Sri Lanka Textiles 2003 - Global Business Reports

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reluctant to settle here, because of
the lack of local market,” explains
Sam Speeza, managing director of
Hayleys MGT, an Australian-based
company. Fabrics and yarns are
mainly imported from Hong Kong,
China and India. The goal of the
industry is to reduce the current
lead-time from 90 days to the 60
days increasingly demanded by
buyers.
There are two options to consider
here. The first would be to establish
local weaving mills, which would
reduce lead times but would require
massive amounts of capital and
considerable development time. The
few mills settled in Sri Lanka –
including Ocean Lanka (owned by
MAST Lanka), Hideramani Group and
Fountain Set – are nevertheless very
dynamic and have good-quality
products. They are all planning
massive expansions.
Man-Kue Pow, director of Ocean
Lanka, said: “We already have three
plants and we want to set up
enough facilities to triple our
production capacity.” By
combining the power of the
country’s second and third largest
exporters with the global might of
the world’s leading yarn
manufacturer, the idea is
to draw upon
expertise from both
up- and
downstream of
the production
process.
The Sri
Lankan
Board of
Investment
(BOI) reckons
that for this
plan to work
effectively, the
country needs a
minimum of two
woven fabric mills
to supply local
demand sufficiently.
The BOI wants to
attract companies
that are currently
seeking for relocate
mills established in
expensive Europe or Northern Asia
(for example in South Korea).
The second track is a more
pragmatic and easily realisable.
Ashroff Omar, chairman of MAST
Lanka, told us: “We are trying to
create closer links with countries like
India and Pakistan, who have
relatively quick delivery times.” With
the signing of a free-trade agreement
with India and Pakistan, local
suppliers can now rely on tariff-free
fabrics.
Amalean sums up the need for
backward integration: “We have to
both strengthen Sri Lanka’s fabric
base and also look how to better use
regional fabric. Giving Sri Lanka a
fabric base should not be given a
second priority, because flexibility
and speed are paramount in our
business.” With local companies
already buying $1.5 billion annually,
international companies would do
well to work take notice.
One of the underlying
assumptions of the
strategic plan is that
the local industry
must move away
from the lower-end
market and look to
engage more
demanding higherend
clients.
Currently,
around 40%
of Sri
Lankan
production
goes to
discount stores
and between
50% and 60% to
department
stores, with only
10% to speciality
stores and the
brands. The goal is
to increase this
final figure to at
least 30% within the
five years.
Like many other
garment manufacturers
around the
world, the local
industry has also been
encouraged to provide increasingly
sophisticated services to its
customers. MAST Lanka’s Omar, who
is part of the ‘Regaining Sri Lanka’
team, reckons that: “We are trying to
educate the industry about following
fabric fashions and trends. Providing
a complete solution is what we have
to emphasise.”
Product development and sampling
are common services among the top
apparel producers. Not surprisingly,
companies such as Hoodvian and M.
Samson Silva already have their
sights aimed higher, by employing
their own design teams. Indika Silva,
of M. Samson Silva, explains: “Our
strategy is to provide costumers with
a global solution.” Amalean, of MAS
Holdings, underlines the strategy:
“We have to provide a total service
to the customer, which involves
being active in the entire supply
chain to ensure that we get the
‘freshest’ products on to the
shelves.”
The phasing-out of quotas is an
issue for any garment producing
country, but Sri Lanka is perfectly
aware of the threat hovering over it.
Instead of competition among
companies, the garment sector
appears united in facing the
challenges to come, with strong
support from the government.
Important goals, such as achieving
peace and solving the lack of
backward linkages, are crucial if the
industry is to maintain its ability to
provide Sri Lanka with external
earnings and massive employment.
Coupled to these investments at
home, the country must look to –
and is currently in the process of –
extending the number of Free Trade
Agreements (FTA) with key
destination markets, mainly in
Europe.
By providing the answers to all the
questions that hang over its future,
the industry aims to grow its current
export figure to $4.5 billion by
2007, which is ambitious but
realistic, if Sri Lanka can inform the
world about its specific qualities –
advantages that no other country in
the region has been able to
develop…so far.
FBI
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