Business

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

Published

4 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

“We Are Building a Stable, Transparent and Resilient Sri Lanka Ready for Sustainable Investment Partnerships” – PM

Published

8 hours ago

2026/02/15

Priyan

Prime Minister Dr. Harini Amarasuriya addressed members of the Chief Executives Organization (CEO) during a session held on Thursday [3 February 2026] at the Shangri-La Hotel, Colombo, as part of CEO’s Pearl of the Indian Ocean: Sri Lanka programme.

The Chief Executives Organization is a global network of business leaders representing diverse industries across more than 60 countries. The visiting delegation comprised leading entrepreneurs and executives exploring Sri Lanka’s economic prospects, investment climate, and development trajectory.

Addressing the gathering, the Prime Minister emphasized that Sri Lanka’s reform agenda is anchored in structural transformation, transparency, and inclusive growth.

“We are committed not only to ensuring equitable access to education, but equitable access to quality education. Our reforms are designed to create flexible pathways for young people beyond general education and to build a skilled and adaptable workforce for the future.”

She highlighted that the Government is undertaking a fundamental pedagogical shift towards a more student-focused, less examination-driven system as part of a broader national transformation.

Reflecting on Sri Lanka’s recent political transition, the Prime Minister stated:

“The people gave us a mandate to restore accountability, strengthen democratic governance, and ensure that opportunity is not determined by patronage or privilege, but by fairness and merit. Sri Lanka is stabilizing. We have recorded positive growth, restored confidence in key sectors, and are committed to sustaining this momentum. But our objective is not short-term recovery it is long-term resilience.”

Addressing governance reforms aimed at improving the investment climate, she said:

“We are aligning our legislative and regulatory frameworks with international standards to provide predictability, investor protection, and institutional transparency. Sustainable investment requires trust, and trust requires reform.”

Turning to the recent impact of Cyclone Ditwa, which affected all 25 districts of the country, the Prime Minister underscored the urgency of climate resilience.

“Climate change is not a distant threat. It is a lived reality for our people. We are rebuilding not simply to recover, but to build resilience, strengthen disaster mitigation systems, and protect vulnerable communities.”

Inviting CEO members to consider Sri Lanka as a strategic partner in the Indo-Pacific region, she highlighted opportunities in value-added mineral exports, logistics and shipping, agro-processing, renewable energy, pharmaceuticals, and innovation-driven sectors.

“We are not looking for speculative gains. We are seeking long-term partners who share our commitment to transparency, sustainability, and inclusive development.”

She further emphasized collaboration in education, research, vocational training, and innovation as essential pillars for sustained economic growth.

Concluding her address, the Prime Minister expressed appreciation to the Chief Executives Organization for selecting Sri Lanka as part of its 2026 programme and reaffirmed the Government’s readiness to engage constructively with responsible global investors.

The event was attended by the Governor of the Western Province, Hanif Yusoof, and other distinguished guests.

[Prime Minister’s Media Division]

Business

High Commissioner in Pakistan urges high level business visit to Colombo

Published

9 hours ago

2026/02/15

Thilina Walpola

High Commissioner Senevirathne and Dr. Munir at meeting

The High Commissioner of Sri Lanka to Pakistan, Rear Admiral Fred Senevirathne, met Dr. Zeelaf Munir, Chairperson of the Pakistan Business Council (PBC), in Karachi on Feb. 6 and urged a high level visit of Pakistani business people to Sri Lanka, a news release from the High Commission said.

Dr. Munir, who also serves as the Managing Director and Chief Executive Officer of English Biscuit Manufacturers (EBM), leads Pakistan’s premier business policy advocacy body, which plays a key role in promoting a conducive business environment, export growth, and industrial development.

The High Commissioner who was warmly received by Dr. Munir at her office briefed her on the current economic and political landscape in Sri Lanka, highlighting the country’s improving economic outlook, enhanced political stability, and a favourable environment for foreign investment, the release said.

He also outlined the policy priorities of the new Government, with particular emphasis on ongoing economic reforms, investment-friendly initiatives, and opportunities to further strengthen bilateral economic and trade cooperation between Sri Lanka and Pakistan, it said.

He invited Dr. Munir to consider leading a delegation of prominent business leaders and investors to Sri Lanka, with a view to engaging with Sri Lankan counterparts and exploring potential investment opportunities and avenues for collaboration across key sectors.

The meeting was facilitated by. Honorary Consul of Sri Lanka in Hyderabad, Mehmood Mandviwalla, who was also present. Minister and Head of Chancery of the Sri Lanka High Commission in Islamabad, Christy Ruban, and Consul General of Sri Lanka in Karachi, Sanjeewa Pattiwila also participated at the meeting.

Business

IRONMAN 70.3 Colombo Returns, Kicks Off #ActiveColombo City Transformation

Published

9 hours ago

2026/02/15

Thilina Walpola

All partners at the Ironman 70.3 Colombo Launch with Vraîe Cally Balthazaar, Mayor of Colombo at the event held last Wednesaday at Shangri-La.

Officials from the Western Provincial Council, Colombo Municipal Council, and event organisers marked the official launch of IRONMAN 70.3 Colombo – Presented by Port City Colombo today at Shangri-La Colombo, the Host Hotel, signalling the return of Sri Lanka’s premier endurance event and the start of the long-term #ActiveColombo initiative.

Scheduled from 19–22 February 2026, the world-class triathlon will anchor #ActiveColombo Week, combining international competition with a city-wide celebration of sport, health, and urban vitality. Highlights include the KAYA Colombo – Active Lifestyle & International Expo (19–21 Feb), the family-focused IRONKIDS Colombo (21 Feb), and the IRONMAN 70.3 Colombo triathlon (22 Feb), featuring swim, bike, and run events at Port City Colombo, the Official Venue Partner.

The event is set to welcome nearly 1,000 athletes from over 49 countries, many visiting Sri Lanka for the first time, bringing international media attention and significant economic impact across hospitality, aviation, retail, and transport. As part of the globally recognised IRONMAN® circuit, Colombo now joins iconic host cities such as Sydney, Nice, and Muscat, reinforcing its position as South Asia’s emerging endurance sports hub.

“IRONMAN 70.3 Colombo embodies the spirit of resilience and excellence,” said Rajan Thananayagam, Director of Serendib Multisport (Pvt) Ltd. “This event puts Sri Lanka on the world stage and showcases Colombo as a vibrant, welcoming destination for athletes and their families.”

The launch also introduced #ActiveColombo, a long-term initiative aimed at transforming Colombo into South Asia’s leading Active City. The programme focuses on activating everyday urban spaces through parks, waterfronts, beaches, clean streets, shaded corridors, and safe environments that encourage walking, cycling, yoga, and other outdoor activities.

“Through #ActiveColombo, we aim to inspire a more active generation while strengthening Colombo’s appeal as a globally competitive capital,” said Hanif Yusoof, Governor of the Western Province. Mayor Vraîe Cally Balthazaar added that the initiative symbolises inclusive growth, promoting healthier streets, greener corridors, and vibrant public spaces for residents and visitors alike.

With signature policies such as the “Every Active Street is a Shaded Street” Shade the Road initiative, Colombo aims to combine urban health, economic growth, and international sports tourism. Experts say cities that invest in active lifestyles see 10–20% reductions in long-term healthcare costs, safer streets, and higher visitor spending.

By linking IRONMAN 70.3 Colombo with #ActiveColombo, organisers hope to position the city as a healthier home for citizens, a premier destination for high-value tourists, and a credible host for global sporting and lifestyle events, cementing Colombo’s reputation as South Asia’s Active Capital.