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By Channa Kasturisinghe

Small and medium scale garment exporters have called for Government assistance to revive the severely affected garment factories for the country to successfully face the intense competition in the quota free regime due within the next couple of years.

Small and medium scale exporters feared that the entire sector would collapse unless immediate measures be taken to put an end to rapidly closing down of factories due to financial difficulties. The SMEs had to undergo severe difficulties during the latter part of last year due to political instability and a turbulent economy which caused the overhead costs in garment manufacturing to go up in an unprecedented manner.

"Out of 850 garment factories in the country 450 are small and medium scale factories. We constantly pointed out to the previous government that over 50 percent of the garment factories had been on the verge of collapse and proposed several remedial measures. However, today the situation has not yet changed but has gone from bad to worse," Past Chairman, Sri Lanka Chamber of Garment Exporters Cassian Fernando told the Daily News.

He said although there were budget proposals during the previous regime, with regard to the cess and a Restructuring Fund, nothing has materialised so far.

"Most of the small scale exporters have invested in their factories by mortgaging their properties. They need some form of assistance from the Government at least to survive until 2005. It would be mostly beneficial to the country's entire apparel sector as the small and medium scale manufacturers also have a great role to play once the quota system phased out. Although it has not been highlighted most of the large-scale manufacturers are facing problems and it is our sector that should be protected to if we are to survive as a garment exporting country," Mr. Fernando said.

He said although the decision had been taken to provide BOI assistance to the SME sector due to the financial difficulties it has become difficult for them to fulfil the requirements to gain that status.

"We have no funds and our overhead costs are ever increasing. There is a threat of youth losing their jobs with the closing down of factories. When it comes to buyers we have to abide by certain compliance regulations which demand us to invest more on developing our factories to the required level. Therefore it is high time that the Government pays enough attention to the problems we are facing," Mr. Fernando said.

The Chairman of the Chamber M.I. de Silva said that while assisting the SME sector financially the Government should also focus on effectively lobbying the buyers in the same manner countries such as India and Pakistan are doing.

Finding buyers will be one of the most difficult things in the quota free era. The Government should discuss with all stakeholders and formulate an effective strategy in this regard. At the same time we need the maximum support of the state and private banks in solving our financial problems to strengthen our manufacturing process," Mr. de Silva said. 

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