Sri Lanka’s apparel sector hopeful of turnaround

27 April 2009, Colombo - Sri Lanka’s largest foreign exchange earner, its garment industry, which earlier forecast a doomed outlook with up to 15 % sales decline, is now hopeful of recovery.

Secretary General of Sri Lankan garment industries apex body-Joint Apparels Association Forum (JAAF) Rohan Masakorala speaking to The Nation Economist said that the industry is hopeful of recovery after June 2009.

“We have secured orders up to 2009 June, and although we don’t have orders after that, since our buyers’ markets in the West are bottoming out, we hope that the industry will be able to recover.” Masakorala said.

Mr Masakorala told The Nation that the domestic market was also improving with the devaluation of the Rupee, reduction of interest rates and inflation. He added that the Export Development Reward Scheme (EDRS) was giving them a lot of support.

“It’s a matter of us selling and obtaining proper prices now. We have been campaigning for an exchange rate between Rs 118 to 120 a Dollar. It is Rs 121 now. So we now have a clearer vision, and the industry is keenly marketing for new orders. There’s time till June, so we are having some breathing space,” he said.

“Although we don’t envisage growth in leaps and bounds, still we are much appreciative and positive of the government’s approach and country’s current market environment,” he added.

Earlier the industry anticipated a downturn for 2009 with a slump in export sales between 10 to 15 per cent. Although orders were secured for the first half, store closures were taking place and the industry target was to sustain the same market level as 2008 rather than achieving growth. Under the Export Development Reward Scheme the government proposed the 5 % production subsidy and reduction of interest rates. The removal of 15 per cent electricity surcharge and suspension of Economic Service Charge (ESC) also has a positive impact, analysts said.

Layoffs of retail chains, and especially the closure of stores of world retail giant Marks and Spencer (M&S) for which Sri Lanka is a major supplier, have had a significant impact on the local garment industry, The Nation said. Export of knitted fabrics in 2009 February amounted to Rs 14,263mn, while woven fabric and other made up textiles brought in Rs. 15,943mn and Rs. 277mn respectively. Total apparel exports in 2009 February amounted to Rs. 30,483 million which was a 14 % increase from Rs 26,743 million total export proceeds recorded for the same period in 2007, The Nation said.

 Source: The Nation