Analysis of the Sri Lanka’s Apparel Sector Potential
The apparel industry in Sri Lanka started in the 1960s and has been ranked among South Asia’s highest growth industry in the past decade. Sri Lanka experienced a constant growth of 6.3% between 2002 and 2013, with a per capita Gross Domestic Product reaching $3,256 in 2013, from its low labor expenses and proximity to significant importers of garments and fabrics. Apparel exports are the country’s biggest export earners, earning $4.9 billion in 2014 with a 9.26 percent year-over-year rise, according to the State appointed agency – Export Development Board (EDB), and the apparel industry has been the country’s biggest foreign currency earner since 1992.
The Sri Lankan clothing sector presently maintains a worldwide market share of 1.2%, outside the top 10 worldwide manufacturers. The industry’s objective is to place itself within the top 10 world market leaders by 2020. The Sri Lankan apparel industry presently has four main export markets. U.S. maintains the top of the list, representing total exports of $2.1 billion. Even when EU tariffs were in place, the United Kingdom brought in $826 million in revenue of apparel exports. Sri Lanka also receives export revenue of $349 million and $204 million respectively, from Italy and Belgium.
As the sector continues to develop, the key to unlocking a maximum level of achievement will be relationships. For example, currently in Sri Lanka, recognized as one of the biggest fabric mills in South Asia, Teejay Lanka PLC is reportedly looking at sales to fresh factories of apparel being set up in Asia and Africa. Last year, Teejay Lanka PLC, the only multinational fabric company in Sri Lanka, reported recorded revenues of Rs. 14.4 billion and Group-level profit after tax of Rs. 704.8 million for the six-month period ending 30 September 2018, an increase of 25% and 20% respectively. Hence, the bilateral ties between Sri Lanka and South Africa are to strengthen with such business expansion.
OSL Take:
The growth in sales recorded by Sri Lanka’s multinational textile manufacturer shows the business potential in Sri Lanka’s apparel manufacturing and exports sector. Sri Lanka enjoys the GSP Plus trade concession from the EU and the US GSP facility which provides added incentives to local manufacturers and exporters. Teejay’s profits would be an encouraging sign for foreign apparel companies to explore business opportunities in Sri Lanka. Relationships with fresh clients will diversify the export industry that is needed because of U.S. import dependency. This emphasis will also be here to create long-term relationships with global brands that can enhance the apparel sector.
| Article Code : | VBS/AT/30092019/Z_T1 |