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A unique Lanka Rubber Global Consortium was launched last week to boost the industry’s exports under a groundbreaking multi-stakeholder initiative.
Incorporated as a Special Purpose Vehicle (SPV), the consortium aims to engage collaboratively in business activities pertaining to value chain development and supply chain management processes in polymer and allied industries, with a view to remain competitive in global markets in a sustainable manner.
For the first time, the consortium has brought together rubber sector manufacturers, exporters, the Exports Development Board (EDB), the Asian Development Bank (ADB), rubber sector consultants from local and foreign domains, and many other stakeholders around a single entity.
The SPV as a small and medium-sized enterprise (SME) cluster is a widely adopted mechanism across the global context.
The consortium consists of five rubber sector companies, namely, Jafferjee Brothers Exports Ltd, Polymer Products Impex Ltd, Sinwa Holdings, Textrip Ltd. and Microcells Ltd.
In addition to encouraging collective strength channelling among Sri Lankan rubber sector manufacturers, the consortium raises the bar of operational excellence in the Sri Lankan rubber sector by enabling local brands to benchmark with global standards and industry best practices, which ultimately enhances the status of the rubber industry in the country.
The consortium’s office will be operational from the EDB building and a Memorandum of Understanding (MoU) has been signed between EDB and the consortium. The office was ceremoniously opened yesterday.
The goal of the consortium is to strengthen the rubber value chain, which would result in building a global brand for Sri Lankan rubber products, and to become a dynamic one-stop shop for all buyers, investors and other interested stakeholders. The Lanka Rubber Global Consortium’s main activities would be to collaboratively improve export competitiveness of rubber products by jointly setting up a finite element analysis centre, joint venture manufacturing, building forward and backward linkages in the rubber value chain, joint product development and R&D facilities, which result in improving the overall growth of the entire rubber value chain. The consortium’s vision is to make local brands more competitive in the global arena, as this would help to drive the country towards a highly competitive export-oriented economy.
The idea of a consortium originated when EDB, in collaboration with ADB, carried out a study showing that most companies in the industry are SMEs, and identified issues being encountered by such companies in their value chains.
One of the issues identified by the study was that SMEs are, individually, in a weak position to address some common issues prevailing in the value chain. Therefore, it was proposed that a collective effort might bring solutions which could be executed through the Cluster Development and Financing approach accepted worldwide. The consortium was born of the adoption of a ‘Collaborate to compete’ theme that connects corporates with homogenous needs, competencies and business interests, with the aim of mutual prosperity.
EDB said the rubber product sector has been identified as a trust industry, which has the potential to contribute markedly to export revenue and has established a reputation for quality and reliability. Sri Lanka produces a wide variety of value-added rubber products from both latex and dry rubber, such as solid tyres, latex gloves, rubber bands, extrusions, beadings, mats, and miscellaneous sports goods by processing raw rubber for exports.
The rubber products industry is a key sector, contributing 6.9% to exports in 2016. The major markets are the US, Germany, Belgium, Italy, Canada, the UK and Brazil. Sri Lanka supplies to major international brands such as Continental, Solideal, Wonder Grip, Mapa, and Safety Work, Tesco. Companies in the rubber industry use state-of-the-art technologies in manufacturing the above international brands.
The tyre sector accounts for the largest share of turnover (60%) of rubber exports, including solid tyres, pneumatic tyres, bicycle tyres, three wheeler tyres, and a variety of smaller tyre categories. Currently Sri Lanka is considered as the global leader in solid tyres, accounting for over 20% of the global demand, and rubber gloves, catering to over 7% of the global demand. EDB said it has implemented several programs to assist the rubber industry in the past years, such as System Development Program to obtain ISO 14001 and 50001 certifications, Technical Training and Exposure programs in UK and Malaysia, Financial Schemes to obtain relevant certifications and testing not available in Sri Lanka, trade fair participation and B2B meetings in several countries.
Vision of consortium is to strengthen rubber value chain and be dynamic: Chairman
I am greatly honoured to stand before you on behalf of the LRGC Board of Directors and indeed on my own behalf, to earnestly express my heartfelt gratitude and appreciation to allow us to gather here to witness the effort and achievement that can only be described as a ‘dream come true’.
This dream has come about to its fullest culmination after a short period of time due to the hardwork and determination of all of us. The Sri Lanka Export Development Board, together with the Asian Development Bank, gave birth to Lanka Rubber Global Consortium Ltd., by making it the first rubber SPV in Sri Lanka.
Jafferjee Brothers Exports Ltd., Polymer Products Impex Ltd., Sinwa Holdings (Ltd.), Textrip Ltd. and Microcells Ltd. volunteered to be a part of this vehicle. I wish to thank you most profoundly for your support and encouragement given throughout the commissioning of this project.
In today’s global competitive environment, companies have to face a lot of challenges to sustain themselves in the marketplace. Companies come up with different strategies to mitigate those challenges. Some companies fail in the long run due to their incapability and the lack of resources.
Lanka Rubber Global Consortium’s main aim is to find out those pain points which our partners face and make strategies to overcome those challenges collectively. One individual player battling in the global marketplace will be disadvantageous but forming an alliance and entering into the global marketplace will give many chances to win the battle and help to negate competitors. This venture has been initiated based on the necessity of ‘Collaborative to Compete’.
The vision of the company is to strengthen the rubber value chain which would result in building a global brand for Sri Lankan rubber products and to become the dynamic one-stop-shop for all buyers, investors and stakeholders.
Initially the main target of the consortium would be to collaboratively improve export competitiveness of rubber products by joint venture manufacturing, building forward and backward linkages in the rubber value chain, joint product development and R&D facilities which hopefully will result in improving the overall growth of entire process. This project is a stepping stone to a forthcoming of the Rubber Master Plan. To start operations, LRGC has decided to go ahead with a joint procurement project, a joint warehousing project, and identify new markets.
Lanka Rubber Global Consortium Chairman Mohideen Cader said that the vision of the new industry initiative was to strengthen the rubber value chain and be dynamic. Following are his remarks at the launch:
Joint procurement and identifying new markets projects have already been started. LRGC has also entered into digital platforms like Facebook, LinkedIn and Twitter. An official website comprising all the updated information is already in operation.
The wider product portfolio range which serves different industries, a pooled set of talented, experienced management, and the support and guidance from well-recognised Government organisations and institutes act as the key differentiating points of LRGC.
LRGC is also guided by values such as mutual trust and understanding among partners, provision of maximum benefits to our partners without discrimination, non-isolation of individual partners, integrity and innovation through success. We also expect to build strong network of relationships between all rubber industry stakeholders.
Our ultimate goal is to be the best solution provider for all the rubber-related products and to improve exports of the country. Achievement of all these goals will not only benefit us but also add value to the entire rubber value chain in Sri Lanka.
As the Chairman of the LRGC, I am really proud and feel greatly honoured that as a team we have proven that once determination is there and the will to achieve is embedded in the soul, everything is possible. And by the grace of the great we will continue to do more for the benefit of all. We thank you for lending your hands for the formation of this company and wish that you will continue your support and guidance throughout our journey
Helping local brands to compete globally
It is my great pleasure and honour to welcome you all to the opening ceremony of Lanka Rubber Global Consortium Ltd., the entity incorporated as a Special Purpose Vehicle (SPV) to engage collaboratively in business activities pertaining to value chain development and supply chain management processes in polymer and allied industries with a view to remaining competitive in global markets in a sustainable manner.
For the first time in Sri Lanka, the consortium has brought together rubber sector manufacturers, exporters, the Export Development Board, Asian Development Bank, rubber sector consultants from local and foreign domains, and many other stakeholders around a single entity.
I would like to take this opportunity to thank the Chairperson of EDB for offering us an office space in the EDB building for the first year of operation of LRGC.
The vision of the Lanka Rubber Global Consortium is to create local brands that are more competitive in the global arena as this would help to improve the country to drive towards a highly-competitive export-oriented economy.
Lanka Rubber Global Consortium CEO M.S.M. Sulaiman said that the aim of the multi-stakeholder initiative was to create local brands which are more
competitive globally. Following are excerpts:
The Chairman of LRGC will brief you on the current status of the SPV in his speech today at the press conference.
We appreciate your participation in this ceremony and look forward to having your strong support and active participation in the future to make this journey a truly successful one.
Raising the bar of operational excellence in Sri Lankan rubber sector: EDB Chief
It is indeed a pleasure to address you at this milestone event. Congratulations and best wishes for the consortium to continue for many years in serving the industry under the theme of ‘Collaborate to Compete’.
Although the consortium and the members are young, I am confident they are capable and energetic enough to take up the challenges of the ever-changing business environment on a single economic collaboration platform.
The rubber product sector has been identified as a trust industry which has a potential to contribute markedly to the export revenue and established a reputation for quality and reliability. The industry’s contribution was 6.9 % to exports in 2016 and 7.3% up to January to November 2017.
The EDB has implemented several programs to assist the rubber industry in the recent past, i.e. system development program to obtain ISO 14001 and 50001 certifications, technical training and exposure programs in UK and Malaysia.
The EDB having collaborated with Asian Development Bank carried out a study on ‘SME Cluster Development’ to identify issues being encountered by companies in their value chains pertaining to few identified sectors in Sri Lanka such as rubber, fruits and vegetables with the objective of assisting them to address some of the major issues hindering exports.
A value chain study for the rubber sector was carried out under this project. One of the issues identified by the study was that though these companies individually were in a weak position to address common issues prevailing in the value chain, collective effort might bring solutions that could be executed through the cluster development and financing approach accepted worldwide.
Sri Lanka Export Development Board Chairperson and Chief Executive Indira Malwatte said that the launch of the Lanka Rubber Global Consortium will raise the bar of “operational excellence” in the sector and enhance prospects and growth. Following is her speech at the launch:
Giving impetus to the rapid adoption of ‘Collaborate to Compete’ theme, the EDB and industry with the assistance of ADB has embraced a novel concept, by pioneering initiative to establish product clusters by way of formation of a ‘Special Purpose Vehicle’ simply referred to as SPV, a new economic collaboration platform that connects corporates with homogenous needs, competencies and business interests with the aim of mutual prosperity.
The PWC, the local counterpart of the project, coordinated this initiative together with EDB and ADB. Five major Sri Lankan rubber sector exporters have marked a new chapter in the country’s business economy by coming together to form a business alliance under the umbrella of a Special Purpose Vehicle named ‘Lanka Rubber Global Consortium’.
SPV encapsulates collective strength channelling among the Sri Lankan rubber sector manufacturers, raises the bar of operational excellence in the Sri Lankan rubber sector and make provisions for the local brands to benchmark with the global standards and industry best practices, which ultimately enhances the status of the rubber industry in the country.
Whilst congratulating the Lanka Rubber Global Consortium, once again I take this opportunity to wish them all the very best in their future endeavours.
I would also like to thank ADB for joining hands with EDB in undertaking this project.
Thank you PWC for your efforts in coordinating this project.
There is no doubt in my mind that with a collaboration of competencies and business interests focus on mutual prosperity our country can be a global force in the rubber sector.
Global Network & Cluster Pulse Founder hails move
Founder of the Global Network & Cluster Pulse and Mentor on Road – India, USA and Sri Lanka Jagat Shah has commended the formation of the Lanka Rubber Global Consortium.
In a message to mark the launch, he said: “This is a historic day for Sri Lanka in the cluster approach to SME competitiveness. Export consortia is a proven tool around the world for SME growth. I congratulate the entire team of LRGC for taking this first step which is the most difficult of all. I also thank EDB, ADB and PWC for full support to this initiative. LRGC can now look for joint trade missions abroad, discussion on JV with foreign companies and warehouse abroad. I am confident, that with the support and backing of the EDB, this initiative will scale heights of excellence. I will remain connected to this consortia for lifetime as a mentor.”
