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Reimagining the future of Sri Lanka’s apparel industry

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By Shirendra Lawrence

The emergence of apparel and textiles as a significant contributor to Sri Lanka’s economy began post-Independence in 1948 when a few pioneering industrialists saw opportunities in its domestic market. Following the liberalization of the economy in the late 70’s, the industry ventured into exports, bringing in much needed foreign exchange, and before long, established Sri Lanka’s reputation as a manufacturer of quality products.

During the 90’s, facilitated by the 200 Garment Factories Program, manufacturing that had until then been located in free trade zones was expanded across Sri Lanka. This played a key role in the upliftment of the country’s rural economies.

The last decade has seen a further evolution, focused on end-to-end partnerships and complete customer solutions. However, an in-depth assessment of the sector’s strengths and competencies indicates that its full potential is yet to be realised.

With the pandemic causing significant disruption to Sri Lanka’s economy, our vision of elevating the country to a US$ 8 billion global apparel hub by 2025 is now perhaps more critical than ever. This growth is envisaged through value addition and further evolving from contracted apparel manufacturing for Buying Offices to end-to-end solutions for leading Global Brands and Retailers, spanning innovation to last-mile delivery.

With the pandemic gradually receding, apparel sector stakeholders have renewed collaborative efforts to achieve these goals.

Current status

In pre-pandemic 2019, the value of global apparel exports was estimated at $492 billion. Most would agree that with Sri Lanka’s contribution being just 1% of this, at $5.3 billion, the industry’s aspiration to grow it to $8 billion is not unreasonably ambitious.

Sri Lanka enjoys a reputation as a trusted partner within the supply chains of some of the world’s leading brands and retailers. The country’s apparel industry comprises a few large groups, supported by a strong ecosystem of Small and Medium Enterprises (SMEs). This is a symbiotic system; the larger players have developed meaningful Customer Partnerships, whilst the SMEs have created niches, including supporting the larger Groups to meet their supply chain requirements.

Despite its smaller scale and Sri Lanka’s apparel sector having relatively higher labour costs than some of its regional competitors, along with less preferential export market access, it has still progressed by leveraging other sources of competitive advantages. Sri Lanka ranks high in terms of reliability and product quality, which have elevated the country’s reputation and overall positioning. This is best reflected in the impressive list of global Brands and Retailers served by Sri Lankan manufacturers, including Victoria’s Secret, Marks & Spencer, Boss, NIKE, Calvin Klein, GAP, Levi’s, Ralph Lauren, lululemon, Calzedonia, Intimissimi and Tommy Hilfiger.

This elevated positioning also extends to talent attractiveness, with the country’s apparel sector appealing to the better professional talent, unlike some of our regional counterparts. A case in point is India, where professionals would often see other industries such as automobiles, electronics and IT as more attractive. Furthermore, the Island benefits from its strategic geographical location along major shipping routes as a regional logistics hub.

From an infrastructure standpoint, fabric manufacturers, who require process water, have established their factories within the BOI facilitated Free Trade Zones, which include advanced water treatment processes, whilst those in relatively labour-intensive apparel manufacturing have located themselves in rural areas across the country, providing direct and indirect employment to those communities, accelerating the development of those areas.

Leveraging on trade shifts

Whilst all of this progress has been well invested in, for the country to realise its apparel sector’s true potential, it is essential to fully leverage these strengths while understanding and aligning with the trade shifts that are taking place.

Studies indicate that the impact of increasing political and economic tensions between the Far East and the West will result in the movement of significant amounts of trade from China. Whilst these movements appeared to have commenced pre-pandemic, customers in western markets have delayed this process, not wanting to add additional dimensions of risk on top of pandemic-induced challenges. However, the shift is expected to gather momentum in 2022 and beyond.

Apart from direct business migration, opportunities would include potential FDI inflows from companies in the Far East seeking to augment their existing bases by establishing manufacturing locations in South Asia to mitigate their risk of losing customers. The industry and policymakers are mindful of potential opportunities that could arise as a result. The leadership of Sri Lankan apparel companies, with the support of the industry umbrella organisation, the Joint Apparel Association Forum (JAAF), and its constituent associations, including the Sri Lanka Apparel Exporters Association (SLAEA), are reimagining the sector’s future. These stakeholders are crafting strategic plans to facilitate the process of achieving the sector’s vision.

Maintaining competitive advantage

‘Doing the right thing’ has been the driving philosophy of Sri Lanka’s apparel industry, and this was key in attracting reputed Brands and private label retailers to Sri Lanka during the 80’s and 90’s. Marks & Spencer, in particular, saw Sri Lanka as a credible alternative for the migration of its western manufacturing bases at that time. This catalysed Sri Lankan manufacturers’ alignment with the expectations of the Ethical Trading Initiative (ETI), Worldwide Responsible Accredited Production (WRAP) and other organisations and standards focused on social responsibility and differentiated us from our competitors.

Moving to the present, what were competitive advantages have today become ‘hygiene factors’. Sri Lankan manufacturers have maintained their reputation for ethical manufacturing through environmentally responsible production, strong connections with existing and emerging organisations such as the Sustainable Apparel Coalition (SAC), and investments to reduce their Carbon Footprints. Significant strategic initiatives include the conversion of fossil-fuelled boilers to biomass and introducing other environmentally friendly energy sources such as solar. This also aligns the industry well with the Government’s efforts to increase renewable energy to 70% of Sri Lanka’s total requirement by 2030.

Sri Lankan apparel groups have also grown their businesses through geographic diversification. These efforts seek to minimise customer concerns of single country sourcing, leverage on bilateral and multilateral trade agreements and augment Asian manufacturing locations with a capacity closer to markets.

Improved trade access is vital

Greater preferential market access to existing and identified key export markets would substantially boost Sri Lanka’s apparel exports. However, it is vital to retain existing concessions under the EU and UK Generalized System of Preferences (GSP) Plus schemes while securing tariff reductions to other countries. Considering our success in penetrating key markets such as the USA, where tariffs for apparel exports are as much as, or in some cases even more than 30%, there is a significant opportunity to be had if the industry were provided with tariff waivers or even reductions.

Substantial opportunities also exist in large developing nations. Sri Lanka needs to increase its export quota of 8 million garment items per year to India, one of the fastest-growing regional economies. The Chinese market, too, presents vast potential.

Need for conducive policies

While recent initiatives to modernise trade facilitation, including the digitisation of customs clearance processes and administration of payments through online gateways, are welcomed, much more policy reform is needed. For example, if Sri Lanka is to evolve as an innovative apparel hub, a safe and conducive environment for innovation is required. This is only possible if Intellectual Property and data protection laws are given priority. Similarly, reforming colonial-era labour laws to reflect the very different world that we live in today is essential.

Favourable policies and incentives should be provided for investments related to backward integration and automation. The Eravur Fabric Processing Park is an important development in this regard, and the industry acknowledges the contributions of multiple state agencies in this initiative.

In conclusion, evolving Sri Lanka’s apparel industry will, without doubt, continue to bring benefits to the country – both directly and indirectly – increasing FDI, employment opportunities and export earnings whilst improving innovation and technology inflows.

With all stakeholders working in collaboration, the vision of making Sri Lanka a fully-fledged apparel hub is well within the country’s reach.

(Shirendra Lawrence is an apparel industry veteran and is the Deputy Chairman of the Sri Lanka Apparel Exporters’ Association. He is also an Executive Director of MAS Holdings. Shirendra holds a Mechanical Engineering (Honours) Degree from Imperial College, University of London, and is a Chartered Mechanical Engineer. He counts over 35 years of experience in manufacturing, business development and organisational leadership in the UK and Sri Lanka.)



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Renewable energy producers say they can generate more power if govt and CEB support

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From Left: Manjula Perera, Wind Power Developers Association Secretary, Thusitha Peiris, Small Hydro Power Developers Association President, Lasith Wimalasena, Ground Mounted Solar Developers Association President, Chamil Silva, Bio Energy Developers Association President, Kushan Jayasuriya, Solar Industries Association President.

by Sanath Nanayakkare

In the backdrop of dwindling foreign currency reserves and capacity shortages, the only logical solution for Sri Lanka to take is to adopt renewable energy as the primary source of energy production, Manjula Perera, Secretary of the Wind Power Developers Association said in Colombo yesterday.

He said so speaking at a press conference held at the Hilton Colombo Residencies, convened by the associations of local entrepreneurs who have invested in the development of wind power, small hydro power, ground mounted solar power and bio energy.

Notably, the associations reiterated the fact that they want only the policy support and that they can provide themselves with necessary funding for the projects if the government, CEB and related line ministries act together to remove the bottlenecks which are there for no clear purpose.

“Sri Lanka is currently facing an acute energy crisis, primarily due to the country’s reliance on imported fossil fuel. The solution to this is for the country to move on to more renewable sources of energy such as wind, solar, bio-gas, biomass and hydro power. Renewable energy also presents a host of other benefits both socially and economically as well,” Manjula Perera said.

“Renewable energy can be generated using Sri Lanka’s ample natural resources. This would also offer some relief to Sri Lanka’s diminishing foreign reserves as renewable energy does not need to rely on fuel imports,” he noted.

‘However, one of the main issues which the renewable energy sector faces is the government approval process which can take years to complete. This process needs to be streamlined and implemented in an efficient manner as possible. Renewable energy developers also run into a myriad of challenges from the CEB that has delayed approval and grid connections, sometimes attributed to incorrect technical analysis. Bringing correct knowledge and international best practices to the CEB will help sort out these issues,” he pointed out.

Riyaz Sangani, Past President of Hydro Power Developers Association said, “Our goal as the renewable energy sector is to help the government and the people overcome the current energy crisis in the country. We believe that the key to this is to increase co-operation between the government and the private sector. Only then will we be able to successfully overcome all obstacles and make the switch to renewable energy.”

“There are currently a total of 294 private sector renewable energy developer projects which have been commissioned. These projects have combined capacity of 718.334 megawatts (MW). The total number of projects needs to increase drastically, for the country to truly reap the full benefits of renewable energy,” Thusitha Peiris, Small Hydro Power Developers Association President said.

He said that small hydro power projects have been brought to a halt for years now, and today the need is ever more acute for local entrepreneurs to be allowed to restart investing in this sector in a conducive operating environment.

“Another issue that has hampered the success of the renewable energy sector is the importation restrictions imposed on the sector, which has made it difficult to obtain the machinery necessary,” the associations said.

“In addition to the immediate benefits which the country will receive, renewable energy sources also pose less of a risk to the climate and environment. This will help protect the environment and ensure that the country’s development will not be hindered by any environmental issues in the future,” they observed.

“There have been many local and foreign investors who have shown interest in investing in renewable energy for Sri Lanka. These investors need to be shown that it is a worthwhile investment and that hindrances will be minimal. Only then can Sri Lanka overcome its socio-economic woes and continue with development,” they pointed out.

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Cargills Online becomes first ecommerce platform to integrate LANKAQR

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From left: Prabhu Mathavan - Executive Director, Cargills Bank, Roshan Dilruk – Operations Manager, Cargills Online, Asanka Mahanama – Senior Manager - IT, Cargills (Ceylon) PLC, Namal Rajapaksa, Minister of Youth & Sports, Minister of Development Co-ordination and Monitoring and State Minister of Digital Technology and Enterprise Development, Yohan Samuel- Delivery Agent, Cargills Online, D Kumaratunge- Assistant Governor, Central bank of Sri Lanka, Asoka Pieris - Managing Director, Cargills Retail, Cargills (Ceylon) PLC and Sanjeewa Premawaradana - General Manger - IT, Cargills (Ceylon) PLC

Cargills Online has become the first and currently the only e-commerce platform in Sri Lanka to integrate LANKAQR for delivery thereby providing greater convenience to its customer base together with its wide merchandise offering. LANKAQR is a project initiative from the Central Bank of Sri Lanka to ensure all QR codes and QR based transactions in Sri Lanka are standardized and interoperable.

How many of us have ordered groceries online and not received most of the order? Cargills Online revolutionised the grocery supply chain in Sri Lanka by introducing the dark store to solve this issue. Cargills Online offers the freshest produce and one of the range of products, providing a convenient, hassle-free delivery where customers can order weekly groceries in less than 2 minutes. Deliveries are efficiently carried out by professional delivery agents with consistent on time delivery. The dedicated customer experience team ensures that higher customer satisfaction at all times. In addition to LANKAQR, Cargills Online also offers cash and card on delivery and online payments. Cargills Online can be accessed via the App available on Android & iOS and the website https://cargillsonline.com/. Customers can use the mobile app or visit the website and select LANKAQR as the payment method. When the Cargills team delivers the order, the customer can use any payment app to make the payment using LANKAQR. Even if the payment option is selected as “Card On Delivery” or “Cash On Delivery”, the customer can pay via LANKAQR once the goods arrive.

Namal Rajapaksa – Minister of Youth & Sports, Minister of Development Co-ordination and Monitoring and State Minister of Digital Technology and Enterprise Development stated, “Sri Lanka is currently undergoing a revolution as we aim to deploy the latest technology so that we can increase financial inclusion in the country, strengthen trade and drive the economy towards prosperity. I am excited to see Cargills Ceylon coming forward to support us in this national effort. LANKAQR is one such initiative that we have conceptualized with the support of the Central Bank and Lanka Clear. A notable fact is that LANKAQR was entirely developed by using Sri Lankan expertise.”

From left: Senarath Bandara – Managing Director /CEO, Cargills Bank, Ranjit Page – Deputy Chairman / Group CEO, Cargills (Ceylon) PLC, D Kumaratunge – Assistant Governor, Central bank Of Sri Lanka, Ajith Nivard Cabraal – Governor, Central Bank of Sri Lanka, Yohan Samuel- Delivery Agent, Cargills Online, Sanjeewa Premawaradana – General Manger / IT, Cargills (Ceylon) PLC, Asanka Mahanama – Senior Manager – IT, Cargills (Ceylon) PLC and Roshan Dilruk – Operations Manager, Cargills Online

Ajith Nivard Cabraal – Governor of the Central Bank of Sri Lanka commented, “The Central Bank of Sri Lanka introduced LANKAQR in partnership with LankaClear to fast track Sri Lanka’s journey towards becoming a cashless society while also boosting financial inclusion. SMEs are the engine of growth in the country and it is important for us to give them all the resources and support necessary to achieve their fullest potential. I thank Cargills Ceylon for joining hands with us to take this technology to its large, island wide customer base.”

Asoka Pieris – Managing Director Cargills Foods Company (Pvt) Ltd, “Cargills’ continued commitment and passion to improve the lives of all Sri Lankans led us to Cargills Online and ensured that customers can continue to purchase groceries at home while still enjoying the supermarket experience. By integrating LANKAQR, our valued customers will have even more flexibility when it comes to paying for their goods. We are proud to be the first and currently the only e-commerce platform in Sri Lanka to integrate LANKAQR for delivery.”

LANKAQR was introduced by the Central Bank together with licensed financial institutions and LankaClear (Pvt) Ltd with the aim of moving Sri Lanka towards a less-cash society and increasing financial inclusion across the country. LANKAQR allows customers to make payments, directly from their bank accounts to accounts of merchants or service providers, using payment apps of LANKAQR certified financial institutions. LANKAQR is a low-cost digital payment solution, which primarily targets small and medium enterprises (SMEs).

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Brantel appointed Sri Lanka distributor for ‘Oukitel’ and ‘Blackview’ smartphones

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Brantel Lanka Limited, the company that built the E-tel mobile phone brand in Sri Lanka, has secured the distributorship of two other smartphone brands that are in popular use in 80 countries worldwide, including in European hotspots.

With the appointment as the authorised distributor for the China manufactured ‘Oukitel’ and ‘Blackview’ smartphones, Brantel will initially retail select models of these warranty-backed phones which are known for their durability, exceptional battery life, high Random Access Memory (RAM) and Read Only Memory (ROM) capacities, superb cameras and the latest features including secure biometric authentication.

With both these brands, Brantel continues with its strategy of providing specifications and performance that match the latest smartphones in the market without the price tag associated with leading global brand names, the Company said.

Among the Oukitel models Brantel Lanka will offer is the C21 which is powered by a P60 octa-core processor that results in maximum operational speed and is known for its pro camera with an unprecedented 20 MP hole punch that enables the taking of high-quality selfies. Another is the entry level Oukitel C19 model which comes in vibrant colours and offers a 6.49-inch immersive HD+ experience in addition to impressive computing power. From Blackview, the company will offer the octa-core 4G fashion smartphone Blackview A90 model in multi colours and the quad camera, ‘budget king’ Blackview A80 Plus model. These models can be purchased at the Brantel showroom, by visiting www.brantelonline.com or its dealers island-wide. Online shoppers can enjoy discounts up to 15% and island-wide delivery, the company said.

Established in 2007, Oukitel is owned by a national high-tech company in China with an advanced and experienced Research & Development team, dedicated production crew, and technical services. Oukitel has a global presence including in countries in Europe, Asia, North and South Americas and has successfully developed over 130 distributors from 60 countries worldwide.

Blackview has an 8,500 square-meter factory in China and its customer base is spread across 80 countries and regions including Russia, Spain, Germany, Czech Republic, Ukraine, France, Italy, Turkey, Algeria, Colombia and South Africa. It has more than 100 authorised agents in over 80 countries and regions.

Brantel Lanka (Pvt) Ltd. delivers technology and value-added services to more than 2,000 business customers. The Company partners with leading technology brands from around the world to simplify and accelerate sales channels. With expert sales and technical support teams it has serviced its customers for the past 18 years from its branches and dealers island-wide.

Brantel’s range of products from leading global manufacturers include copper and fibre network cables, passive network components, solar inverters, PV modules, point-of-sale thermal printers, and digital smart board solutions. Brantel is also the national distributor for E-tel Mini Computers, Android smartphones, tablets and feature phones and Corning products in Sri Lanka.

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