Sri Lanka’s JAAF commends rise in May apparel earnings
The Morning: The Joint Apparel Association Forum (JAAF) thanked all industry stakeholders for their resilience in ensuring that the sector continued to meet its commitments in the face of unprecedented challenges, as apparel export earnings expanded by 30% year-on-year (YoY) up to $ 446 million in May 2022.
“We are still hopeful of achieving the sector’s target of $ 6 billion by the end of 2022; however we acknowledge that there are significant obstacles ahead that we will first have to overcome. It is therefore essential that all possible support is provided to the sector to continue operating,” stated JAAF Secretary General Yohan Lawrence.
Accounting for approximately 6% of Sri Lanka’s Gross Domestic Product (GDP) and almost half of all merchandise exports, the apparel sector serves as a bulwark of the nation’s economy. While the sector continues to face significant limitations from continuing disruptions in energy supply and logistics, cumulative export earnings from the sector increased by 16% YoY up to $ 2.2 billion as at May 2022.
“In addition to ensuring that large manufacturers are able to maintain production, much more needs to be done to prioritise support for small and medium enterprise (SME)-level apparel producers, who are an equally essential component of the industry that is also facing severe challenges in day-to-day operations,” Lawrence noted.
Despite unprecedented domestic volatility, unstable global market conditions, and escalating raw material and logistics costs, Sri Lanka’s apparel sector has provided extraordinary support to the national economy, including direct surrender of export proceeds to the Government, the JAAF stated.
“All apparel companies receive payments through the formal banking system, which is visible at all times to the Central Bank. Once they receive these funds, they are permitted to use these dollars to fund raw material imports, which in previous years stood at approximately $ 2.5 billion annually,”
These measures have also been commended by the Prime Minister’s office as having provided vital assistance in mitigating issues around energy, transport, and healthcare in the country.
“On a monthly basis, the balance of our industry’s export proceeds are then converted into Sri Lankan rupees. Once converted, the dollars are then available within the banking system to go towards payments for essential imports such as fuel, gas, food and medicine,” Lawrence explained.
Despite the ongoing crisis, the outlook for Sri Lankan apparel is still considered positive, as evidenced by the continuing Foreign Direct Investment (FDI) inflows to Sri Lanka, which have mirrored upward trends in export performance, recording 17% YoY growth up-to June 2022. At present, $ 73 million worth of investments have been committed for expansions in the apparel sector in 2022, out of a total apparel investment pipeline of $ 94 million.
“Moving forward, the apparel industry remains totally committed to doing all we can to help our nation move past this unprecedented crisis. There is still a great deal of potential for new investments, and capacity expansions including domestic production of raw materials to supply our manufacturing base. Such development hinges on the extent to which the Government delivers on the widespread and clear demands of the Sri Lankan people for meaningful economic and political reforms,” Lawrence reiterated.
OSL take:
Sri Lanka’s apparel industry is one of the key foreign exchange earners to the country. The many trade agreements and trade concessions enjoyed by the country have also helped boost Sri Lanka’s apparel exports in the international market. The industry has shown a steady growth through the years including the years the country was affected by the global pandemic. The country’s apparel industry continued operations even during the lockdown period showing great resilience. The local authorities after identifying the growth potential of the industry has launched a project to set up a fabric park to manufacture the materials required by the apparel industry which in turn would help local apparel exports to become competitive in the international market. Almost all local businesses in the apparel industry have recorded a growth as well as profits indicating the growing business potential of Sri Lanka’s apparel industry. Foreign businesses/investors could confidently explore the growing opportunities in Sri Lanka’s apparel industry.
| Article Code : | VBS/AT/25072022/X_2 |