Manufacturing
Uncertain Future for Fiji's Garment Industry
May 2000 Coup Delivered a Near Fatal Blow.
To revive an economy wrecked by a 1987 military coup, the Fiji government offered garment manufacturers concessions that within a few years drove their industry from minnow status to one of serious magnitude. By early 2000 about 150 garment factories employed 18,000 to 20,000 people and were exporting more than F$200 million (US$90 million) of products a year to Australia, New Zealand, the United States and Europe.
The industry was the third largest foreign exchange earner and accounted for 28 percent of local weekly wage employment. Some manufacturers were predicting that exports would reach F$1 billion (US$440 million) within a few years.
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Another coup struck the economy in May 2000 and then came predictions that the garment industry had been struck a fatal blow. According to the industry association, about 7,000-8,000 garment workers have lost their jobs and seven or eight factories have closed. Is the industry doomed and is the cause just political instability? No, and not really.
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Even before the May coup some manufacturers had uncertain futures presented by changing market conditions that they had not adapted to. Some foreign-owned factories were near the end of their tax concession periods and were planning to leave anyway.
Others, and some local businesses, had invested heavily in upgrading their factories to produce short runs of high-class garments for the Australian, European and US market, an area that large Asian volume competitors can’t operate in profitably.
Political and economic sanctions applied by Australia, Fiji’s main market, after the coup, affected many factories badly. But these have since been lifted on condition that progress towards the restoration of demo- cratic government by September is maintained by the country’s care-taker government.
Other damage was inflicted by bans on the handling of Fiji products by Australian and New Zealand trade unions. These also have since been lifted or watered down.
A compensation for the industry was a March decision by the European Union to approve Fiji’s application for derogation of rules of origin for certain garments from April 1. What this means is a bigger quota for garments admitted to Europe free of duty.
Some closed foreign factories were owned by fly-by-night operators. Others were Australian businessmen caught out by changing markets at home. Ranjit Solanki, chairman of the Textile, Clothing and Footwear Council and one of the industry’s most successful performers, says that while the cost of orders lost because of political instability is F$10 million (US$4.4 million) a month and manufacturers face a "very difficult" situation, too many factories depended on the risky Australian market.
"The ones exporting to the United States are doing reasonably well.” Solanki says manufacturers are working with the government on ideas for promoting the industry’s high-tech, short-run abilities at international trade fairs.
Some factories are actually hiring more staff and investing in improving their plan. Lotus Garments, which relies on Australia for only 3 percent of its custom, since December had added about 20 to its staff of 110-120.
Australian manufacturer Mark Halabe, the industry’s official spokesman, warns that factories would not survive the impact of the reimposition of sanctions by Australia and the US. The "complete destruction" of the industry was possible in a short time. Redundancies and closures will continue for as long as political instability does, he says. But Halabe is one of the optimistic owners investing in the expansion of his business.
