JAAF to aggressively promote hub concept, forecasts $ 1 b extra revenue

The apparel sector yesterday welcomed the Government’s decision to declare Colombo and Hambantota as free ports, a move which the export industry foresees would help boost revenue by an extra $ 1billion.


“It is a long-term strategic move with the objective of making Sri Lanka a knowledge-based economic hub, thus deviating from the existing traditional mode of manufacturing and supply. The Joint Apparel Association Forum, the apex body which guides the destiny of the $ 4 billion industry, has been advocating this move,” Joint Apparel Association Forum (JAAF) Secretary General Tuli Cooray said.

 

President Mahinda Rajapaksa in his capacity as the Minister of Finance last week released a Gazette notification titled Commercial Hub Regulation No. 1 of 2013, which will be applicable to all new enterprises established or incorporated in Sri Lanka.


Speaking of the apparel sector and the immense benefits the industry could accrue under this new regulation, Cooray said that the apparel sector alone would anticipate an additional foreign exchange turnover of $ 1 Billion (Rs. 1320 million) by the year 2018. Based on the current scenario in international business climate the apparel sector has set itself a target of achieving $ 5Billion in 2015 through garment exports. A further $ 1 Billion is targeted from the emerging new market in China around that time, together will make the Apparel Sector worth nearly $ 7 billion before the end of 2020, he added.


“We (the apparel sector) will mobilise all our existing resources to promote the new opportunity that has been opened and significantly improve our participation in reinforcing the national economy,” the Secretary-General added.


The JAAF has played a vital role in the formulation of the new regulation and actively participated in most of the consultative processes capitalising on the Government’s “Open Forum” policy where input from all shades of stake holders were considered before the CHR was introduced, he added.


When the bill for the introduction of commercial hub regulations was introduced in Parliament, it was challenged in the Supreme Court through a petition in the mid part of this year and the JAAF collective stood by the bill and intervened as an interested party and cited its implementation justifiable as it was in the best interest of the country.


“We did this because we saw the potential for the industry and for the betterment of the country,” Cooray said.


The five-year strategic plan of the JAAF which was rolled out in 2010 has outlined the significance of enhancing its present role as a manufacturing and supplying garments to a totally integrated solution provider for the international apparel sources, facilitating end to end solutions starting from research and development , supply chain services, logistics etc. Three years on, our achievement is significant, he stated.


The JAAF submitted a concept paper in 2011 for consideration for that year’s budget proposals which focused on the need to establish a KBEH, which will help increase export turnover while creating additional capacities in the basic manufacturing activities in under-developed areas in the country.


Citing an example of success, the JAAF has pointed out that Hong Kong and Singapore have reached high level competitiveness by providing similar services and has been recognised world-wide. In that scenario re-export of textile and apparel have played a vital role in improving trade between Singapore and other countries.


The JAAF concept paper said, “The Sri Lanka Apparel industry, particularly strong companies well connected to the market, would be able to create additional business by providing hub services from Sri Lanka to low cost countries in the region providing high value-added services both at the front end as well as back-end support.”


Front end support services include conceptualising designs and developing them in to proposer finished products, while back-end services would include value additions for made up garments from the region and the logistic support to buyers.


Other areas which the industry could benefit from the proposed Knowledge Based Economic Hub are; providing a platform for bonded multi-country storage and consolidation facility for the apparel sector, this to be undertaken by various logistics providers
Virtual Hub operations can be undertaken whereby only the management activities are being done in Sri Lanka where no physical goods will come in or move out of the country but the goods delivered will have ‘Made in Sri Lanka’ or the name of the local company.

Establishment of a regional or global headquarter operation in Sri Lanka.