Sri Lanka should increase global apparel market share, says WB
The World Bank on Tuesday highlighted that Sri Lanka is in a position to grab a share of the apparel market as China scales back its operations in the sector. Sri Lanka stands to gain a larger market share as China scales back in the apparel industry, World Bank Operations Advisor Dr. Rolande Pryce said at the launch of the bank’s report titled “Stitches to Riches?: Apparel Employment, Trade and Economic Development in South Asia” in Colombo. With the rising prices in China, the country is now looking at moving into other sectors from apparel to higher value added industries like electronics, the report stated. In this regard, it was noted that the potential decrease in Chinese exports presents a huge opportunity for South Asian countries, which currently account for 12 per cent of total exports.
China which currently dominates global apparel trade with a 41 per cent share is expected to reduce its share since more buyers from the US and the EU would reduce purchases over the next five years from this state as its prices rise, the report indicates. Sri Lanka and Pakistan each has a share of 1.2 per cent of the global apparel trade while India commands 3.5 per cent and Bangladesh at 6.4 per cent. Sri Lanka stands out against some of its competitors in the region in terms of quality, lead times, reliability and social compliance, the report states. The labour demand would be on the rise in the apparel industry in the South Asian Region countries as results indicate that a one per cent increase in apparel output is associated with a 0.3-0.4 per cent increase in employment.
In fact it was noted that a one per cent wage increase could increase the females joining the industry by 89 per cent in Sri Lanka. And Dr. Pryce noted that increase in labour incomes was the single most factor to increasing employment. Industry and Commerce Ministry Additional Secretary M.A. Thajudeen said that in the wake of the phasing out of the quota system the apparel industry had evolved and pointed out that Sri Lanka exports were directed towards high end markets. Going forward he noted that “new out of the box thinking is essential” adding that while the government continues to support the industry efforts are made to support SMEs. Mr. Thajudeen pointed out that the smaller apparel manufacturers had no favourable growth and had the inability to meet quality and delivery targets although some others were found to be keeping abreast with global changes. In this respect, the government is aiming at developing at least a few entrepreneurs, he noted.
Colombo University Prof. Sirimal Abeyratne looking at “Apparel Exports and Beyond: the Opportunities and Challenges for Sri Lanka” stated that the local economy had to get things corrected and that there should be a turnaround with “no room for lukewarm policies.” He pointed out that Sri Lanka has a “peculiar and strange” economy noting that the only challenge in 1956 was how to maintain development with the fast growing population which the country is still talking about. The professor highlighted that the country’s export composition was not consistent with its middle income status adding that the taxes collected was insufficient to pay the country’s loan installments. And inspite of the shift in global production from developing countries to Asia and the exponential foreign direct investments outflow in the world Sri Lanka was not even attracting one per cent as a result of which the country needed a breakthrough to move forward much faster. Prof. Abeyratne explained.
Another interesting finding from the report was highlighted by its author Dr. Gladys Lopez-Acevedo who stated that about one million individuals would enter the workforce every month for the next three decades (in South Asia). Sri Lanka needs to diversity its export destinations through trade agreements; leverage skilled workforce; and establish a regional hub. Apparel manufacturer Brandix CEO Ashraff Omar said during the panel discussion that Sri Lanka’s per capita exports were higher and their strategy for the industry was to act as a hub and ensure that the SMEs in the country be the backbone of the industry as they could respond fast and act agile. In this respect, the Joint Apparel Association Federation (JAAF) had taken up the task of developing the SMEs.