Thursday, May 20, 2010

Sri Lanka - Discussions between the Government and the EU on GSP+ underway: Apparel industry must move upmarket

The apparel industry is US $ 3 billion export business and contributes 10 percent of the GDP. Picture courtesy Global compact asia
Sri Lanka has made impressive strides in development of industries especially in the garment sector. The country is poised to make greater strides in this peaceful environment, European Union Ambassador Bernard Savage said. He said the apparel industry should capitalize on opportunities.

“The country will be strong enough to stand without specific concessions. The EU recognises the important role played by the GSP+ facility in apparel and supported industries. Discussions between the Government and the EU are currently underway for a positive outcome.

The EU likes to see Sri Lanka take off and become the hub in development, Savage said.
The apparel industry could do well with the GSP+ facility as the country is no longer a low cost manufacturer. GSP+ helped Sri Lanka to build a competitive edge in the present time, Sri Lanka Apparel Institute Chairman Prof. Lakdas Fernando said.

He said the GSP+ facility is like a double edged sword.

“A much as it has its immediate benefits, in the long-term it can blunt competitiveness in a level playing field. It is for the industry to make the best use of this facility but being over-dependent can put the industry into lethargy.

Sri Lanka faced a similar situation in 2004 when the Multi-Fibre Agreement (MFA) expired. However, after initial shock the industry reformed and re-shaped itself to meet the challenge.

The country’s apparel industry is tailor made for mass production where most apparel manufacturers focus on the lower end of the market. “We are no longer a low cost producer of garments and low productive producer. The survival of this industry depends on moving upmarket where the country needs to cater, Prof. Fernando said.

Bernard Savage Prof Lakdas Fernando
He said it is necessary to introduce flexible manufacturing techniques, acquire the skills necessary to supply small orders to niche markets with high value addition and higher price margins. Just-in-time and right first time which are the two pillars of lean manufacturing, cellular manufacturing, good house keeping, good manufacturing practices, automation with a human touch and innovation are vital efforts to bring down costs and move upmarket.

The two key elements that need attention are fashion and branding backed by high quality manufacturing.
The apparel industry is US $ 3 billion export business and contributes 10 percent of the GDP.

It accounts for 67 percent of industry exports and one third of industrial employment.
Over 45 percent of Sri Lanka’s export revenue is generated from this industry which directly employs 270,000 and touches the lives of more than a million people.

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