SLAMERP Chief lists key factors to achieve $ 3 b rubber industry by 2020

Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) Chairman Prabhash Subasinghe at its Annual General Meeting 

outlined the status of the rubber sector, recent progress and future challenges. Here are excerpts:

It is with great pleasure, as the Chairman of SLAMERP, that I welcome you allfor the SLAMERP AnnualGeneral Meeting 2017. I take this opportunity to thank the Minister of Finance and Mass MediaMangala Samaraweera and Minister of Plantation IndustriesNavin Dissanayake for being present here today; it is a great honour for SLAMERP and I believe it reflects upon the importance they attach to the rubber sector, its growth, and ongoing development of the rubber industry on both a national and international scale.

I would like to begin with a brief introduction to SLAMERP and what it is we do here. SLAMERP represents the manufacturers and exporters of rubber products in Sri Lanka, an industry with a history of over 100 years in exporting sophisticated rubber products to international markets.

This association was created in 1985, with the mission of being the face of the industry to the Government on policy matters, to provide unwavering representation of the rubber industry at local and international forums, in various advisory committees and research institutions, and to be a sound representative of all SLAMERP members to the Sri Lankan Government. 

A key success of SLAMERP is the unstinted support received from its members. The association has achieved excellent progress in a very short span of time, and the continued increase in our membership base is a reflection of the strong interest in the portfolio of services we provide. None of our accomplishments would have been possible without the steadfast confidence and support rendered to us by our member companies and stakeholders. 

At this juncture, it is with great respect I would like to recognise the hard work of our past chairs, and I am grateful for this opportunity to amplify and accelerate the same. It is with this promise that I look forward to bringing about further success, progress and growth to SLAMERP in 2018.

Sri Lanka’s rubber industry 

The turnover of Sri Lanka’s rubber industry today stands at approximately $1 billion, with the majority of this turnover contributed by our very members. The rubber industry plays a vital role in our national economy, all the while being an environmentally sustainable industry that assists hundreds of thousands of rural rubber producers. For the full year in 2017, it is estimated that Sri Lanka recorded a total of rubber product exports of $ 855 million. The export performance in 2017 did well in comparison to 2016 as the value of rubber exports reflect a year-on-year growth of approximately 11%.

However, it is disappointing to note that the rubber production in the country grew only 7% to 85,000 tons in 2017. The local demand for rubber is almost 130,000 tons and creates a major shortfall which has to be filled by imports of raw material. As a cautionary note, our neighbours in Thailand, Vietnam, and Indonesia have all grown their rubber production between 10 and 25%, and it is critical that the Plantation Industries Minister takes all necessary action to uplift and promote natural rubber production in Sri Lanka. SLAMERP will continue to support our members on this cause to ensure the continuous growth in our industry.

Today, the tyre sector represents 60% of exported rubber products and the country is recognised as the world’s leading solid tyre exporter with over 30% of global market share. Sri Lanka is also known for latex-based products such as gloves which is the second largest product category exported. Like most industries, we are not immune to change and we are seeing a seismic shift in our industry that requires us to reposition ourselves for the future. 

Positive developments

The centre of gravity of the rubber industry has shifted steadily from natural rubber production and exporting raw material to value added rubber product exports. This is a very positive development for Sri Lanka to progress higher in the economic value chain, and offers us the real possibility for the Sri Lankan rubber industry to one day become a 10-billion-dollar business.

Another positive development last year to the rubber industry in Sri Lanka was marked by the renewal of the European GSP+, as certain sub-sectors such as industrial gloves will continue to have favourable market access in European markets as a result. In addition to this, bilateral Free Trade Agreements with China and India are currently under negotiation, and I urge the Governemnt to finalise these Free Trade Agreements as these are expected to enhance industry growth opportunities and prospects in the future.

As part of our stewardship to our members, SLAMERP also successfully engaged the Government of Sri Lanka in a number of key discussions with the aim of removing obstacles and assisting industry growth. A noteworthy event in our collaboration with the Government was when Sri Lanka had to face an unjustified Anti-Dumping and Countervailing Duties (CVD) charge imposed by the USA for Pneumatic OTR tires. SLAMERP took immediate action in response to this claim, and it was with the able assistance and support of the Government of Sri Lanka, the Department of Commerce and the Attorney General’s Office, that we were able to minimise the consequence of this anti-dumping charge.

SLAMERP in collaboration with the Ministry of Industry and Commerce and EDB also arranged many international training programs for personnel in the rubber industry. Over 100 personnel from the rubber industry attended the University of Cochin to be trained in advanced rubber technology. Additional training was arranged in the United Kingdom for 10 senior personnel from the rubber industry for technical training and exposure at the Abdul Razak Research Centre. This is commendable as Sri Lanka needs more expertise in the rubber industry as trained manpower required to develop the export industry is scarce.

These have been some of the industry highlights and the collaborative initiatives with the Government and SLAMERP has steered many similar projects during 2016 and 2017 to address issues of common concern in the industry, and we certainly have come a long way in fulfilling our association objectives.

Keysuccess criteria

Looking to the immediate future, Sri Lanka aims to make the rubber sector a $ 3billion industry by 2020 and there are a number of key success criteria that need to be put in place for this to become a reality:

1. First and foremost, and as already noted, we must continue to support and boost domestic rubber production. This the backbone of our sector. Sri Lanka needs to be known as a serious player in raw material production, there is no question that our overall rubber production needs to increase to at least match our regional competitors.

2. The second factor that goes hand in hand with the first is that in the case of any shortfall of locally sourced natural rubber, we must continue to allow local manufacturers to import their shortfall so they can add value, maintain capacity and sustain employment. Some of the leading players in the industry have plans for extensive expansions and policy decisions to support these manufactures of value added rubber are critical and necessary.

3. None of our actions or ambitions for the future will be realised without the direct commitment and investment in up-skillingour labour force. The quality of our people is the engine that drives this industry forward. Therefore, we request the Government’s support in this important endeavour and request it take the required initiatives and establish requisite technical training centres. Our country does not have tyre testing laboratories that are on par with global standards, which is long overdue. We need the Government’s assistance to set up an accredited Tyre Testing Laboratory.

4. And last but not least, all of us in this room must take necessary action to fully execute the vision and actions laid out in the Rubber Industry Master Plan.

Rubber Industry 

Master Plan

The Rubber Industry Master Plan is a brainchild of the Sri Lanka Society of Rubber and the Rubber Secretariat, and has been endorsed by the Government. The Rubber Industry Master Plan is based on a futuristic action program, aimed at laying a foundation for industry development and establishes a higher standard in stakeholder collaboration.

The Government of Sri Lanka has allocated Rs. 100 million in the budget for the Rubber Master Plan, and this is the first time in the history of the rubber industry that such a generous allocation has been made in support of a comprehensive long-term growth plan. 

The commendable decision made by the Government, taken by the recommendation of the Minister of Plantation Industries to implement the Rubber Master Plan demonstrates the importance and attention of the Government to the development concerns of the rubber industry. Operationally this will be carried out through 23 projects within 10 programs designed to achieve specific goals. All projects, directly or indirectly, are aimed at enhancing the global competitiveness of the rubber products manufacturing sector.

I am pleased to report that one such project – theestablishment of Finite Element Analysis and Simulation Centre, was approved last year and is now well on its way to becoming a reality in the next 2 years. The Government of Sri Lanka has allocated Rs. 50 million towards the initial capital of this project in the National Budget of 2017 with the aim of securing its opening – andI thank you for thatFinance Minister. 

The project objectives include developing necessary skills on the use of FEAS for modelling and simulation of rubber products that enables Sri Lanka to add value to natural and synthetic rubber, to compete more effectively in the global market, and to become a centre of excellence for FEAS services in the region.

On a concluding note, we urge the Minister of Finance to kindly implement the Government-approved 75% waiver of PAL on import of high-tech machinery, which was approved at the 2017 Budget.

I take this opportunity to thank all the members of SLAMERP, office bearers and committee members of our esteemed association for the immense trust that you had bestowed on me and for giving your fullest and continued support during 2016 and 2017.

I believe that we are at a pivotal juncture in time, and I need each of your assistance to make the forthcoming year a success. This new year represents a new frontier of possibility for us to now take definitive action to augment our vision and increase the economic prosperity of the industry by becoming a global force in the years to come.