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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Saturday, June 03, 2006

Made in Sri Lanka Vs the imports

Daily Mirror: 06/03/2006" BENCHMARK highlights challenges faced by local industrialists, while keeping an eye on the consumers’ interests

On the most recent edition of BENCHMARK, ‘Made In Sri Lanka’ – the pros and cons of local enterprise, industry and manufacturing – was in the spotlight. The business programme presented by LMD began by noting that the island nation has tried virtually every economic model. “But the focus has never really been on servicing the Sri Lankan market, simply because it has always been perceived as too small – and therefore, the returns would hardly be worthwhile,” BENCHMARK noted, observing however: “But that appears to be changing.”

The business programme went on to discuss related issues such as competition from cheap imports and queried, among other matters, if national policy should be to encourage local manufacturers by offering them a degree of state protection.

Nawaz Rajabdeen, the President of the Federation of Chambers of Commerce and Industry in Sri Lanka, asserted that much protection is offered to manufacturers of products, recommending that the same should be offered to the consumer. “Any organisation that introduces a product to the local market must have competition – in the interest of the consumer,” he averred.

Commenting on Sri Lanka’s reputation in the global apparel market, he noted that the “name of the game is the brand”, observing that most international brands are now manufactured in Sri Lanka. The chamber chief also noted that the country has enjoyed its share of success stories in terms of tea, apparel, rubber and leather products, and urged the government to encourage the sale of such products globally.

Rajabdeen noted that the local market has also created a demand for such products and many branded products are sold locally under different names.

He also opined that in order to provide a level playing field for Sri Lankan manufacturers, infrastructure needs to be improved without further delay.

“The government needs to play a positive role in infrastructure development – specifically with regard to roads and railways,” he opined.

Rajabdeen told BENCHMARK that the present government has set its sights on expanding the rural sector, noting however: “Nobody will venture into rural areas to start up a factory, for example, if there is no infrastructure – especially a good transportation system and electricity. If these are improved, we can compete in any field, with any country.”

Responding to issues raised by BENCHMARK vis-à-vis corruption, he said that if taxes keep multiplying while numerous restrictions are also imposed, corruption would become a social evil that cannot be easily eradicated. He surmised: “Importers will find a way to bring down their goods at a lower price. The bottom line is that they must be very competitive…,” noting that hidden taxes often account for 40-50 per cent of the total cost of an import: “As a result of the imposition of cess and other duties, the consumer is affected.”

Also airing his views on the programme was Dr. Lawrence Perera, Chairman and CEO of Transmec Holdings – the man behind the Micro – about his experiences as a local manufacturer.

He noted that a major investment in manufacturing local products is not sustainable, as the market is not big enough. Low-volume manufacturing, he declared, is most suitable, elaborating: “There are two aspects of manufacturing. One is where you opt for larger markets, and hence, invest in robotics and other expensive infrastructure. The second is to opt for a low-volume manufacturing facility. This does not require a huge investment. Moreover, we have plenty of skilled labour; and if you use skilled labour, you do not need to invest in robotics.” Challenging the widely held belief that anything foreign is better than a local product, he said that this could well have been the case 10-15 years ago, but affirmed that things have greatly improved today. He cited the garment industry as one that has made great strides towards world-recognised quality. “If the quality of a product is good, people will automatically get used to it,” he said. In such instances, competing with imported products would not be so arduous as it is now for the local manufacturer.

Perera noted that Sri Lankans expect any local product to be cheaper than its imported counterparts. Otherwise, he said, it does not make sense to invest in a local car – a Micro, for example.

“This is where the government can play a role: by imposing a different tax structure for imports and locally manufactured goods, so that people will then be encouraged to buy local products,” he underscored, stating that this would also lead to more employment creation and could perhaps even attract the interest of global-giant manufacturers.

He emphasised: “We do not need any special grants or incentives, but the government should allow us to carry on our business without any bureaucratic blocks.” Such, he said – speaking from personal experience – is the bane of the local industrialist.

BENCHMARK is presented by LMD and produced by ‘the wrap factory’. It is aired every Sunday on TNL, at noon and 9.05 p.m.; and also goes on cable TV – on LBN’s Bloomberg segment – on Mondays at 10 p.m.

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