By Saman Indrajith

The apparel sector has received more orders in the first two months of 2024, compared to the same period in 2023, Deputy Chairman of Joint Apparel Association Forum Sri Lanka (JAAF) Felix Fernando said.

However, one must not forget that last year was a particularly bad year for the sector, he said. “We are still not seeing the volumes we did in 2022. We hope things will improve in the coming months.”

Fernando said 2023 was a bad year for the entire export sector, mainly due to external problems. The war in Ukraine adversely affected the economies in the European Union and there was a drop in the purchasing power of people living in the US and the EU.

“In general, the US imported 22 percent less apparel from across the world. This was about 10 percent in EU countries. We got less orders because of this and a lot of factories reduced working hours and some operated only a few days of the week. This year there is a positive development and factories that focus on some categories have got more orders. Some clients, who used to work only in Bangladesh, have come to Sri Lanka to reduce the risk of importing from one location.”

He added that the demand for items, like underwear, and active wear, has increased.

Fernando said there isn’t a big difference in the production cost of apparel between Sri Lanka and Bangladesh. A few months ago, Bangladeshi manufacturers had to increase the salaries of their workers significantly.

“One of the conditions of GSP+ is that the fabric we use for garments must come from Sri Lanka, another SAARC country or an EU country. The quality of fabrics produced in India and Pakistan are low. For high quality material at low cost, most people go to China, Thailand, Vietnam, Indonesia, or Korea. People feel that it is better to get good quality cheap fabrics from the countries I mentioned than trying to adhere to the conditions I stated. Because of that we only use about 60 percent of the quota given by GSP + concessions,” he said.

Fernando went on to say that one of the main problems they face is the policy uncertainty that prevails in the country and the lethargy the State has shown to ensure market access for Sri Lankan businesses. In the long term the industry must look at enhancing productivity and enhancing the quality of labour.

“We are not a country with a lot of people. So, how do we attract new people to work in the industry? A lot of workers left the country in the last two years to work in Eastern Europe and the Middle East. We must create an environment that’s conducive to their return.”

Fernando said the rupee has appreciated against the dollar in the past few months. However, the cost of living has not gone down and a stronger rupee is bad for exporters.

“We have spoken to senior government officials about our concerns. I think they, especially the Governor of the Central bank, are aware of this. This is why the Central Bank is buying dollars from the market. The appreciation of the rupee is good if the cost of living goes down. If the price for food, transport, etc., goes down, our costs will also go down. However, these costs have not gone down,” he said.