Making changes for a $ 5 billion target

By Rashika Fazali

Newly-appointed SLAS Chairman Yohan Lawrence addressed the need to change the Labour market reforms, which will help achieve the apparel industry target of US$ 5 billion. He stated that though Sri Lanka has a number of public holidays, there are other areas the Government could look into which would help generate this income.

Speaking at the Annual General Meeting (AGM) of the Sri Lanka Apparels Exporters Association (SLAS) held at the JAIC Hilton, he stated that employees should be given an option with an agreement with the employer to spread over the 45.5 hours in five days without premium payments. He added: “I believe this gives greater flexibility to the business and allows employees to have more time for their families.”

Working hours

The second area that should be looked at is the number of working hours. Lawrence noted that in countries like Bangladesh, India and Cambodia, they work around 48 hours a week. “We do need to challenge this, as the lower number of hours coupled with a restriction time as set out by our Customer’s Ethical Compliance codes means that certain member factories have to limit their working hours to below legal limits. This gives our competitors an advantage on a plate.”

The third area Lawrence addressed was on the flexibility of the fixed weekly holiday for the trade. He stated that companies should be allowed to maximise their return on their investments by increasing the number of shifts without premium payments and giving employees a day off during the week.

Ensuring sustainability

He also noted the ways in which the industry can grow to ensure the sustainability of the industry. He mentioned that the industry should look into product development and innovation which in return will help attract new investments into the industry. However, he stated that a new environment should be created to attract these new investors if there has to be a 24% growth in the next three years.

With targets to achieve and longer working hours, the minimum salary in the garment manufacturing trade is said to be increased by 30%. Lawrence also stated that a new concept of salary package should be built in that will not only include an employee’s basic salary, but other wages measured on productivity and attendance. He noted that this will boost productivity.

Concluding his speech he added that the industry should help with training and skill development programs that will produce more skilled employees.

GSP+ facilities

SLAS outgoing Chairman Rohan Abayakoon urged the Government to consider reapplying for GSP+ facilities based on the progress of the Lessons Learnt and Reconciliation Commission (LLRC).

He added: “The opportunity cost from this loss affects not only our industry but also hundreds of other exporters.” He further revealed that the value of loss within the next few years could be close to a billion dollars.

His second request to the Government is to look at the anti-competitive trade practices with regards to shipping.

Finding ways to grow

Ministry of Industry and Commerce Secretary Anura Siriwardena also addressing the gathering spoke on the apparel industry’s growth from a US$ 0.2 billion industry to have become a US$ 4 billion industry. He further noted that the combined export earnings of the members of the SLAS accounts for around 70% of the total apparel export earnings of the country.

Siriwardena also mentioned that in order for the country’s apparel industry to grow people should be more optimistic to find ways to grow. He added, “We will cater to the tradition markets, but at the same time, we should also find the new emerging markets.”

Sriwardena said: “The Government are not only policy makers, but we are also facilitators.”

He also added that Sri Lanka is targeting to achieve a GDP growth of 7.5% in 2013, aiming higher than this year’s 6.5% GDP growth. However, he added that although Sri Lanka is doing economically well, the global economy is decreasing.

According to the World Economic Outlook report (WEO) released by the International Monetary Fund (IMF), the global growth for 2013 has been revised from 2% to 1.5% for advanced economies while 6% down to 5.6% for emerging markets and developing economies stated Siriwardene.

“In advanced economies, growth is now too low to make a substantial change in unemployment. And in major emerging market economies, growth that had been strong earlier has decreased,” stated Siriwardena.

Technology

Lawrence noted that this decrease in growth could mainly be due to customers adopting a different purchasing strategy to purchase goods. In moments like this, business can quite clearly see that technology is becoming the cause of many win-lose situations in the business world.

For retailers, selling goods has undoubtedly become harder and competitive today. TradeCard Inc. Founder, Chairman and Chief Strategy Officer Kurt Cavano firmly noted that 25 years since its inception, technology has drastically changed not only people’s lives but businesses too.

“Did you know that the smart phone in your hand is more powerful than the computer that was taken to the moon?” revealed Cavano. Further speaking about the groundbreaking social networking site, he stated that in Asia, Facebook has grown by 41% in the last six months. Older people are also using this technology amongst others like text messaging, sending between 60 and 80 messages a day, stated Cavano.

‘The Long Tail’ strategy

He spoke about ‘The Long Tail’ strategy which is used in many noted companies such as Amazon, Google, etc. “While the shop provides you with the popular items, the internet becomes the place to find the unique hard-to-get items,” stated Cavano.

Companies such as Amazon bought over Kiva, a company that deals with mobile robots for warehouse automation. By acquiring this product, Amazon started their 24 hour delivery system available in most of the metropolitan cities in the US. What they did changed the face of retail and demand that left other businesses confounded and wanting for this kind of success. Soon Walmart and Sear announced new technologies.

Some companies use technologies such as Radio Frequency Identification (RFID) that uses bar codes to locate items in a store and Styku, a virtual fitting room that scans the body of the user in order to find the right clothes at the store.

He concluded: “If you want to get US$ 5 billion, you have to sell items to the right people.”

Pic by Upul Abayasekara