Sri Lanka should foster strong regional economic partnerships: Outgoing JAAF chief

Following is the full speech delivered by the outgoing Joint Apparel Association Forum (JAAF) Chairman Noel Priyathilake during the 13th JAAF AGM held last month. 

Today is my last day as Chairman of JAAF in championing the legacy of Sri Lanka apparel, an organization that has been identified as a role model to be emulated by any sector in organizing themselves to be a force to be reckoned with. 
I have already sent a comprehensive Chairman’s report outlining what we have done despite the challenges that we faced and the opportunities that we availed ourselves of. Hence, I am not proposing to read out that lengthy report which I request you to read at leisure, but at this moment let me make a few comments.

Preferential treatment
On the international market penetration platform, the much awaited GSP+ facility is now being positively considered by the EU themselves and only few issues are said to be pending as per the information available in the public domain. I am happy to note that by the 1st quarter of 2017, we will have that preferential treatment.
The much discussed bilateral trade negotiations, which were a priority item in our agenda as well, are now being undertaken with China, India and Singapore. 
Of these, the Chinese authorities have offered us much flexibility in the country of origin rules that does not demand double transformation. 
In the case of India, we have emphatically advised the authorities the need for the removal of quota in its totality in respect of the textile and apparel sector under the early harvest programme in order to create a sectoral balance in trade between the two countries whereby Sri Lanka will have a high potential to cater to the emerging middle income population in India. However, on the other hand if the early harvest programme does not include the removal of apparel quota, we as an industry would not see a significant benefit that could accrue to the apparel sector in Sri Lanka through the proposed ETCA.
Singapore is not an important trading destination to us as at date, they will not offer significant market access to us.
There is a commitment by the government to elevate the present TIFA process to a strong trade dialogue, the direction of yet is not fully understood given the different circumstances under which the United States will now be operating under the new administration.
Preferential and differential treatment expected out of these arrangements would improve our market penetrating capacity at least into two markets and the initiatives for trade dialogues with our partners that was canvassed by us during the last year has been translated into action and the results could be seen in 2017.
The country is now targeting more towards regional economic partnerships or regional economic integration. The Asian focus of these negotiations would be culminated in a strong manner depending on the way that the new United States Administration focusing on fairer bilaterals in place of regional partnerships.
Perhaps, this approach may change the trade development agenda and Asia will become important even within our trade and Big Asia may be writing the trade rules for the world if they foster strong regional or Asian economic partnerships.

Government acceptance
Majority of our agenda items in the domestic policy framework also has gained acceptance by the government. The introduction of the new Exchange Control Management system will offer us opportunities for a more liberal environment enabling us to be regional or global players while identifying our value addition in the global supply chain.
Gaining momentum in customs reforms, in that rules are to be introduced, and enforced, creating a culture of accountability. Electronic documentation for import export trade will be the centre of facilitation for international trade. While the revenue authorities are also expected to transact with us electronically.
The de-stuffing of LCL cargo monopoly by the Sri Lanka Ports Authority is to be done away with and we are required to actively participate in the ‘Unique Craft Marketing Center’ that has been proposed. 
Although we managed to prevent the moves that were planned to amend the THC gazette notification, I wish to mention that this issue may come up again and there is a need for us to be vigilant to protect this.
The agenda of Sri Lankan apparel has always been credible and sustained at all times and sometimes with a little rebellion we have succeeded.
Yet vigilant on a committed basis is a must as we have been practicing these principles from day one that our organizing was rooted. 

Issues for new management
I wish to elaborate on a few matters which I believe should be taken on board by the new management of the JAAF.
The struggle for sustaining THC has to be taken to the next level. As you know best wishes have been received for this action from all the shippers in the world who are suffering from these anti competitive practices. Unfortunately, however, this has not reached the level of international recognition that can be used by countries who are interested in ethical and fair trading practices. I, therefore, wish to propose to this august assembly that this master piece of legislation should be taken to the next level by canvassing at UNCTAD, WTO by the use of the Global Shippers’ Forum, ICC and the office of the Sri Lankan permanent representative in Geneva.
Secondly, we should continue to actively work on the bilateral negotiations that are taking place and offer whatever assistance needed by the government through its consultative process. It is my firm belief that through this consultative process, we should emphasize the protection of national interest shall not be limited to protecting domestic industries or services, but shall essentially entail the promotion of offensive interest of able sectors and emerging sectors so that the export agenda can be sustained well beyond the present basket of exportable goods. Thirdly, with regard to the liberalization of de-stuffing of LCL cargo, I would urge the membership to explore all possibilities of creating a new vehicle where our members could get their cargo without delay, pilferage, in time and at a lesser cost, for which I propose to explore the possibility of joining our service providers to obtain a better service by being partners. 
On the SVAT issue, though we have made all possible representations in writing, extensively deliberatedat a number of meetings we are yet to receive a response either positive or negative. We still believe that sanity will prevail and until RAMIS is matured the SVAT system will continue. This is an area that the new JAAF administration will have to concentrate on. We may need to use advanced technology in order to meet our labour shortage issue in urban areas and also to expand capacities in areas where labour is available. The government has offered a number of opportunities in this regard and it is upto us to actively participate in developing capacities in the lagging regions where we have made a commitment to create 20,000 jobs. 

Craft Marketing Center
The ‘Unique Craft Marketing Center’ proposed by the government is an extension of the Apparel Mall that was proposed by us and the government is willing to participate as an equity partner while offering a premium land for this purpose. It is our responsibility to convert this proposal into a viable project and negotiate with the government for its implementation. I invite the new management to offer serious consideration for same.
Ladies & Gentlemen, in my detailed report I have touched on the new calendar event that I have proposed to explore the possibility of combining the SLABA Runway with the fashion show and International Fabric and Accessories Exhibition. I am sure if we conceptualise this well this could be the calendar event of the industry for the betterment of the common interests of the industry. 
As we all know Sri Lanka is now heading towards a more liberalised trading regime where protection through distortions such as protection of tariff, cesses, and other para tariff are to be removed in a systematic manner compelling the domestic players to convert themselves to be competitive in the international market. 

Adjustment package to vulnerable industries
Our members who are catering to the domestic market should get ready to be exporters as well rather than concentrating on the domestic market. These members have joined us in this journey and were not demanding us to be counterproductive. Therefore, we as a responsible organization shall ensure that the structural adjustment package being offered to vulnerable industries by the government under the trade reform agenda be made available to our members who are presently catering to the domestic oriented market as well.
The reason I thought of highlighting these few matters is because all of these proposals will have a direct impact on the entire membership, be it small, medium or large and we can act together. Thus the industry will continue to be an important contributor even in the high middle income Sri Lanka.
You may recall during my opening remarks to you at the last Annual General Meeting, I noted that in terms of the information that was available in the public domain, our industry was not given a seat at the head table. However, today, with a sense of pride that I wish to report to this august assembly that once again our apex body has been included in the proposed statute of this country. 
The Development (Special Provisions) bill just submitted by the government to facilitate the formulation of a national policy including Accelerated Economic Development of Sri Lanka identified the Chairman of JAAF as an ex officio member of the International Trade Development Agency being established under the proposed Act. 
While it is an extremely valuable recognition given to this organization, it also imposes a heavy responsibility on our part to ensure that our contribution for the development of this national policy framework should be in the national interest as has been our tradition, fashion and style. I have no doubt whatsoever that the new Chairman and management team of the JAAF will shoulder this responsibility in the spirit of the law, meeting the intentions and objectives of the framers of the law.
Let me thank the senior industry leadership for all their advise given to me on critical issues but I know that I have to apologize for not accepting some of the advise at times because I had reasons for doing so and I did it my way. That’s where the little rebellion was the medicine necessary for the governance of sound health. 
My thanks are also due to the members of the Executive Committee, and the two Deputy Chairman who gave me sufficient confidence and support in that we are working towards a cause and it is not for the purpose of an individual company agenda, but the industry as a whole.

Support extended
Officials of government institutions such as the Ministry of Development Strategies & International Trade, Ministry of Finance, Ministry of Industry & Commerce, Department of Customs, Department of Commerce, Department of Inland Revenue, Sri Lanka Export Development Board, Board of Investment of Sri Lanka, Sri Lanka Institute of Textile &Apparel and the University of Moratuwa. Further, our friendly associations such as the Sri Lanka Shippers’ Council, Joint Chamber have assisted us in numerous ways.
Our member associations are our strength and they represent the industry and the individual companies. Their valuable contribution and support for the sustenance of the JAAF is appreciated. I also thank their secretariats in helping us to carry the message and connecting with us as and when required. Two sub committees namely the logistics and the finance have helped us extensively in our work during the period under review. Special mention must be made on the logistics committee headed by Rohan Masakorala who was ably supported by Mr. Sean Van Dort even during the last effort in defending the THC legislation. They organised other trade chambers to join us in our efforts and their contribution is well recognised. Ladies and Gentlemen, I must say the value of work ranging from researching, preparation of documents, submission, consultation and intervention undertaken by the Joint Apparel Association Forum secretariat in achieving the targets of the industry has to be well appreciated. I thank our Secretary General, his staff and Special Advisor for their commendable work during this period.
I am sure that the new management of the Joint Apparel Association Forum will be able to continue this challenging march forward under the leadership of our new Chairman.