Business

Reimagining the future of Sri Lanka’s apparel industry

Published

5 years ago

2021/12/1

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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Business

Committee appointed for restructuring SriLankan Airlines

Published

8 hours ago

2026/06/12

Priyan

The Cabinet of Ministers has approved the appointment of a Committee, chaired by Senior Presidential Advisor on Digital Economy Dr. Hans Wijayasuriya, to conduct a strategic review and restructuring of SriLankan Airlines.

The other members of the committee are as follows:

• Senior Presidential Economic Advisor Duminda Hulangamuwa

• Financial and corporate strategy expert Deshal De Mel

• Transaction and investment banking, mergers and acquisitions expert Dumith Fernando

• The Secretary to the Ministry of Finance or his Representative

• The Secretary to the Ministry of Transport, Highways and Urban Development / a representative of the Civil Aviation Authority

• The Chairman of SriLankan Airlines

• Legal experts with specialised knowledge in corporate, aviation and public law

• Aviation industry experts to be appointed

The Government has recognised the urgent priority of undertaking a comprehensive strategic review of SriLankan Airlines, taking into account the broader macroeconomic context.

The main objective of this exercise is to establish a financially sustainable and commercially efficient national carrier, while reducing the long-term fiscal burden on the Government.

Accordingly, it has been deemed appropriate to establish a dedicated committee to carry out the strategic review and restructuring process in collaboration with the International Finance Corporation (IFC), which is serving as the Transaction Advisor.

The committee will be responsible for:

• Conducting an independent review and assessment of the airline’s strategic direction and future course of action

• Recommending restructuring requirements and possible restructuring models

• Evaluating specific strategic options and identifying the most suitable course of action aligned with the Government’s overall objectives

• Providing oversight, guidance and support for the implementation of the selected strategy and execution framework determined by the Government

The committee will function for the duration of the strategic review and restructuring process, or until it is formally dissolved by the Government of Sri Lanka.

(PMD)

Business

CMTA warns of further Rs. 40 billion revenue leakage in 2026, calls for urgent removal of 15% depreciation

Published

20 hours ago

2026/06/12

Thilina Walpola

(L to R): Andrew Perera, Chairman, Ceylon Motor Traders Association and Lakmal de Silva, Senior Vice Chairman, Ceylon Motor Traders Association

The Ceylon Motor Traders’ Association (CMTA), the senior-most automotive association in Sri Lanka affiliated with the Ceylon Chamber of Commerce, has issued an urgent appeal to the government to abolish the 15% depreciation currently granted on used vehicle imports, warning that the concession is causing massive revenue leakages at a time when the country can least afford them.

The Association estimates that the existing depreciation mechanism resulted in approximately Rs. 40 billion in lost government revenue in 2025 alone. If corrective action is not taken immediately, a similar level of revenue leakage could occur in 2026, further impacting the government’s fiscal position and depriving the country of much-needed funds for national development and public services.

The Association notes that loopholes within the existing system have created opportunities for misuse, resulting not only in unfair advantages for certain importers but also in substantial losses to government revenue. Addressing these abuses, alongside the removal of the 15% depreciation concession, is essential to ensuring greater transparency, strengthening regulatory oversight, and protecting the integrity of Sri Lanka’s vehicle import sector.

While no official announcement has yet been made regarding the removal of the 15% depreciation, the CMTA has consistently highlighted the issue through multiple budget proposals submitted via the Ceylon Chamber of Commerce. The Association has repeatedly maintained that there is no viable justification for the continued application of this concession on used vehicle imports.

Currently, used vehicles receive a 15% depreciation on their Cost, Insurance and Freight (CIF) value for duty calculation purposes. However, the vast majority of vehicles entering the country through the used vehicle market are virtually zero-mileage units, with CIF values that are often comparable to those of brand-new vehicles. In such circumstances, the CMTA argues that granting a blanket 15% depreciation creates an unfair and unjustifiable tax advantage while significantly reducing government revenue collections.

The Association acknowledges that if the objective through this concession is making vehicles more affordable for consumers, then the CMTA stresses that affordability cannot be achieved through arbitrary concessions that create market distortions and substantial losses to the Treasury. If the intention is to reduce vehicle prices, similar policy considerations could be extended to brand-new vehicles rather than selectively benefiting one segment of the market.

Consumers who purchase brand-new vehicles benefit from manufacturer warranties, which help mitigate maintenance and repair costs during the warranty period. As a result, vehicle owners are less likely to incur additional expenses associated with importing replacement parts, providing greater long-term value, reliability, and peace of mind.

The CMTA further notes that as far back as 2013, a structured depreciation framework was implemented based on the age of a vehicle, rather than a flat-rate concession. Under this proposal, depreciation would be calculated according to a defined scale and capped at a maximum of 10%, ensuring greater fairness, transparency and alignment with the actual value of the vehicle.

The Association stated that the continued application of a blanket 15% depreciation is resulting in significant and unnecessary revenue leakages for the government. At a time when every rupee of revenue is critical to the country’s economic progress, this issue requires immediate attention and decisive action.

The CMTA therefore strongly urges the relevant authorities to take swift action to abolish the current 15% depreciation concession and close this avenue of revenue leakage without delay. The Association emphasises that every month of inaction increases the risk of further losses to the state and undermines efforts to strengthen public finances.

Should the government determine that some form of concession should continue to be extended to the used vehicle market, the CMTA maintains that it must be implemented through a structured and transparent framework based on vehicle age and capped at a reasonable level. Such an approach would ensure fairness while safeguarding government revenue and maintaining a level playing field across the automotive industry.

Business

Climate adaptation now a business survival imperative, experts warn

Published

20 hours ago

2026/06/12

Thilina Walpola

Businesses in Sri Lanka risk severe financial and operational disruption unless they urgently invest in climate adaptation and resilience measures, leading climate experts warned at a high-level dialogue on “Climate-Proofing Business Sri Lanka” held on Wednesday at Genesis – The Dilmah Centre for a Sustainable Future.

The event, jointly organized by Genesis and the Ceylon Chamber of Commerce, brought together corporate leaders, sustainability professionals, policymakers and climate specialists to discuss how climate change is rapidly emerging as one of the biggest risks facing Sri Lanka’s economy.

Climate Change and Disaster Risk Management Specialist Rohan Cooray said climate-related disasters were already exacting a heavy economic toll globally and locally.

He noted that climate-induced losses divert resources that could otherwise be invested in economic development and business growth and stressed the need for stronger adaptation measures to protect investments and livelihoods.

Delivering the keynote address, internationally renowned climate lawyer and governance specialist Dr. Lalanath de Silva said climate change was no longer a future threat but a present-day economic reality that businesses could not afford to ignore.

“The impacts are coming whether we like it or not,” he said. “The question is whether we prepare now or pay a much higher price later.”

Dr. de Silva explained that while global efforts have largely focused on mitigation—reducing greenhouse gas emissions—adaptation has become equally important, particularly for vulnerable countries such as Sri Lanka.

“Sri Lanka contributes less than one percent of global greenhouse gas emissions, yet we are among the countries most vulnerable to climate impacts,” he said.

He warned that climate change would alter rainfall patterns, intensify floods and droughts, increase the frequency of extreme weather events and place growing pressure on infrastructure, agriculture, water resources and businesses.

“We are very good at producing plans in Sri Lanka. What we have not been good at is implementing them.”

Calling for stronger institutional coordination, Dr. de Silva proposed the establishment of a high-level climate coordination mechanism operating at the highest level of government to ensure coherent action across ministries and agencies.

Providing scientific context to the discussion, Cooray presented projections based on global and regional climate models adopted by Sri Lanka’s Department of Meteorology.

According to Cooray, rainfall patterns across Sri Lanka are expected to become increasingly erratic.

The wet zone is projected to receive more intense rainfall events while many dry-zone regions could experience prolonged drought conditions interspersed with extreme rainfall episodes.

“The danger is not simply that some places become wetter and others become drier. The danger is the increasing variability and unpredictability of rainfall,” he said.

While mitigation projects often generate measurable returns, adaptation investments require innovative financing mechanisms and stronger public-private partnerships, speakers noted.

The event also featured contributions from Dilhan C. Fernando, chairman of Dilmah Ceylon Tea Company PLC; Shiran Fernando, Secretary General and CEO of the Ceylon Chamber of Commerce; and Yasangi Randeni, Chief Sustainability Officer of Aitken Spence PLC.

Speakers agreed that climate-proofing businesses is no longer simply about environmental responsibility but about safeguarding assets, maintaining competitiveness, protecting supply chains and ensuring long-term economic sustainability.

The consensus emerging from the forum was clear: while mitigation remains important, Sri Lanka’s immediate priority must be preparing businesses, communities and institutions for climate impacts that are already unavoidable.

By Ifham Nizam