The loss of the Generalised System of Preferences Plus (GSP+) facility offered to Sri Lanka and the wages board’s recent decision to raise the minimum salary of garment workers by 20% have prompted some top industry players to look for alternatives in other countries.
Industry sources said some major apparel manufacturers in the country were considering the possibility of shutting down their factories here and open then elsewhere to cut costs.
“This is the case at present with factories that have a greater exposure to Europe since they are reluctant to lose the higher margins that could be made through buyers in these markets,” a top industry official told The Bottom Line.
The sources said some players were contemplating on relocation based on the fact that costs of labour and raw materials were much lower in those countries.
It is learnt that some major players are conducting feasibility studies to operate from regional countries such as Bangladesh and the Maldives.
Joint Apparel Association Forum (JAAF) secretary-general Rohan Masakorala said the industry was facing a ‘tough situation.’
“There’s a grave threat of GSP-related orders moving out of Sri Lanka and to countries like India or Bangladesh. Exporters will feel the pinch by late September or October. However, it’s too premature to comment on this.”
He said the turnover forecast for apparels would be around Rs 333bn or US$ 3bn.
According to Masakorala, the minimum wage has risen to Rs 7,900 for a garment employee, starting without any skills.
“I can’t tell what the exact impact would be but certain industrialists will definitely feel the pressure. Although industrialists wanted the Wages Board to have January 1, 2011, as the implementation date the government wanted it to be
October 1, 2010.”
“It will affect within the trade and across the trade although we still haven’t heard of retrenchment or layoffs so far.”
Another top official, meanwhile, said the industry was currently trying to mitigate the loss of the GSP plus by portraying Sri Lanka as a country that is serious about its ethics in manufacturing standards such as employing greener production methods and adhering to accepted labour standards.
Sri Lanka’s garment industry is a US$3.2 billion export business and accounts for around 46% of the country’s export revenue.
Sri Lanka has nearly 300 garment factories including major suppliers such as Brandix, Hirdaramani and MAS Holdings.
Until recently, Sri Lanka had been one of the two Asian countries which enjoyed the GSP Plus benefits for trade with EU countries.
Sri Lanka was awarded the GSP Plus to facilitate its recovery from the Tsunami disaster in 2004.
http://www.thebottomline.lk/2010/09/05/page1.html
Industry sources said some major apparel manufacturers in the country were considering the possibility of shutting down their factories here and open then elsewhere to cut costs.
“This is the case at present with factories that have a greater exposure to Europe since they are reluctant to lose the higher margins that could be made through buyers in these markets,” a top industry official told The Bottom Line.
The sources said some players were contemplating on relocation based on the fact that costs of labour and raw materials were much lower in those countries.
It is learnt that some major players are conducting feasibility studies to operate from regional countries such as Bangladesh and the Maldives.
Joint Apparel Association Forum (JAAF) secretary-general Rohan Masakorala said the industry was facing a ‘tough situation.’
“There’s a grave threat of GSP-related orders moving out of Sri Lanka and to countries like India or Bangladesh. Exporters will feel the pinch by late September or October. However, it’s too premature to comment on this.”
He said the turnover forecast for apparels would be around Rs 333bn or US$ 3bn.
According to Masakorala, the minimum wage has risen to Rs 7,900 for a garment employee, starting without any skills.
“I can’t tell what the exact impact would be but certain industrialists will definitely feel the pressure. Although industrialists wanted the Wages Board to have January 1, 2011, as the implementation date the government wanted it to be
October 1, 2010.”
“It will affect within the trade and across the trade although we still haven’t heard of retrenchment or layoffs so far.”
Another top official, meanwhile, said the industry was currently trying to mitigate the loss of the GSP plus by portraying Sri Lanka as a country that is serious about its ethics in manufacturing standards such as employing greener production methods and adhering to accepted labour standards.
Sri Lanka’s garment industry is a US$3.2 billion export business and accounts for around 46% of the country’s export revenue.
Sri Lanka has nearly 300 garment factories including major suppliers such as Brandix, Hirdaramani and MAS Holdings.
Until recently, Sri Lanka had been one of the two Asian countries which enjoyed the GSP Plus benefits for trade with EU countries.
Sri Lanka was awarded the GSP Plus to facilitate its recovery from the Tsunami disaster in 2004.
http://www.thebottomline.lk/2010/09/05/page1.html
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