Apparel exporters have urged that the country should move towards becoming a sourcing hub with regard to the apparel export industry and in the process reduce the export of non-value added and low-value added garment products while introducing increased industrial technological modernization.
The Sri Lanka Apparel Exporters Association (SLAEA) also urged the government to seriously consider abolishing the Simplified Suspended Value Added Tax (SVAT) scheme or at least exempting the industry from it. They cited problems for exporters in terms of cash flows, which would result in more bank borrowings in the short term as the reason. The apparel exporters were previously exempted from Value Added Tax.
According to SLAEA, which noted that consistency in terms of policy was of paramount importance in the long term, recent figures pertaining to foreign direct investments were not great partly due to the fact that the ease of doing business in the country was bad. “Who is going to invest”, an official of SLAEA asked.
Recently, Prime Minister Ranil Wickremesinghe citing a study carried out by the University of Harvard at the request of the government of Sri Lanka, observed that the country could no longer depend on the apparel exports industry as countries like Bangladesh which had cheaper labour were more competitive in the apparel export sector and market.
Chairman of SLAEA, Felix Fernando while acknowledging that Wickremesinghe’s statements were spot-on, noted that though Sri Lanka was unable to be price-competitive and was also held back by way of the constant and acute shortage of labour the industry had to deal with, it could on the other hand capitalize on being internationally recognized in terms of quality and delivery.
The contention is that quality can be developed by way of moving towards more and more value added products while cheap garments can be absorbed into the domestic market.
According to an official, delivery can be handled by taking on orders and even though Sri Lanka could not handle the production locally, it could be outsourced to countries such as Bangladesh, Vietnam or Ethiopia while value creation and addition can be done domestically.
Fernando emphasized that the processes in the industry would have to become more machine-operated and adopt advanced technologies and machineries towards this end. Regarding certain aspects of production, Fernando added that labour would have to be trimmed down by 20%.
He further explained that this would not mean that workers would be sent packing but that they would be absorbed to other aspects of the production where manual labour was necessary and is required.
“In terms of products and styles, it is advisable for us to make more and more value additions. Factories may close, yet more revenue must be earned from the limited number of factory complexes. Hong Kong has the hub concept. Sri Lanka too can be a sourcing hub as the buyers have recognized the open market. We practice the garments without guilt concept, where there is no child labour utilized and exploited. The big players know this. Sri Lanka is still the largest source for Victoria’s Secret lingerie and women’s wear.
Elsewhere, there must be definite modernization and industrialization in terms of technology and machinery. Capital allowances can be invested in it. The incorporation of new technologies will result in efficiency, help existing workers be more productive and break the monotonous nature of their jobs,” Fernando pointed out.