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Amid Economic Challenges, Sri Lanka’s Garment Industry Soldiers On

As Sri Lanka’s apparel industry buckles under the long-term effects of Covid-19, including the country’s worst financial crisis in a decade, resilience, creativity and talent will be critical to both its survival and success, according to the Joint Apparel Association Forum of Sri Lanka.

One way the sector can adapt to the fast-changing and increasingly competitive market, said Sharad Amalean, the apex group’s chairman, is to think of itself not as a collective of manufacturers but rather as “solutions providers.” He pointed out the South Asian country’s contributions to the larger fashion community, including high-impact protective gear for athletes and 3D avatars for virtual photoshoots. To overcome the current logistical morass, several partner organizations are offering customers flexibility and multiple distribution channels.

“It is imperative that we foster a culture of invention and innovation in the industry, but also be creative and prudent in maximizing the potential of our ideas,” Amalean said. “Considering the effort and scale that we put into commercializing products, and the constraints in market access, we need to pick our best options and partners to ensure maximum benefit to Sri Lanka. It is this thinking that we need to foster in order to make the best use of our talent and ideas and take them global.”

Compared to its neighbors in Bangladesh and India, Sri Lanka’s garment sector is small but mighty. Employing 350,000 workers, its 1,000-plus factories supply nearly half of all merchandise exports and contribute 6 percent of the island nation’s gross domestic product. But recent months have proven more challenging than usual. Inflation is soaring, as are the prices of basic necessities such as food and medicine. Fuel shortages have resulted in power cuts, causing a number of factories to struggle with keeping their lights on, though operations are still largely on schedule.

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“At this point in time the industry is managing as best as possible to fulfill orders under the circumstances,” said Yohan Lawrence, secretary-general of the Joint Apparel Association Forum of Sri Lanka. “Our orders are secure for the next three-to-four months and are being processed, with some companies having to resort to costly air freight to meet committed deliveries.”

While Sri Lanka does not export significant volumes of clothing to Russia or Ukraine directly, the organization is also wary of the “compounding effect” the continuing conflict could have on the sector’s economic volatility, Lawrence said, particularly if further escalation results in reverberations across the European Union and elsewhere in the globe. Circumstances could require a “different set of responses” if the political and humanitarian crisis extends beyond the next two to three months, he added.

“We are closely monitoring the situation and are having discussions with the government,” Yohan said. “Depending on how the situation evolves, we will take necessary steps and work with stakeholders, including the government, to ensure the long-term stability of the industry.”

There are bright spots, however. Though the pandemic has thrown into relief the tug of war between cost and values such as ethical manufacturing, sustainability and inclusivity, the focus on “building back better” has also initiated a rejiggering of priorities, including a heightened sense of “vigilance” on the environmental, social and governance aspects of manufacturing that Sri Lanka is well suited for, Amalean said.

“Having built a reputation of being a sustainable and ethical manufacturing destination, Sri Lanka is well placed to thrive in this evolutionary phase,” Amalean said. “Although in the past our contribution to these external aspects has impacted Sri Lanka’s cost-competitiveness, we now see buyers support and partner with our efforts. These have enabled them to provide complete supply chain transparency to their end consumers.”

It’s also not all doom and gloom. Sri Lanka’s apparel exports jumped by nearly 23 percent to reach $5.42 billion in 2021, thanks to the industry’s “tremendous resilience.” If revenues maintain their trajectory, Amalean estimates that they will hit their target of $8 billion by 2025. “Our vision for 2030, however, is much more complex and aspirational, going well beyond just revenue growth,” he added.

One cornerstone of that vision, Amalean said, is Colombo Port City, a sprawling new financial and business district spanning 269 hectares of reclaimed land that will include a marina, housing, medical facilities and a school.

“As an industry, we need to capitalize on opportunities such as the Port City, which could be a springboard not just for our vision [for] 2030 but for Sri Lanka as a whole,” he said. “The project has been laid out as an opportunity for global partnerships; we need to intensify our efforts to convince global customers and brands to set up in Sri Lanka. This will enhance Sri Lanka’s image and aid the industry in providing complete solutions, reducing the turnaround time between concept and product development significantly.”