Well Dressed

Sri Lanka apparel industry says it helped uplift village economy


Oct 14, 2008 (LBO) - Sri Lanka's apparel industry is aiming to increase export revenue despite tough market conditions, saying the spread of factories to rural areas has significantly raised living standards in villages.


"Without this industry poverty would have been much higher," said Ashraff Omar, a top exporter and member of the Joint Apparel Association Forum, the apex industry organisation.


Exports of apparel now earn 3.2 billion dollars a year, and contributes 10 percent of gross domestic product, he told a meeting of industry officials.


The industry provides direct employment to more than 270,000 people and indirectly keeps about a million employed.


The industry was now generating more value addition internally and importing fewer imports to make the finished product, Omar said. "When we started we used to import everything - from polybags to cartons to labels. Now most of it is made locally." Garments exporters were aiming to raise export revenue despite global economic turmoil that could affect demand and the possible loss of the GSP Plus European Union trade deal under which exports go duty free to European markets.


"This is one of toughest times we have seen ever," said Omar. "Therefore, our competitiveness is at a low." However, he said, some competitors in the industry were facing even more tough times. "There are still many countries, we found, who are suffering a much bigger punch than we are," said Omar.


"For example, Mexico is losing exports very fast. It is the same with Guatemala. Turkey is also facing problems with operating costs of about 700 dollars per month for a machine operator, whereas our basic cost is about 150 dollars."


A strong rupee was making it difficult for exporters who also had to cope with high inflation.


"Inflation is high and definitely it is a problem. Therefore costs are going up." Retail prices were going down and the credit crunch in western countries means customers have less money to spend.


"GSP Plus is uncertain," Omar also said. "We're still hoping against hope we will somehow get it. But we also have to look at the practical side of it if it does not come." The industry has said it fears the loss of the GSP Plus scheme because of EU concerns over alleged human rights abuses by the government.


Omar said the apparel industry was aiming to earn more despite these difficulties. "Our target is five billion US dollars (by 2010)."


JAAF officials also said the apparel industry had made a big contribution to villages in the island by shifting garment factories to rural areas in response to government tax incentives.


They also said a new effort had also transformed the image of women workers who had previously had a negative image but were now looked upon as breadwinners. Mahesh Amalean, another big exporter representing JAAF, said the number of factories had fallen to 300 from 800 owing to mergers and the closure of some plants. "What is interesting is that over 50 percent of these companies are in rural Sri Lanka." The shift of garment factories to rural areas had improved infrastructure in villages as roads were built and power and telephone lines were drawn to connect the plants. "Infrastructure got developed around the factories and within the villages," Amalean said.


"The industry not just provided jobs but helped make a complete social transformation, providing new opportunities for those in the villages. The impact of money getting into villages is enormous."


Most of the factories which went out to the villages also extended their reach through contributions to hospitals, schools and places of worship, provided teaching in English and help in other areas.


"So lifestyles have improved, their social standing has also improved as a result of these factories migrating into the village."