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| Sunday, 21 July 2002 |
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Need to reduce production costs in packaging industry by Indunil Thenuwara The cost of production of Sri Lanka's packaging industry will have to go down if the industry is to develop, a spokesman for the Sri Lanka Institute of Packaging (SLIP) said. "The quality of local packaging products is certainly better compared with others in the region, even in India. Although we are competitive with regard to quality, the same cannot be said when it comes to pricing", A.K. Ratnarajah, Assistant Treasurer and Chairman (Publicity) Sri Lanka Institute of Packaging told the 'Sunday Observer'. "Our pricing is not competitive compared with countries such as India, Indonesia and Thailand. The economies of scale of operations is one reason for this. "We do not have the bargaining power to get low cost raw materials from other countries whereas India has almost everything available locally. According to two people who had worked in the industry in both Sri Lanka and India, our labour cost and productivity are not sufficient while the cost of power is too high. According to them, upgrading of technology is also rather slow here although I may not agree with this", Ratnarajah, who is also Chairman of Ceylon Tapes (Pvt) Ltd. and Vice Chairman of the Ceylon National Chamber of Industries, said. He said although mergers between companies in the industry are a means of cutting costs, this is unlikely to happen in Sri Lanka where most businesses are family-owned. Manufacturing customer-oriented products was also cited by him as a possible solution. Another threat the local packaging industry faces comes from the Board of Investment (BoI) companies. "Although these companies were set up for direct exports, this sometimes is not the case. At least three or four BoI companies operate in the sector. They have a lot of advantages over us in the way of incentives etc. but compete with us in the market, which is not fair. We are only asking for a level playing field which does not exist at present", he said. The industry has made representations to the newly appointed Tariff Commission. It has called for the imposition of a 10 - 15 per cent duty on imports to the country if several local industries are involved in the manufacture of this product. "We have made representations to the government on various occasions, but we have not yet seen any progress. The State has to provide the right environment for industries to operate in", Ratnarajah said. However, the Institute has implemented several measures aimed at developing the industry. It has launched a series of seminars at various locations in the country to create awareness among small and medium-scale industries on the packaging industry and the need for quality packaging to clinch better prices. "Packaging is necessary to sell a product, even if one is aiming at the lower end of the market. It need not be very sophisticated, but is important. However, small-scale entrepreneurs, specially from rural areas, are not aware of this factor. This is what we are trying to rectify. The response from the participants of these seminars has been very positive", he said. SLIP has appointed a sectoral committee which is working with the Ministry of Enterprise Development, Industrial Policy and Investment Promotion to identify the problems affecting the industry and to prepare medium-term plans to develop the sector. It is also working with the Ministry of Commerce and Consumer Affairs to augment the national packaging centre, SLIP's technical arm, with facilities for research and development, library and auditorium. It is also working with the Ministry of Environmental Affairs to minimise environmental pollution arising from the industry. "The packaging industry is one of the main contributors to pollution and we are hopeful of addressing this problem through these measures", Ratnarajah said. A training institute for industry personnel is also on the cards. "This could take two or three years and although we are expecting the initial funds to come from the government, we hope to be a self-financing venture. Improving the skills of people in the industry specially those working in factories is one of our objectives and we might even utilise foreign expertise in this regard", he said. Plans are also afoot to re-launch the training programmes on packaging for schools, to create awareness on the sector among schoolchildren. The Institute will host the 30th Asian Packaging Federation Congress in Colombo in November 2003 while an international packaging exhibition will also be held at the same time. |
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