MAS joint...

Unfortunately, the Sri Lankan apparel exporters are yet to see any stimulus,” Lakhany noted.

Although several apparel exporters have moved into production of personal protective equipment (PPE) to recover their costs and to maintain a cash flow, he pointed out that they are still incurring operational losses as their revenues are not sufficient to cover the fixed costs.

“Even plants that have commenced operations can only operate at a maximum capacity of 50-60 percent, which means they continue to make losses until they can run at 95-100 percent capacity. The factories would only operate at a partial capacity due to the health guidelines and social distancing as well as order cancellations,” he pointed out.

Further, he opined that the most of the industry players would be forced to focus on their regular orders in a little over a month, as there could be an oversupply of PPE in the world market by end-june.

“I think we have to get back to regular orders from end of June; we will run out of PPE orders, that’s when the industry really has to face difficulties,” he added.

Some leading exporters expect that the industry would see some recovery in orders only from August this year with several leading retailers in the United States (US), such as JC Penny, Neiman Marcus and J. Crew, already filing for bankruptcy.

Although, there is an increasing number of opportunities for Sri Lanka’s apparel exporters in the medium to long term, as the brands look to diversify their production base, moving away from China, Lakhany asserted that it’s crucial for the industry to survive during the next couple of painful months to capitalise on these opportunities by staying afloat.

“It will be a slow and gradual move; it will take some time for some orders to move out of China. We hope that it will help the Sri Lankan manufactures in the long term. We need the industry to survive during the short term in order to capture these opportunities. If the factories go bankrupt during the current crisis, it would be difficult to take the advantage of these opportunities,” he elaborated.

Sri Lanka’s apparel exports are estimated to decline by US $ 1.5 billion this year to reach US $ 3.5 billion in the best case scenario, compared to US $ 5.3 billion earnings last year.