Local footwear manufacturers await a favourable response from government authorities for the grave problems they face.
“The Board of Investment has given approval to an Indian giant footwear manufacturer to start operations in Sri Lanka and to supply its products to the local market. This is a time when local footwear manufacturers are stabilizing themselves in the market place. They are also entering the international market with a few orders. They need the support of the government to establish themselves and when their existence is challenged, it is a disadvantage for them ,” Footwear Advisory Council Chairman Ranjith Hettiarachchi said.
The BOI had the option of allowing the Indian footwear manufacturer to set up the factory for export purposes only, thereby protecting the local industry. However, it has given the approval for a factory to be set up to supply the local market.
This is a bad decision as it will adversely affect the local industry and employment opportunities, he lamented.
The Indian manufacturer will only bring US $ 250,000 as an investment and there will not be a large number of employment opportunities created. There will not be new technology introduced as well. However, they will have the advantage of economies of scale in the manufacturing process. The Indian manufacturer has so many plus points as they can inter exchange the machinery and the equipment with India. This will not benefit the country in the long run and the government should seriously look in to this matter, he stressed.
“We should assess whether we need a foreign footwear manufacturer where the local supply is over 70 percent of the market requirement. The local industry meets 100 percent of the school shoe market needs. Therefore, we do not see why a global manufacturer is needed at this point,” he said.
“There has been a mistake made and the government authorities should correct the mistake. Otherwise it will set a bad example and give a wrong message to the international business community. This mistake should be addressed to protect the local manufacturers. The industry is ready to reach for the export market. It brings in US$ 150,000 as foreign exchange at present. This could be enhanced with the assistance given by the government institutions such as the Export Development Board,” he said.
“We are not opposing the big international players entering the footwear market. What we say is to make them export oriented or joint ventures with the local big players. There should be restrictions for them and the local industry must be given priority. The government could make this factory export oriented and correct this mistake which will otherwise give a wrong impression regarding the country,” he said.