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| Sunday, 5 December 2004 |
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Sri Lanka losing out to China by Gamini Warushamana The disadvantages are apparent and many industrialists of developing countries are anxious about the outcome of the total phase-out of the Multi -Fibre Agreement (MFA). But, Secretary General of the Joint Apparel Associations Forum (JAAF) M.P.T Cooray is still optimistic and confident that Sri Lanka can reap the benefits from opportunities which open up after December 31st 2004. He projected that under a competitive market environment Sri Lanka would be able to increase annual textile and garment export earnings From the present US$ 2.3b to US $ 4.5 b in 2007 by following the five year strategy started in 2002. The strategy includes transforming the industry from a manufacture to a provider of a fully integrated services facility, penetrating the premium market segments, becoming internationally recognised in specific product categories and consolidating and strengthening the industry. He expressed these ideas presenting his country paper at a workshop co-organized by the World Trade Net of the International Trade Centre (ITC) and the Ceylon Chamber of Commerce and held on December 1 and 2 at the TransAsia Hotel. Just one month ahead to completely phasing out of the MFA, representatives of industrial lobbies of the countries that mostly depend on textile quota in Asia and Pacific region gathered in Colombo to discuss challenges and opportunities facing the industry from January 1, 2005. Cooray said that available data indicates mixed results in the Sri Lankan Textile and Clothing export sector. In the apparel trade Sri Lanka could grow while in the textile and the made-up articles segment Sri Lanka will lose its market share. In apparel also mass production items may not be viable and small flexible production modules could contribute effectively. After being in the industry for several decades Sri Lanka achieved the strength to face the world competition. We have a prestigious international customer base and reputation as a quality manufacturer. Sri Lanka is in compliance with international labour regulations and also has a skilled and trainable labour force. Capability of competitive pricing and on-time delivery are the other strengths that Sri Lanka has, he said. Stating the opportunities that Sri Lanka has in the post MFA era, Cooray said that Sri Lanka would become a total service provider for the global apparel industry. It will open new markets. FTAs with India and EU and USA, moving into products requiring high labour content, getting the opportunity and positive impacts of the government peace initiatives are the other opportunities, he added. However, he did not underestimate the threats in the competitive market. Competition with China, formation of regional trade blocks, preferential trade agreements and rapidly changing trends in the global retail industry have been identified as threats that Sri Lanka has to face in the post MFA era. When Agreement on Textile and Clothing (ATC) was laid down to phase out MFA over a period of 10 years it was assumed that there would be movement of Textile and Clothing (TC) industry from the developed to developing countries. But after completion of three stages today many countries are frustrated. China factor is one threat that most countries pointed out. As a result of the first three stages of phasing out of MFA TC market share of the countries in EU and USA have been changed in the EU before the ATC China's market share was 18% and it has increased to 29% after the ATC. China's share in the USA market increased from 16% to 55% after the ATC. From Sri Lanka's perspective also the China factor is very significant. After the 3rd stage of the integration in 2002 five categories became quota-free. In the dressing gowns category Sri Lanka's export increased by 64% and. But China's exports increased by 540%. In the bras category we are losing and China increased its exports by 230% . In the babies' garments, gloves and mittens and flat goods categories China's growth are 826%, 230% and 536% respectively while Sri Lanka is losing. Every country believes and evidence has proved that China will be the winner of this competition. China has become the largest producer and exporter of the TC overtaking Mexico in the US market in 2002 after the third step of the integration. There are allegations against China that it is adopting unfair trade practises to gain markets. Countries are demanding WTO intervention and effective mechanism to ensure fair-trading and prevent China or one or two countries to become monopolistic players. Though Sri Lankan industrialists are somewhat positive, many countries in the region are not so. Representative of the Garment Association of Nepal, Narayan Bajaj told the "Sunday Observer" that Nepal would have to face tremendous socio-economic and political problems from next month. Nepal's situation is also similar to most of the developing countries. TC exports account for 40% of its total exports. Their cost of production is 15% higher than other regional countries due to high transport costs. Nepal is also totally depending on imported raw material. Nepal needs 20-days extra lead-time. Narayan said that any counter measure has not been taken so far due to political instability in the country over several years. Nepal TC industry is already hit after 2002 and every year exports have declined by 25%. He said that since other sectors of the economy are also not dynamic people who are loosing jobs would join Maoist guerrillas. The Cambodia's position is also similar. These countries are seeking some special reliefs from major markets on a bilateral basis. They have requested zero duty or low duty for their exports to US market but have failed so far. |
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