive Trade Bill, issues related to Nation Building Tax (NTB) and immunity on VAT liability for SMEs.”

Challenges aside, the industry is well on its way to reach the US$ 5 billion target by end 2015. As at now, four years before the target period, the industry is hitting close to US$ 4 billion, he said.

The country can benefit from customers moving away and relocating sourcing away from China. China, Abayakoon said, supplies 35% of the global apparel requirement, while only 1% goes from Lankan shores. “Sri Lanka has the opening to reap benefits from this.”

What could be a major constraint however is labour. He commented that tapping into new labour pools in the north and east is a short-term affair and that the country must find long-term solutions to the resource problem for the industry to grow beyond 2015.

To facilitate the needs of the industry, one must focus on opening opportunities for Sri Lankan women living as domestic workers overseas to come back home and seek employment within the industry.

“It may be good to look at the one million Sri Lankans employed overseas, of which 60% are women. Statistics show that 54% out of this work as domestic helpers.”

“We need to make them believe that it is better being a garment girl working in an industry with world class accolades on human resource management as opposed to working in a far-off land.”

He stated that this would act as a factor to not only uplift the workers but as a key factor enabling the industry to grow beyond the 2015 vision.

Within the industry, stakeholders must stop competing against each other but help each other improve, Abayakoon said. “There is a need to work together to benchmark best practices for collective progress and to come together in customer strategies, supply chain management and human resource development among other areas.”

Sri Lanka also needs to face competition from low cost manufacturing bases such as Bangladesh and Cambodia and other countries benefiting from bilateral and multilateral agreements. To sustain the current high levels and drive market share, the industry will have to embrace the ever-evolving market dynamics of the world.

Such dynamics include green initiatives, developing a brand culture, multi-seasonal apparel, differentiation and innovation, fast fashion capabilities, penetration to emerging markets and logistics and hub services among others.

“Many of these initiatives are being explored,” Abayakoon said. He stated that soon a mission would embark on a study of the ‘Turkey model,’ which has been identified as one that Sri Lanka needs to look into in order to evolve. “Turkey has achieved success in terms of market share despite costs being exorbitantly higher than in Sri Lanka,” he explained.