Ghosts of “aragalaya” haunt apparel industry in 2024

The apparel industry in Sri Lanka has been taken by surprise this January when it recorded a US$381.2 million, down from $424.4 million in the same month last year.

The industry is currently feeling the impact of 2022’s “aragalaya” protests when orders were shifted elsewhere to other countries, Joint Apparel Association Forum (JAAF) Deputy Chairman Felix Fernando told the Business Times. Due to the crisis in the country at that time that spiraled to lack of fuel, buyers opted to place orders outside of Sri Lanka.

The industry is already reeling from a $1 billion loss last year and this year they were hoping to achieve revenues close to $4.8 billion. But the January numbers have created a setback and the industry is awaiting the numbers for February to reveal the future.

With larger apparel firms receiving increasing orders and having improved on their performance the industry believes they will be able to sustain better orders in the next three months.

In competing with countries like Vietnam that produces its own raw materials and Bangladesh that is a Least Developed Country (LDC) that have its own advantages, Sri Lanka stands to lose as they are compelled to import a majority of the fabric as a result the lead times are much longer.

Mr. Fernando explained that the sudden government policy changes also do not help like the imposition of new taxes as a result of which foreign investors would opt to move out or shift orders elsewhere.

“We request the government to be more consistent, transparent, have an ease of doing business, establish more Free Trade Agreements (FTAs)” in order for the industry to progress, the JAAF Deputy Chairman said.

Sri Lanka’s costs have dropped but the majority of the cost of production is the 60 per cent incurred to purchase materials whereas wages have dropped to around 15 per cent of the costs and energy costs too have reduced, he noted.

Sri Lanka is lagging behind compared to its competitor nations like Vietnam and Bangladesh that continue to receive assistance from the state whereas in Colombo there is no access to finance and no development bank. As a result the industry is pinning its hopes on future FTAs and pointed out that “we need to act soon”.