Business

US dollar weakens, rag industry faces hard times

Written By : Kelera Serelini . The weakening US dollar is affecting Fiji’s economy, but the sector bearing the impact is the garment and textile industry It has posed great
27 May 2008 12:00

Written By : Kelera Serelini . The weakening US dollar is affecting Fiji’s economy, but the sector bearing the impact is the garment and textile industry
It has posed great challenges to Fiji’s garment and textile industry.
And it has forced some garment manufacturers to change the way they operate.
Mark One Apparel managing director Mark Hallabe said the industry lost against exchange rates variations due to the weakening US dollar.
“In 2010 Fiji’s preferences to our main market Australia will be reduced by another 7.5 per cent,” Mr Hallabe said.
“The cost of doing business in Fiji is increasing disproportional to our competition.
“The Fiji industry has lost against exchange rate variations, as the $US has weakened.”
He said Fiji’s export will decline to a certain extent as a result of this and there will be little growth in the industry.
“The exchange rate disadvantage has had a limiting effect on our exports but not a cessation of exports,” he said.
“Fiji is seen as an expensive country to source garments from but Fiji also has advantages over China that in some cases balances the exchange rate problems, in that Fiji manufacturers will make small runs and quickly.
“This allows a premium to be paid by the customer.
“I suspect there will be little or no growth rather than cutting back, as long as we remain comparatively uncompetitive.
Latest statistics from the Fiji Islands Bureau of Statistics for this year, indicated that garments contributed 11.7 per cent to the 12.2 per cent growth in textile and textile articles.
Garment main source of export was Australia.
“The International exchange rates fluctuations are well beyond Fiji’s ability to control,” said Mr Hallabe.
“The decline of preferences has been known to the Industry for over 10 years while the cost of doing business rises by legislation like the Employment Relation Bill is beyond our control.
“The result will be declining exports as Fiji made goods become comparatively expensive.”
He said for the garment industry could improve if government pushed the Fiji Islands Revenue and Customs Authority to complete its training on time.
“The Australian government will reduce the local area content to 25 per cent which will help increase Fiji’s potential to export more apparel, but one of the conditions prior to it being implemented was that FIRCA has a compliance team functioning to Australian Customs Requirements,” Mr Hallabe said.
“If there is anything the government can do it is to ensure this FIRCA team completes its training and auditing as soon as possible.”
In regards to the new Employment Relation Bill, Mr Hallabe said the Bill would definitely increase the cost of doing business compared to its competitor, China and recommended a 150 per cent tax deduction or government rebate of a value to any mother or easier access to FNPF funds.
“I believe employers should pay 50 per cent while government and those who have children be responsible for the balance.
He described the garment industry as “struggling to remain competitive”.




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