13 October 2021 12:00 am Views - 396
Fabric production line at an apparel factory
Since the first announcement in June 2020, expectations have been high on the potential of the Eravur Fabric Processing Park to catalyse a new era for Sri Lankan textile and apparel manufacture.
Of the allocated approx 300 acres of land, fifty have been allocated for the Park’s maiden investment of US $ 35 million to establish a state-of-the-art fabric mill. Negotiations are also underway with two international companies to infuse mega investments for the remainder. The park is estimated to attract a cumulative investment of US $ 300 million. The zone is also seeking further investments towards dyeing, washing, knitting, weaving and other associated and ancillary activities.
The Cabinet approval for the zone’s classification under the Strategic Development Projects Act was also secured, enabling the extension of tax and other relief and incentives to investors.
Rapid progress towards vertical integration
“We would like to see the first company commence commercial operations in the next six months to one year,” stated BOI Chairman Sanjaya Mohottala.
Leveraged in support of Sri Lanka’s highly developed apparel manufacturing sector, which has steadily benchmarked itself on global standards for ethical, sustainable production and high levels of technical and technological expertise, Eravur’s promoters also see the project as an opportunity for Sri Lankan-made apparel to take global leadership on sustainability in its most holistic sense.
Mohottala explained further that the most immediate benefit from the park’s establishment will be in the cost advantages and enhanced economies of scale gained through capacity expansion and vertical integration of domestic supply chains.
Currently, Sri Lanka has approximately 300 apparel manufacturing facilities across the country. By contrast, it has only seven textile and raw material factories capable of producing fabric for export and for conversion into garments for export. At its peak, Sri Lanka imported over 250,000 MT of fabric both for export-oriented apparel manufacturing and for local consumption in 2019, at a cost of US $ 2.2 billion.
In the context of unprecedented disruptions across global supply chains in particular and persistent commodity and currency volatility, increased availability of high-quality raw materials will enable an immediate and drastic reduction in raw material costs, while also conserving foreign currency.
Increased domestic production of textiles also translates to a higher percentage of domestic value. If that threshold increases from its current 52 percent to 65 percent, it qualifies for a larger proportion of Sri Lankan exports for zero-duty benefits under GSP Plus.
Culmination of a pioneering national journey in sustainability
The economic argument in favour of investing in Eravur is bolstered by its potential to also be the most sustainable venture of its kind in the entire Asian region, with local stakeholders having already committed to establishing extensive renewable energy facilities, water recycling facilities, science-based targets and circular business models.
At a macro-level, increased local production capacity will contribute significantly to all these targets by reducing the end-to-end length of Sri Lanka’s apparel supply chains. This in turn enables tighter backward integration and lower carbon emissions.
Taking a cue from the Sri Lankan textile and apparel’s industry’s outstanding achievements on environmental sustainability to date, the Zone is being designed from the ground-up to facilitate and incentivise sustainability in every facet of its operations. In terms of fabric processing, the main focus is on wastewater treatment.
Mohottala continued: “Sri Lanka’s environmental standards for industries are quite stringent, especially compared with regional competitors. A key feature of the zone will be its central wastewater treatment facility with a sea outfall, which will require a high standard of treatment. Fortunately, we already have strong expertise available locally, with many of Sri Lanka’s textile producers having established facilities on par with global best practices on wastewater treatment. We have used this to our advantage by calling in the local industry’s technical experts and drawing on their pioneering experiences to optimise wastewater treatment protocols at Eravur.”
Adding that this will be one of many positive attributes all stakeholders downstream of the textiles produced at the zone can lay claim to, Mohottala said, “With the greater localisation of production, we also gain improved oversight and control over environmental standards within the zone. This also enables greater transparency, traceability and accountability across the supply chain, which in turn will confer preferable competitive advantages to Sri Lankan apparel exporters. In addition, this will empower brands and retailers to make clear and credible claims to genuine sustainable sourcing.”
An end-to-end opportunity
Another significant advantage for Eravur is that it is purpose-built with the most advanced environmentally friendly technology available. This will also promote efficiency in energy and water consumption, as well as additional infrastructure for recycling and recovery of water used in production, for which the BOI aims to provide investors with additional incentives.
Notably, Eravur also enjoys a high level of solar irradiance and consistent high-wind conditions, making any manufacturing facility established in the area, ideally suited for solar and potentially, wind turbine power generation.
“Augmentation of the zone’s energy requirements with plentiful renewable energy will enable cost savings on the energy-intensive aspects of wastewater recycling. Given the consistent annual reduction in the cost of solar and wind energy, the conditions at Eravur are another unique attraction for investment into the zone and potentially enables the entire supply chain to utilise global incentivises around responsible and sustainable production,” Mohottala said.
In addition to the wastewater treatment protocols, the zone will also include a sludge treatment facility, with further trials already underway for responsible disposal. These include tests using micro-algae to breakdown sludge, as well as utilising sludge to fuel furnaces and as bricks with a bio-mat mask.
The final and potentially most vital contribution which the Eravur Fabric Processing Zone is the empowering impact it will have on the lives of Sri Lankans in Batticaloa. At present, the district has an estimated population of 621,887, of which, an estimated 60,912 individuals are below the poverty line. As at 2019 – prior to the pandemic – unemployment in the region stood at 6.4 percent
“With the development of the zone, we will be able to create thousands of stable, well-paying direct and in-direct jobs. This could prove to be one of the most transformative developments to take place in the Eastern Province in recent history,” Mohottala concluded.
JAAF
JAAF is the apex body, which guides Sri Lanka apparel towards its ultimate goal of being the world’s number one apparel sourcing destination. JAAF represents five associations that cover supply chain partners, the export-oriented apparel manufacturers, buying offices and representatives of international brands in Sri Lanka.