Apparel industry sets US$ 10bn export target by 2025

27 November 2015 04:18 am

SLAEA Chairman Saif Jafferjee  in conversation with Development Strategies and International Trade Minister Malik Samarawickrama at the SLAEA AGM held at Jaic Hilton
Pic by Pradeep Pathirana

By Chandeepa Wettasinghe
The apparel industry has set an annual export target of US$ 10 billion by 2025 while expanding into regional markets, the Sri Lanka Apparel Exporters Association (SLAEA) said.
“We have set our own a target of US$ 10 billion by 2025 and continue to be a strong player not only in rural Sri Lanka but regionally and globally as well,” SLAEA Chairman Saif Jafferjee said at the apex body’s annual general meeting.

He said that while the Asian region makes up a significant portion of global apparel manufacturing, Sri Lankan apparel brands will be entering the high-end markets of neighbouring countries due to growing economical affluence in the region.
“We have also begun our product innovation and design journey to get high value addition in the front end. Our local brands are making waves and we expect more to fill the retail malls of regional markets in the future,” Jafferjee said.

High-end apparel exports from Sri Lanka until recently had focused mainly on manufacturing for foreign labels such as Victoria’s Secret and GAP.
The electronics market had also experienced a similar phenomenon in recent decades with brands such as Samsung and Acer opting to produce components for better established brands until they had reached greater heights of innovation to launch successful in-house brands.
“It is our expectation that the new Exchange Management Bill will give impetus for such globalizing efforts,” Jafferjee said.
He added that new innovations such as 3D printing, sewing robots and nanotechnology in the global arena could completely change the apparel sector business model, and said that the local industry should expand its efforts to create an ecosystem for such innovation and research.
However, he said that the increase in multitude of taxes for the apparel industry will leave companies with less cash to invest in such high-value automation and technology.

Thumbs down for ad-hoc state intervention

The government should not intervene in the wages process and cause unnecessary distortions in the industry, Jafferjee said.
“We would urge that the government intervention in the wage process be limited to the tri-partite arrangements of the wages board mechanism for the establishing of minimum wages for the industry,” he said.
The budget had requested all private sector employers to increase the monthly wage by Rs.2500, to reflect the increased standard of living given to state-sector employees with a Rs.10,000 raise.

While the budget proposal is a request, it would give private sector employees grounds to pressure companies to increase their salaries.
“Ad-hoc state intervention in the wage mechanism disrupts the basis on which wages are negotiated and takes away the element of performance-based pay that we all adopt in our businesses,” Jafferjee said.
Meanwhile, in the tea industry, the apex industrial bodies are asking the government to intervene in their wage processes, as highly politicized trade unions are asking for a Rs.1, 000 wage hike, which is not-sustainable in the current tea market.