By: Staff Writer
Colombo (LNW): Sri Lanka’s apparel exports hit by high production costs due to electricity bill hike and other overheads recorded 20 year-on-year (YoY) decline to US $ 330.95 million in October
The Joint Apparel Association Forum (JAAF) anticipates a decrease of approximately one billion dollars in this year’s apparel and textile export earnings compared to last year.
Amid the rising inflation and interest rates, consumer demand in Sri Lanka’s key apparel export markets has faltered.
In addition, Sri Lanka has become expensive for apparel sourcing, due to the higher production cost, stemming from the sharp rise in electricity tariffs and other input costs.
Sri Lanka’s apparel industry has called for government support to expand the country’s apparel export markets, through bilateral and other types of trade agreements.
Particularly, the apparel manufacturers have called to fast-track the efforts to improve the market access to India.
Dhammika Fernando, Chairman of the Federation of Free Trade Zone Investors, has said that twenty percent of some large-scale garment factories have been closed for a period of three months after December.
He also claims that about fifty percent of the small and medium scale factories have been closed.
The income of investors in the garment sector has fallen by 25percent due to the decrease in orders received from Sri Lanka and the increase in costs.
He also claims that some local investors are looking into the possibility of investing in other countries based on this situation.
Some investors have paid compensation to employees and fired them, and so far about 10 large-scale companies have fired workers in this way.
Several company owners have given their employees full or half salary and kept them at home, and some factories are working only 4 days a week, the chairman has said.
According to the Joint Apparel Association Forum (JAAF) data, exports to all major markets fell during October, amid the slowdown in orders.
Exports to Sri Lanka’s biggest apparel market, the United States, fell 16.81 percent YoY to US $ 128.22 million while exports to the EU, excluding the UK, declined 24.79 percent YoY to US $ 110 million.
Exports to the UK experienced a YoY decline of 14.56 percent, amounting to US $ 43.66 million, whereas exports to other markets saw a more significant decrease of 21.69 percent, totalling US $ 49.07 million.
The cumulative exports for the January-October 2023 period fell 20.5 percent YoY to US $ 3,748.72 million.
Apparel is Sri Lanka’s largest industrial export and earned US $ 5.95 billion in 2022. The country’s apparel sector has about 300,000 employees, most of whom are women.