Reviving Fiji’s garment industry

Jan 10, 2024 | Blog, News

This story is republished courtesy of the Fiji Times. The original is written by Meri Radinibaravi and the picture is by Atu Rasea. This is a condensed version:

Fiji’s once-thriving Textile, Clothing, and Footwear (TCF) industry, once a cornerstone of the nation’s export revenue, is now grappling with formidable challenges in its quest to regain its former glory. In an exclusive interview with The Fiji Times, Inbamalar Wanarajan, President of the TCF Council, illuminated the stark realities faced by the industry, outlining both the hurdles and potential solutions.

Founded on the government’s tax-free factory/tax-free zone schemes in 1987, the TCF industry initially flourished, boasting 119 tax-free factories by 1992, with a significant focus on garment production. Trade agreements like SPARTECA-TCF with Australia, the Multi-Fibre Agreement with the US, and the Australian Import Credit Scheme catapulted Fiji’s garment exports, surpassing the sugar industry in economic contribution.

However, the industry’s peak in 2000, employing over 20,000 people and generating $350 million annually, took a downturn in 2005 due to unfavourable modifications in the Multi-Fibre Agreement. The closure of Fiji’s largest garment factory resulted in a drastic drop in exports and the loss of over 3,000 jobs, marking the beginning of a challenging period for the TCF sector.

Fast forward to the present, and the industry is grappling with a myriad of issues. Increased business costs, the introduction of a 3% duty on raw materials, and a labour shortage have led to a decline in exports. Wanarajan revealed that the sector anticipates a 25 per cent decrease in exports in the current year, citing challenges in passing increased costs to customers and positioning Fiji in the international market.

The numbers paint a vivid picture of the industry’s decline. Garment exports, which were at F$97.3 million in 2018, dwindled to F$48.9 million by September 2023. The introduction of a 3 per cent duty on raw materials poses a significant risk to business, especially for factories operating on a cut, make, and trim (CMT) basis.

Wanarajan emphasised the need for government collaboration to address the sector’s challenges. Recommendations include active discussions on the national minimum wage rate, duties, and policies. She stressed the importance of linking wage increases to productivity and called for policy changes to retain skilled workers, discouraging migration through programs like the Pacific Labour Mobility scheme.

To revive the industry, Wanarajan proposed government engagement in discussions with the US for potential trade agreement deals. Existing agreements with Australia and New Zealand, as well as regional pacts like PICTA and MSG, offer potential market expansions. Additionally, she urged the removal of the 3 per cent duty on raw materials to prevent further deterioration of the industry.

While acknowledging the time it might take to restore the TCF industry to its former levels, Wanarajan remains determined, working alongside industry members to bring back the sector’s vitality. The fate of Fiji’s once-thriving export sector hangs in the balance, requiring strategic collaboration and decisive actions to navigate the challenges ahead.

The original story can be read here