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| Wednesday, 4 August 2004 |
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Major threat to local shoe and leather products industry From Shirajiv Sirimane in Thailand Illegal shoe and leather product imports from Thailand and China have created a major threat to the local industry. Due to the free flow of finished leather products to the country the local industry is facing unfair competition. Over 50 percent of Sri Lankan products are manufactured as a cottage industry. According to the Production Manager, DSI Samson Group, Gamini Ratnayake who is now in Thailand, Sri Lankan companies import raw material for shoes direct from Thailand. "Sri Lankan manufacturers have to pay 10 percent duty in addition to other customs and freight charges," he said. Companies also have to bear the high electricity charges and other overheads before a final product is released to the market. He said that local infant shoe manufacturers have almost folded up since competition is high. "When three pairs of adult shoes are exported over eight pairs of infant shoes could be exported for the same weight. It is also difficult to match the high contrasting colours used in children's shoes," he said. When local manufacturers send their products to the market they find the imported items freely available at a cheaper price. The customs duty per imported shoe is around Rs. 100. However this is hardly charged because these products escape being subjected to duty. This is very unfair, he said. Thailand has very good airline links with Sri Lanka and this is another reason for illegal items to find their way to Sri Lanka. China is far ahead in the leather product manufacturing business, due to limited accessibility between the two countries. "However, with air and ship links improving China would be the biggest threat for the local industry in the future," he said. He said that they are not saying to stop all illegal imports. "What we are asking is for a level playing field," he said. The best way out of this problem is to waive off the 10 percent duty imposed on Thailand for the export of raw materials. "Negotiations have been already done in this area and the Thai government on principle has agreed to waive off this duty," said the Treasurer of the Thailand Sri Lanka Business Council, which was set up this year. He said that the visit of President Chandrika Bandaranaike Kumaratunga last week to attend the BIMST EC Summit to Thailand and the signing of six bilateral agreements with Thailand has made matters easier for them. The publicity the President received and her talks during the Summit highlighting the importance in rural economic development would be a major boost for Thailand investors who were earlier reluctant to invest in Sri Lanka. The President's visit should be followed up, he said. |
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