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by Surekha Galagoda and Gamini Warushamana

The United Nations Development Program (UNDP) will open its second base in the Asia Pacific region, UNDP Regional Centre Colombo (RCC) next week at Independence Avenue, Colombo 7.

Assistant Secretary General of the UN and a director of the UNDP regional bureau, Asia Pacific region, Hafiz A. Pasha, top UNDP officials of 37 countries and the diplomatic community in Colombo will participate in this inauguration scheduled for next Thursday.

UNDP regional manager at RCC Minh H. Pham in an exclusive interview with the Sunday Observer shared his views on trade and development. RCC covers 37 countries in the region from Iran to Samoa and from Mongolia to East Timor with 25 country offices. This is a part of decentralisation of the UN and the objectives are to be more flexible, more responsive and more relevant to the needs of the countries, Pham said. UNDP acts as an inhouse think tank, serves as a consultant partner and supports capacity building on poverty reduction and prevention of HIV/AIDS.

Explaining the different role that will be played by the two UNDP offices in Colombo, Pham said, the RCC mandate is regional and we will report to the New York head office. The mandate of the UNDP country office in Colombo is national and the country office is a client of the RCC.

Commenting on the selection of Colombo as its second base in the region Pham said, we are here on a long term basis and we see the long term importance of Sri Lanka. "we are thankful to the government of Sri Lanka and the people for hosting us". RCC has already employed a staff of 80 people consisting of 15 nationalities including Sri Lankans. We open the RCC 56 years after Colombo plan was signed. The spirit of the Colombo Plan is Human Resource Development, solidarity and a joint effort to improve the living standard of the people.

Sri Lanka has always been known as a high achiever of education and health facilities in the region and as a result the country has a very talented and hard working pool of human resources. Sri Lanka also has a very vibrant private sector and these reasons will benefit us, he said.

The UNDP is a long term investor and despite the conflict we are looking at Sri Lanka on a long term basis as we are confident of long term development. There are ups and downs but in the long term we see a growth and thought to anchor here, he said.

RCC will generate a large number of direct and indirect employment. It will also generate many opportunities in the country through businesses generated by RCC, its interactions and relationship build, pham said.

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Brand Lanka's apparel products - UNDP Regional Manager

Regional Manager of the UNDP at the Regional Centre, Colombo, Minh H. Pham shared his views with the Sunday Observer on trade and development issues faced by the countries in the Asia Pacific region with special focus on Sri Lanka. Pham, a scholar of the Colombia University is a specialist in international trade and development and debt policy. He has been serving in the UN with distinction in various capacities for the past 18 years.

Apparel industry after MFA phase out

With the phasing out of the MFA in December 2004, there was much research on the apparel and textile industry and many were doomsday predictions on who would be the winners and losers. Some of the predictions come to pass. China and India won the war in terms of value and volume of exports.

They have their own textile production, advantage of economies of scale, better access to markets and financing.

There are losers and Nepal lost 25% of exports in value and volume. In the Maldives, the sector was totally wiped out. High labour costs and transport costs being the main reasons.

However, in Sri Lanka, to the credit of the government and the private sector, the industry maintained or slightly increased its share in its main markets in terms of value. Earnings in the US market had increased while it decreased slightly in the EU market.

This is an example that should be studied by other countries. It has moved up in the value added sector especially in niche products with a high profit margin and low volumes. The problems in the Sri Lankan industry is the size of the industries.

There are small and medium scale manufacturers where the economics of scale is limited. in niche products, the volume is low. The apparel market is dictated by buyers and there is a large number of suppliers.

The social aspects of the Sri Lankan apparel industry is also important in poverty reduction. The industry is spread over the country in urban as well as rural, high rate of women employment is another feature and it is an advantage in poverty reduction. The educated mother is important in child education and health.

Pham pointed out the disparity in the domestic labour market and labour migration. In the domestic labour force, 68% are male and 32% female. But in migratory labour it is 32% and 68%. Development in the garment industry is very important to create more employment opportunities for women in the country, Pham said considering the impact of women migration on poverty and other social issues.

The main risk faced by the industry according to Pham is Sri Lanka depending heavily on two markets for its apparel. In addition, competitiveness and economies of scale are low. Though the industry is spread over the country, the infrastructure is poor and adds cost.

Low labour productivity is another issue. Cost of utility, specially the energy cost is higher. Concentration on high end product is an opportunity, but branding is very important. The country should develop its own brand for the high end products it produces.

Pham said that the present global market environment which restricts Chinese exports and concessions granted for least developed countries will continue until 2008. This is a big opportunity for countries such as Sri Lanka and it gives time and space for them to adjust. As a middle income country Sri Lanka was not entitled to GSP+ scheme but due to the professionalism of Sri Lankan negotiators the country has received it.

The trap in the apparel exports is its concern in the rules of origin. To derive the benefits from the scheme, Sri Lanka should increase its input base. China and India get advantages in global trade due to the vertical integration of the industry. However, Pham said that it is difficult to say whether the future garment industry will integrate vertically or horizontally.

Trade as a tool of poverty reduction

Trade should be viewed as a comprehensive development issue where all stakeholders are included. It is an instrument of poverty reduction and improving the living standard of the people. Trade creates employment and reduces poverty. Sri Lanka has entered into a number of bilateral trade agreements with its neighbours, but still its major markets are the US and EU in products as well as service.

In tourism, the major market is EU countries. The regional market is emerging in India and China. You have a large market at your doorstep. In addition to the large population, it is a fast growing economy.

There is an argument that the complexity and too many commitments of regional agreements such as SAFTA, BIMSTEC, WTO and a large number of bilateral agreements are a burden to developing countries, due to the limited capacity they have. But they allow you to develop the composition of your export.

Poverty and growth

One-third of the world's poor or nearly 700 million are living in the Asia Pacific region. However, the good news is that the region is the most successful in globalisation, poverty reduction and economic reforms. Though these economic reforms and trade policies have reduced poverty it does not mean that the fruits of development have been distributed equally.

The disparity between the poor and the better-off is growing. There is urban poverty. But the gap between the urban and rural is growing. A domestic policy is needed to reduce this gap. It is the problem of how we share the growth we had in the last two decades.

The situation in Sri Lanka is similar and it needs a geographical distribution of economic growth. In Sri Lanka one in four lives below the poverty line and 90% of poverty stricken are living in rural areas. This can be achieved by private-public partnerships. Growth is pro-poor in universal terms and it expands what we have to share.

Mission to strengthen Lanka, Russian trade ties

The Sri Lanka - Russia Business Council which is affiliated to the Ceylon Chamber of Commerce, together with the Embassy of the Russian Federation in Sri Lanka and the Sri Lankan Embassy in Moscow will be organising a Trade and Investment Promotion Mission to Moscow and Nizhny Novgorod from June 10 - 23.

The main objective of the mission is to strengthen trade ties, source suitable business partners, promote investments and joint ventures between the two countries and offer an opportunity for Sri Lankan companies to obtain a better understanding on the business environment in the Russian Federation.

The Sri Lankan Embassy in Moscow in partnership with the Chamber of Commerce and Industry of the Russian Federation and Moscow Chamber of Commerce will organise one to one meetings for participants with matching Russian companies.

The Sri Lanka-Russia Business Council is very keen to promote more industrial and technological collaborations with Russian companies in addition to further expanding existing trading collaborations.

With this objective in mind, apart from the one to one meetings the Council has decided to organise visits to an industrial plant "Borets" (manufacturers of pumps of all kinds), "Agency of creative technologies" (manufacturers of agricultural machines, firefighting equipment) and "TMK" (manufacturers of pipes).

HSBC training courses in card industry

HSBC has organised three courses in Sri Lanka to be conducted by Visa Business School, covering the topics of 'Fundamentals of Risk Management'. 'Dispute Management' and 'Business of Risk Management' in April and May.

HSBC controls almost one-third of the credit card market in Sri Lanka as well as over fifty percent of the total credit card spend in the country.

In facilitating the courses by Visa Business School and opening these workshops to all Visa International members in Sri Lanka, the bank seeks to improve and enhance the card industry in Sri Lanka at large along with improving and enhancing the strategies used and services offered by organisations in the payment industry.

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