Garment industry hangs in the balance

Garment industry hangs in the balance
Daily Mirror, Sri Lanka

Investors opt to move out to new locations & productions
By Ravindu Peiris

With the GSP+ hanging in the balance the industry is now looking for new locations and productions with some investors likely to move out should concessions for Sri Lanka be rejected.

The Generalised System of Preferences (GSP+) is vital for the survival of the garment industry in Sri Lanka as alternatives for garment manufacturing and exporting companies if the European Union (EU) trade concessions are rejected do not look healthy for the garment industry of the country.

Commenting on this Joint Apparel Association Forum (JAAF) Marketing Committee Chairman Kumar Mirchandani said that companies are already looking at their options and “they will look for new productions and new locations.” He also stated that the investors will move out if the EU decides to reject the trade concessions to Sri Lanka.

Mirchandani said that several years ago the United States was the destination for a bulk of the Sri Lankan exports but over the last few years trade has shifted to EU. “There has been a dramatic decline in Sri Lankan exports to the US, therefore at present the growth of the garment industry hangs on the balance as the industry has grown onto a monumental scale mainly due to the contribution from EU,” he pointed out.

According to him the consequences to the garment industry if the concessions are rejected would be ‘diabolical’.

He noted that nations such as Vietnam and Cambodia are striving to capture the international market and “grab everyone’s business”. He further divulged that the minimum wage of a garment worker is US $ 125 in Sri Lanka compared to low wages such as US $ 40 in Bangladesh while they provide the same amount of labour. “As you can see we are facing massive competition, and even with the high cost of power as well as high inflation we sustain these wages” he said.

However Mirchandani revealed that he is optimistic of receiving the concessions and that the country should adjust and do whatever is needed to secure GSP+ for the next three years.