Financial Times

Lankan garment industry says ‘thank you’ to public officials
By Dilshani Samaraweera

Last week the garment industry, hosted a ‘thank you’ party for public sector officials for their support for the industry. Sri Lanka’s garment industry is entirely private sector owned but is heavily dependent on public services to operate. Leading trade unions were also invited for the felicitation.

“We are hosting this event to inform public officials about the garment industry and to felicitate our public officials. If not for the much maligned public service, the garment industry will not be what it is today,” said Ajith Dias, the Chairman of the Joint Apparel Association Forum, the private sector garment industry representative body, speaking at the event.

Looking to the future

Last year, earnings from garment exports came to US$ 3.2 billion. The industry also says it has reduced its import component and that domestic value addition now stands at 50%, compared to 25% in the 1970s.

However, by now, the industry has shrunk to about 300 factories, from around 800 factories at one point. Nevertheless, the industry remains the largest employer in manufacturing, providing direct jobs to an estimated 270,000 people, mainly young women from rural parts of the country. The number is close to 1 million people when counting indirect employments generated by the industry.

The industry also points out that it has contributed to rural poverty alleviation and rural development, by taking factories and jobs to under-developed villages. “We had around 800 factories at one point, but this has gradually come down to about 300 by now. Out this, about 150 factories are in rural parts of Sri Lanka,” said Mahesh Amalean, the head of MAS Holdings.

Now, the industry is preparing to face hard times again, next year. “We are facing negative perceptions about the country because of the conflict, some feel our currency is over valued, inflation is definitely a problem, there is a global cash crunch, retail prices are at an all time low and the GSP+ is uncertain,” said Ashroff Omar, the CEO of Brandix Lanka.

“So next year will be one of the toughest years for us. But, we have faced, and survived, worse times before,” said Mr Omar.

Government support

Meanwhile, Minister of Export Development and International Trade, G L Peiris, said the government will try to retain the EU’s GSP+ scheme, within limits of national priorities. “The government of Sri Lanka is fully aware of the magnitude of the problem,” said minister Peiris.

“We are always prepared for dialog with the EU. However, it is necessary to emphasise that the government must also uphold national self respect. So we will deal with this in accordance to these principles,” said the Minister.

Sri Lanka has by now submitted the GSP+ application to the European Commission in Brussels. But the renewal of the duty free export scheme, into European markets, is uncertain because of allegations of human rights violations.

Plan B

Given the uncertainties of the future, the garment industry is investing in building its own safety nets.
The Sri Lankan garment industry is trying to differentiate itself from the low-cost competition in international markets by positioning itself as an‘ethical manufacturing destination.’The industry has already launched an international campaign called ‘Garments without Guilt’.

The campaign is trying to raise awareness internationally about Sri Lanka’s much higher labour and environmental standards, compared to other lower cost, garment manufacturing countries. The industry has also invested in a local image building campaign called ‘Abhimani’ to disperse negative perceptions about the industry and to retain its local workforce.

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