SL mission woos US buyers
By Feizal Samath
Sri Lanka, coping with falling garment export orders which may force workers
to be laid off, sent a delegation to the United States and Canada at the
weekend in a bid to whip up more enthusiasm from a recession-hit west.
Another approach the delegation led by Manel Pandithasekera, Additional
Director-General of the Sri Lanka Export Development Board (EDB) is pursuing
is a current move by US buyers to source their supply of garments from
outside the Middle East (ME).
Garment industry officials said ME-generated orders were being given
to non-Muslim countries in a development related to the Osama Bin Laden-connected
US crisis, with the Philippines benefiting from this move. "There are reports
in the market that the Philippines got a big US order for 700,000 dresses
that is normally given to a ME factory," one official said.
Lyn Fernando, past chairman of the Sri Lanka Apparel Exporters Association
(SLAEA), told The Sunday Times Business that Sri Lanka should also try
and get some of these orders. Fernando is in the delegation visiting the
US and made these comments before flying out on Friday night.
The ME is a major supply base for US garments and has dozens of factories
set up by Asian companies. Many Sri Lankans work in these factories.
Industry officials said in recent weeks there has been a trend by US
buyers to shift their supply out of the Gulf and look at other garment
exporting countries. "We should grab this opportunity and be proactive.
If there are orders out there, Sri Lanka should get a slice of the pie,"
said one garment industrialist.
He said US buyers are concerned that garments with, for instance, "Made
in Oman or Made in the UAE" labels could result in a backlash from American
consumers after the September 11 bombing attacks in the US were blamed
on Muslim terrorists. "US buyers are looking for non controversial labels,"
the industrialist noted.
EDB chairman Felix Yahampath said the trip was aimed at boosting Sri
Lanka's image after negative exposure following the Katunayake attacks
and sharp rises in insurance premiums on air and sea transport. Industrialist
Fernando said the delegation was meeting buyers in New York, California
and Canada and would try to raise buying levels because Sri Lanka is back
to being a reliable supplier. Garments exports are Sri Lanka's biggest
export earner but revenue has fallen this year due to lower international
prices and a decline in orders.
Industry officials also met the Labour commissioner last week and obtained
approval to lay-off workers and also reduce permanent workers to temporary
hands due to the crisis. In the case of temporary workers, they would receive
50 percent of their normal salary. Fernando said at least 15,000 workers
would be affected by this move in an industry that employs close to a million
people (direct and indirect). There are some 40,000 workers in direct employment.
"The crisis is there. Factories are closing down or are on sale; machines
are being sold or joint ventures advertised (to raise funds)," he said.
The industry also faced a perplexing problem soon after the US crisis
blew up - Sri Lanka being apparently labelled in the US as a Muslim country
along with Indonesia, etc which would have affected garment exports.
"There were some documents circulating amongst some buyers there about
Sri Lanka being a Muslim country. The industry had to alert the Foreign
Ministry here and the US embassy on this while the Sri Lankan mission did
its part in discounting these reports and establishing this is a Buddhist
country (inclusive of a minority Muslim community)," noted Gihan Nanayakkara,
SLAEA deputy chairman.
The association has also called an urgent meeting with the Garments
Buying Offices Association on Wednesday to discuss strategies in the light
of reports that US buyers were looking for new suppliers outside the Middle
East.
Gulf war fears trigger fertilizer imports crisis
Sri Lanka is heading for possible fertiliser crisis during the upcoming
Maha season as imports have fallen sharply due to high costs plus uncertainty
over shipments from Saudi Arabia, one of the main suppliers, owing to the
current Gulf crisis.
''There could be a problem if the relevant authorities don't pay enough
attention to this situation,'' said a spokesman for one of the leading
fertiliser importing companies.
Fertiliser importers like CIC, Baurs and Mclarens - who represent more
than 70 percent of the local demand - say there could be at least a temporary
shortage of fertiliser for the Maha (November to April 2002) season due
to rising world prices.
''Most companies don't have money to buy fertiliser due to the ongoing
financial crisis caused by high global prices,'' said CIC Fertiliser Ltd's
executive director, Vasantha Gomez.
To add to their woes, urea prices in the Gulf region - the largest global
urea supplier - has shot up to US $ 145 per tonne from US $ 128 mainly
due to the war risk surcharge slapped on the vessels calling at Gulf ports,
he said.
Provisional estimates for expected Maha production this year shows a
decline by about 10 percent due to lower rainfall.
This is particularly in Hambantota, Kurunegala and to some extent Anuradhapura
districts, which account for around one sixth of the country's total paddy
output
A government subsidy was given to all categories of imported fertiliser
until 1999, after which it applied only to urea imports. This has led to
a sharp rise in urea consumption because it is cheaper than other fertilizer
due to the subsidized price.
Industry sources said the annual budget allocation for the fertiliser
subsidy is annually around Rs 1.5 billion but due to rising costs precipitated
by currency fluctuations and other reasons, the government gave another
Rs 750 million as a subsidy payment this year.
Many companies said this is not enough, even though the Treasury granted
another Rs 600 million two weeks ago - making it a grand total of Rs 2.85
billion disbursed as subsidy payments. However the government on Thursday
increased the subsidy to US $ 145 per tonne from US $ 135 earlier.
Sri Lanka's annual fertiliser requirements are around 300,000 tonnes.
Rubber overturned by golden crop
By Hiran Senewiratne
Sri Lanka's rubber industry is facing a serious crisis due to low prices
and output in the past 10 years resulting in many estates converting to
palm oil.
"The only way to improve the performance of the rubber industry is to
go for value addition rather than exporting raw rubber," an industry source
said. Many rubber management companies see palm oil as the golden crop
of the future. Low production is due to smallholders (accounting for 70
percent of total production) not applying fertilizer as returns are low.
Malaysia and Indonesia, once big rubber producers, have found palm oil
more profitable than rubber and are producing palm oil instead of rubber.
Abdullah Zawawi Tahir, Head of Chancery at the Malaysian High Commission,
said palm oil is much more profitable than rubber.
"The future of the rubber industry depends on how we could develop higher
yield plus value added products," said chairman of the Colombo Rubber Traders'
Association, W.T. Ellawala said.
He said the main reason for the drop in production is the acquisition
of yielding rubber lands for industrial purposes and village expansion
plus a shortage of rubber workers (tapers).
Rubber production has consistently dropped to below 90,000 tonnes in
2000 from 156,000, 10 years ago. Production is however likely to increase
to an estimated 95,000 tonnes this year due to incentives given to small
producers.
Another problem faced by the industry is the emergence of new rubber
producers in Asia like Vietnam and Cambodia where the cost of production
is lower than Sri Lanka, he said.
Sri Lanka is the smallest player in the global rubber market, accounting
for less than one percent of total world rubber production, and hence is
unable to influence world prices.
Ellawala said one of the strategies that Sri Lanka should adopt is to
improve the quality of latex, invest on research and development, and improre
marketing.
Given the current scenario, plantation companies are finding it extremely
difficult to continue production of rubber because of declining prices
and low yields.
Sri Lanka's rubber productivity is in the region at 700 kg per hectare
while India and Thailand produce 1,500 kg and 1,200 kg, respectively.
Mind your business
Laden laid off
Beware of the Osama Bin Laden or George Bush jokes doing the rounds on
the Internet, as one Sri Lankan employee here found out.
The man, a senior in an advertising agency, was dismissed. His crime:
inadvertently passing on a Bin Laden joke to a company office in the US,
which infuriated officials there. Pressure was brought to bear on the local
office, and despite their opposition, the adman was forced to quit.
On hold
On hold forever? Sri Lanka's oil major had grand plans to jack up diesel
prices by five to seven rupees per litre to cover losses inspite of crude
prices falling. But the treasury boys put the proposal on hold in a bid
not to further burden the public. With elections on, the proposal is now
probably dead.
Green relief
When it comes to election gimmicks the greens are no better (or worse)
than the blues; so, when the latter announces a 'relief' package, the other
camp must follow suit. On the cards then are a more lucrative pay hike,
lowering of tariffs for power and gas and a generous reduction in the many
taxes that are now being levied.
Even a downward revision of fuel prices is being contemplated. And the
only issue to be finalised is when to make the announcement- not too early
so that voters will forget and not too late so that voters would have already
made up their minds. But many of them have refused outright cash contributions
and offered services, we hear.
TV deal
Yet another TV sponsorship deal has been called off and this has raised
a hornet's nest in cricketing and television circles.
Most networks bidding for the new sponsorship are likely to ask for
immunity from cancellation in the event of a change in the administration
of the sport's controlling body.
And they also fear that a much-maligned individual might re-enter the
sport if the greens emerge victorious at the hustings and that this may
have an adverse impact on the many sponsorship deals linked to the game.
Both sides
It's now nomination time which means it's also donation time for the private
sector- and this time around the requests are said to be more because the
polls are being held for the second time in as many years.
Most corporate blue chips have been propositioned, and most of them
are playing it safe by obliging both camps, green and blue.
Jordan looking for local investments
By Diana Mathews
Jordanian authorities, aware of Sri Lankan companies investing in Africa,
are now trying to entice local investors to their country as part of an
attempt to reduce unemployment there.
"We learnt that Sri Lankan investors are moving into the African region.
Thus we chose Sri Lanka as a country where there are potential investors
who look for opportunities outside," noted Mrs. Dina Daadaa, Senior Promotion
Officer of the Jordan Board of Investment (JBI).
"Investors could bring in a few Sri Lankan employees but our goal is
also to solve the unemployment problem in our country," she said. The unemployment
rate is very high at 14 percent of the workforce and attracting more investments
is one way of solving this problem, she added.
Daadaa was a member of a JBI delegation that visited Sri Lanka last
week to promote investments in Jordan. She spoke to The Sunday Times Business
on the external and internal factors affecting investment opportunities
and also about Sri Lanka being a potential investor abroad.
The recent US crisis, she noted, is spreading across Asia, not only
in the Middle East. "Our country was not the only country to be affected
by the recent attacks (in the US and Afghanistan)," she said.
Jordan is particularly interested in Sri Lankan investment in the garment
industry. "We are concentrating on the apparel and textile industry of
Sri Lanka," she said adding that the Sri Lankan garment industry is well
established and has a skilled workforce.
The delegation met 25 potential investors during the visit. "Sri Lankan
garment industrialists are subject to quota restrictions. But we don't
have such constraints in our country," she said.
Some of the incentives offered by the JBI are total ownership of land
and buildings, exemption of taxes on export revenue and also the exemption
of duties. Investors would also be exempted from the payment of customs
duties on raw material and fixed asset imports.
There are currently 41 factories from countries such as Hong Kong, Taiwan,
Pakistan and India located in investment zones in Jordan. There are also
around 60,000 Sri Lankans working in these factories, she said. |
