Daya Group expanding into Vietnam this year
Sri Lanka’s Daya Group of Company’s apparel arm will expand into Vietnam this year. The company is going into a joint venture apparel investment in Vietnam to hold its competitive edge in the global garment market.
“The Vietnam project will start in July this year. We signed the MOU for the joint venture in March this year,” said Chairman of the Daya Group, Daya Gamage.
The company says the decision to expand into Vietnam is based on Vietnam’s lower production costs and logistical advantages.
“We selected Vietnam for a number of reasons. Almost all the production and transport costs in Vietnam are much lower than in Sri Lanka. Also Vietnam has a very young, hard working labour force and the investment regulations and laws are very investor friendly. Logistically also there are some advantages. We have a lot of imports and exports with Hong Kong and the distance from Vietnam to Hong Kong is very much closer. The flights are also more frequent. From Vietnam to Hong Kong there are five flights per day. So this will help us cut down our lead times to meet buyer requirements,” explained Gamage.
Vietnam joined the World Trade Organisation this year and as a result Vietnamese garment and textile exports to the world are now quota-free and unrestrained. Given its strong production capabilities the country is expected to become a strong contender in the international garment and textile markets.
Sri Lankan garment producers meanwhile are facing an environment of increasing domestic costs and increasing external competition.
The Daya Group is also expanding within the country to meet its growth targets
of increasing current Rs 7 billion annual turnover to Rs 35 billion by 2012. To start with, the Daya Group has joined hands with another local group, DSI Samson.
“We signed an agreement with the DSI Group’s Samson Apparel for a joint venture. Since the garment industry margins are coming down we plan to maintain profitability by increasing output and cutting costs. By combining our operations we will be able to reduce costs. We also plan to increase output at Samson Apparel by 100%,” said Gamage.
The Daya Group already has two apparel factories in Ampara with a workforce of around 3,500. The company is planning on setting up three more, smaller apparel production units also in the Amapara district.
“At the moment the garment industry is suffering from a labour shortage. This is mainly because after girls get married, they find it difficult to travel far to come to work. So we are setting up three small factories, in identified areas in Ampara, so that workers don’t have to travel far to come to work,” said Director, Daya Group, Kingsley Bernard.
The venture is expected to generate around 300 additional jobs in the Ampara area.