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Handling the apparel industry crisis

Our lead story yesterday on the problems affecting the local apparel industry, should set the authorities thinking on evolving suitable remedial measures to the crisis in both the short and long terms.

The cost to the country in financial terms, as a result of the garment industry entering troubled times, is staggering. For, our export earnings are expected to plummet by at least 20 per cent in 2002.

Garments is one of our principal foreign exchange earners and a crisis in the industry could be expected to spread its blight on the whole local economy in a very short period of time, unless remedial counter-measures are launched to stem the rot. As it is, concern is expressed that this reversal of fortunes will put some 50,000 garment workers out of employment in the next six months.

In this crisis, we are seeing a dire consequence of economic globalization. In this situation, when recession hits the world economy, no country could be expected to escape its negative fallout. Thus recession in the West is affecting a mainstay of the Lankan economy.

All effective short-term measures need to be launched to put the apparel industry back on its feet. The authorities may for instance, consider waiving terminal handling charges for the garment industry at the Colombo Port and reduce bank interest rates for garment entrepreneurs to make their enterprises more viable financially. Other short-term, cost cutting measures may be considered.

The vagaries of overseas export markets should remind us of the need to further invigorate and broad-base our export promotion drive. There is a fundamental fickleness in an export driven economy which we have to come to terms with. We simply cannot depend precariously on a few export sectors for our survival.

There needs to be a dynamic exploration of all possible avenues of export diversification. Such explorations need to be an on-going process, needing steady entrepreneurial development. Fortunately, we now have a ministry for this purpose.

These ups and downs in our principal economic sectors should be an impetus for the fashioning of long-term economic survival strategies. The basic parameters of local economic policy need to be reassessed in the light of the current global economic down turn.

Self-reliant growth strategies need to take the place of the current approaches to economic development which place a special emphasis on market-led growth. A stronger case could also now be made for the forging of closer economic linkages in the SAARC region.

• Editorial of  The Observer - 30.01.2002: PA's role
  

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