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Moving to another industry or differentiating the product are the two options available for Sri Lankan exporters of textiles and apparels.

Consultant to USAID/Competitiveness Initiative Howard Rosen, addressing the monthly meeting of the Sri Lanka Economic Association, said that Sri Lanka is highly dependent on the apparel sector which earns 53 per cent of the country's foreign exchange and the Multi Fibre Agreement (MFA) coming to an end in 2005 will have serious consequences.

Therefore moving to another industry or differentiating the product are the two options available.

"If Sri Lankans choose to differentiate, they should adopt a high value upmarket approach and tell buyers that their factories are not sweatshops. Instead they should maintain labour and environmental standards," he added.

At present the textile and apparel sector is under pressure in the US due to the growing number of imports and the slowdown in the US market while the MFA will come to an end in 2005. He was of the view that since Sri Lanka is heavily dependent on the textile and apparel sector for its revenue, people have to be aware of the trends and issues in the sector.

Sri Lanka should look forward and not backward. Mr Rosen was of the view that "the time is not right to have additional economic pressure since the government is trying to negotiate a solution to the ethnic problem."

Concentration of capital and coordination of policy are prerequisites for better economic management. He was of the view that it is better to open up markets and invite more competition rather than privatising individual companies as the former paves the way for efficient allocation of capital and an additional inflow of investments.

Speaking on recent developments in the US and the world economy, he said that trade is based on opportunity more than on policy. "We trade more with Asia compared to other regions, but the amount of trade with Latin America is growing faster compared to the other regions. Trade with the European Union also grew. "

Mr Rosen said that 40 per cent of Sri Lanka's exports go to USA. Sri Lanka imports a mere four per cent from USA while most of its imports are from developing countries.

Analysing the trends in the Sri Lankan economy, he said that expenditure has risen steadily while revenue has remained flat. "The transfer payments are relatively small while defence spending is rather heavy for a small country like Sri Lanka," he said.

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