Business

‘Shake off the shock to the system, rethink the SME ecosystem’

Published

5 years ago

2021/10/21

Sahan Weerasooriya

Agility, adaptability and resilience have been hallmarks of the apparel industry SMEs. It’s time to build that up further

By Rantha Tissera

Treasurer, Sri Lanka Chamber of Garment Exporters and Managing Director of Estilo Apparel

In Sri Lanka, small business is a very big deal. The numbers tell the story. The Department of Census and Statistics, in its decennial Economic Census of 2013/14, found that over 99 per cent of all business establishments are micro, small and medium enterprises (MSMEs).

For context, consider that they account for 52 per cent of GDP, and 42 per cent of private sector employment. In other words, they are the backbone of the Sri Lankan economy. Micro-enterprises account for 92 per cent of 1 million plus business establishments.

Unpackaging those numbers can help arrive at a better understanding of position, priorities and policy. Industry contributes almost 27 per cent of Sri Lanka’s GDP; about 28 per cent of the labour force works in industry as a whole, mostly in manufacturing.

The Annual Survey of Industries 2018 (ASI) covers 28 industry sectors, of which manufacturing comprises 91 per cent. Food processing and apparel are the largest in terms of output (LKR 1.48 and LKR 1.1 trillion respectively in 2017) and employment (333,000 and 730,000). These numbers, however, include micro-enterprises, which are a significant fraction.

Apparel – which this article focuses on – accounts for almost half of Sri Lanka’s merchandise exports, at an estimated $5.2 billion in 2019. SMEs are a significant contributor, as 80 per of them are an inseparable part of the apparel supply chain, and sub-contract for large manufacturers.

A report on the impact of Covid-19 on SMEs in May 2020 put the number of workers in the apparel sector at between 300,000 and 400,000 of which 20,000 are employed by members of the Sri Lanka Apparel Exporters Association This is broadly in line with the estimates from 2013-14 and the ASI 2018. Simply put, SMEs in the apparel sector are a critical factor in the industry’s global success.

The pandemic created some serious disruptions, many of which we are still dealing with. But apparel SMEs have also adapted quickly, changing processes to produce masks and other personal protection equipment (PPE), for example, and adopting new technologies to meet different needs.

Arguably, the best-known and successful SME ecosystem globally is the Mittelstand, the model made famous in Germany, though many countries in Europe have similar models. ‘Mittelstand’ means ‘middle class’ in business terms; but its performance and capabilities’ are world-class.

99 per cent of German companies are Mittelstand companies; they account for 68 per cent of exports. About 80 per cent are B2B firms, and their customers are global leading and brands themselves. A Mittelstand firm’s revenue is €50 million and less than 499 employees (compared to a Sri Lankan SME which has a revenue of LKR 250-750 million and less than 300 employees).

If that sounds familiar, it should be. Sri Lanka’s apparel SMEs share numerous similarities with Mittelstand companies. Most are family-run with a family-culture orientation, and are innovative and adaptive.

They have a high degree of social responsibility, practise ethical manufacturing and meet global sustainability standards, as a World Bank global value chain analysis report found, when comparing the apparel industries in Bangladesh, Sri Lanka and Turkey.

Even though the pandemic was a shock, Sri Lanka’s SMEs adapted to changed circumstances not just with Personal Protective Equipment (PPE) manufacturing; they leveraged each other’s capabilities to ensure delivery deadlines to their customers were met. When air travel was suspended, they resolved the problem of sending buyers samples by innovatively using 3D printing technology.

There are other important elements, too. Mittelstand companies make decisions that are based on generational considerations; the cultural orientation of a family-owned business model is to plan for long-term existence. Investments and employees become important. Employee turnover is very low, less than 3.2 per cent a year, according to studies.

They form competitive clusters: a geographic concentration of suppliers and other inter-connected businesses. This allows specialisation and competitive superiority – which is crucial for export-oriented businesses.

One example is the Baden Wurttemburg region where companies are engaged in machine tool manufacture, and have become a centre of the engineering excellence Germany is famous for. Silicon Valley, or Tokyo’s Otaku district in Japan are examples outside Germany.

An unnoticed element of the German SMEs is the existence of global leaders that are mostly unseen by consumers. Jungbunzlauer is Coca Cola’s citric acid supplier for all the company’s production plants around the world, and Uhlman is the world’s leading producer of pharmaceutical packaging material. Of particular intertest to Sri Lanka, given its fisheries exports, should be Tetramin, the world’s number one producer of fish food.

It is hard to capture the value that Sri Lankan apparel SMEs add in a simple numerical value. There are Sri Lankan SMEs that serve niche markets similar to the ones described in the preceding paragraphs.

The takeaway from all this is that the Mittelstand is an ecosystem, not just a business model, and creating that kind of ecosystem can make Sri Lanka’s apparel SMEs globally competitive for decades into the future. So what can be done?

The adaptability of Sri Lankan SMEs is often forced by circumstances, not nurtured or created. Workflow and orders tend to be volatile; true, apparel is a business that is fashion-driven and fashions change every season, but a minimum degree of sustainable workflow is necessary, so that SME factories are not idle for three months every year as they are now.

This volatility has adverse impact on the workforce, forcing them to seek more permanent and stable employment in other areas than manufacturing. As the Mittelstand system shows, a committed workforce is critical; SMEs can then make investments in training that can create world-leading products, and background integration into the education system. One of the Mittelstand’s outstanding features is workforce training.

Most Sri Lankan apparel SMEs need exposure to global markets and technology. If they are going to emulate the Mittelstand, they have up-grade the technology they currently use, based on what the global markets want. Remember that Mittelstand companies also export to global markets directly.

All of the above also requires the SMEs to be enveloped into the formal financial system. Sri Lankan SME growth is not debt-dependent; what is essential is access to finance to smooth over the impact of volatile workflow, and investment in technology up-grades as needed.

As we recover from this pandemic, we also have to ‘vaccinate’ Sri Lanka’s economic spine against future health threats. To stride forward to economic growth and prosperity, adding muscle to the country’s economic backbone is crucial.

It will take a combination of government policy, the larger apparel industry in Sri Lanka as a whole, our buyers overseas and SMEs to come together to make that happen. And the time for that is now.

Rantha Tissera is Managing Director, Estilo Apparel, a Sri Lankan SME. He is also the Treasurer of the Sri Lanka Chamber of Garment Exporters.

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Business

SLEIS 2026 to examine how Sri Lanka can strengthen its place in Asia’s growth networks

Published

12 hours ago

2026/09/16

Sahan Weerasooriya

Ambassador Akio ISOMATA / Chathuranga Abeysinghe / P.D. Singh

As Asia continues to account for a growing share of global economic activity, Sri Lanka faces an important opportunity to strengthen its links with regional trade networks, supply chains and economic corridors. How the country can make better use of these connections to attract investment, expand trade and strengthen its position in regional value chains will be among the key questions at the Sri Lanka Economic & Investment Summit 2026, organised by The Ceylon Chamber of Commerce on 12-13 October 2026.

Titled “Linking Sri Lanka to Asia’s Growth Networks: Trade, Corridors, and Value Chains,” the session will examine the opportunities for Sri Lanka to deepen its integration with the wider Asian economy and build stronger connections with regional and global markets.

The session keynote will be delivered by P.D Singh – Chief Executive Officer, India and South Asia, Standard Chartered Bank. He will be joined for a panel discussion by Chathuranga Abeysinghe – Deputy Minister of Industry and Entrepreneurship Development, Akio ISOMATA – Ambassador of Japan to Sri Lanka, MASAAKI Kawabata – Chairman – Toyota Lanka (Private) Limited, and Ravi Jayawardena – Group Chief Executive Officer-Maliban Biscuits (Private) Limited. The session will be moderated by Ms. Subhashini Abeysinghe – Research Director- Verité Research.

For Sri Lanka, stronger regional integration can open opportunities beyond traditional export markets. Greater participation in regional supply chains, improved trade connectivity and closer links to economic corridors can support investment in areas such as logistics, manufacturing, export services and other sectors connected to international production networks.

The discussion will consider what Sri Lanka needs to do to strengthen its position within these networks, including improving trade connectivity, attracting investment and creating a business environment that enables companies to participate more effectively in regional and global value chains.

It will also look at the experience of businesses and international institutions operating across the region, providing perspectives on how companies assess markets, build supply chains and identify locations for investment. With supply chains and investment flows increasingly shaped by regional connectivity, the session will also consider the partnerships and strategies needed to position Sri Lanka as a more competitive participant in Asia’s growth networks, while creating opportunities for trade, investment, innovation and economic growth.

The session will form part of the second day of SLEIS 2026, held under the theme “Positioning Sri Lanka in a Changing Global Economy: Resilience, Reform, and the Future of Economic Policy.”

The Sri Lanka Economic & Investment Summit 2026 is supported by its valued sponsors and partners. Platinum Sponsor – Standard Chartered Bank Sri Lanka, Gold Sponsor – VISA Worldwide (Pvt) Ltd., Bronze Sponsor – South Asia Gateway Terminals (Pvt) Ltd., Strategic Development Partner – Asian Development Bank, Telecommunication Partner – Dialog Telecommunication, Television Partner – Dialog Television, Session Sponsors – David Pieris Motor Company (Pvt) Ltd., Hemas Holdings PLC, Sunshine Holdings PLC, International Construction Consortium (Pvt) Ltd., Official Logistics Partner – Hayleys Advantis Limited, Official Airline – SriLankan Airlines Ltd., Official Hospitality Partner – Shangri-La Colombo, Airline Partner – China Eastern Air Holding Co. Ltd.

Registrations are now open at https://sleis.chamber.lk/. For more information, contact Alikie on 011 558 8805 (alikie@chamber.lk) or Shanuka on 0701082541 (events.division@chamber.lk).

Business

AAC launches seat belt safety awareness initiative with RDA Colombo

Published

12 hours ago

2026/09/16

Sahan Weerasooriya

The Automobile Association of Ceylon (AAC), in collaboration with the Road Development Authority (RDA) and Police – Traffic Division, will conduct a special Road Safety Awareness Programme to promote the importance of wearing seat belts in vehicles specially on the express highways in order to reduce road fatalities and serious injuries.

The official handing-over ceremony took place at the Chairman’s Office of the Road Development Authority on 14th September 2026, where specially designed Seat Belt Safety Hanging Tags & Stickers prepared by the Automobile Association of Ceylon were handed over to the RDA for distribution to motorists at entry points to the expressways.

The initiative is being conducted in connection with the seat belt law coming into effect on 19th September 2026 and is intended to create greater public awareness of the importance of wearing seat belts in both the front and rear seats of vehicles.

Representing the Automobile Association of Ceylon at the ceremony Dhammika Attygalle, President; Prasanna De Zoysa, Sectional Chairman – Road Safety; and Devapriya Hettiarachchi, Secretary, Senior Superintendent of Police -Traffic Sisira Peththrathanthri, participated in the programme.

The Automobile Association of Ceylon has consistently maintained that road safety is one of its foremost priorities. Through awareness campaigns, educational programmes and collaboration with government authorities and other stakeholders, the Association continues to encourage responsible driving and safer behaviour among all road users.

AAC believes that the proper use of seat belts, including by rear-seat passengers, is a simple but vital safety measure that can help reduce serious injuries and save lives in the event of a road crash.

The programme further strengthens the cooperation between the Automobile Association of Ceylon, the Road Development Authority and the Police in their shared commitment towards safer roads and saving lives in Sri Lanka.

Business

Sanath Jayasuriya as Brand Ambassador

Published

12 hours ago

2026/09/16

Sahan Weerasooriya

Mr. Dasun Wickramarathna, Chairman Global Housing & Real Estate (Pvt) Ltd with Sanath Jayasuriya, World Renown Personality & Brand Ambassador

Global Housing & Real Estate (Pvt) Ltd (GHR) has announced a landmark partnership with Sri Lankan cricket legend Sanath Jayasuriya, as its Brand Ambassador as GHR enters a new chapter in its journey within Sri Lanka’s luxury real estate sector.

The partnership was officially unveiled at a press conference held at Cinnamon Life, Colombo, on 14 September 2026, bringing together industry leaders, investors and members of the media under the theme “Two Gamechangers, A New Beginning.”

The collaboration brings together two names associated with challenging convention in their respective fields: Sanath Jayasuriya, whose fearless approach transformed the dynamics of international cricket, and GHR, which has sought to introduce new approaches to property investment and luxury living in Sri Lanka.

Over the past two decades, GHR has built its presence in Sri Lanka’s real estate sector with a focus on quality, structural integrity and long-term investment value.

A significant milestone in the company’s journey came in 2016, when GHR introduced the hotel residency concept to the Sri Lankan market. The model brought together luxury hospitality and real estate investment, creating opportunities for property ownership with the potential to generate investment returns while contributing to the growth of the country’s high-end tourism offering. GHR has since continued to expand its portfolio across key destinations in Sri Lanka.

Speaking at the announcement, Dasun Wickramarathna, Chairman of Global Housing & Real Estate (Pvt) Ltd, said, “For over twenty years, Global Housing & Real Estate has strived to push the boundaries of what property development can achieve in Sri Lanka. As pioneers who introduced the hotel residency concept back in 2016, our mission has always been clear: to provide high-yield investment opportunities for our clients while taking Sri Lanka’s condominium industry into a new frontier.”

Commenting on the decision to partner with Sanath Jayasuriya, he added, “When looking for a voice to represent GHR’s ethos, Sanath Jayasuriya was the natural choice. Just as Sanath disrupted traditional international cricket and redefined how the world viewed the opening overs, GHR challenged traditional approaches to real estate and established a new benchmark in luxury living. This partnership represents a true convergence; Two Gamechangers, A New Beginning.”