Slowing global demand makes Lankan apparel exports slump further

• April exports down by 24% YoY
• Exports to all key markets down; sharpest drop seen to EU
• January-April exports totalled US $ 1.8bn

By Shabiya Ali Ahlam

The fortunes of Sri Lanka’s apparel sector took a further dip, with the month of April showing the sharpest year-on-year (YoY) contraction in terms of exports, asserting the need for renewed efforts to maintain the industry’s contribution to the national economy. 
The data compiled by the Joint Apparel Association Forum (JAAF) showed the apparel exports in April contracted by 23.99 percent YoY to US $ 318 million. In the corresponding month of the previous year, the exports totalled 
US $ 418 million. 
The exports to all the markets contracted significantly and the most significant drop in apparel was seen from the Europe Union (EU); the exports to the EU market dipped by 27.53 percent YoY, totalling
US $ 90.11 million. 
Sri Lankan apparel exports to the United States contracted by 25.50 percent YoY to US $ 129 million, whereas the exports to the United Kingdom declined 26.72 percent when compared with April 2022. The exports to the other markets too contracted by 9.6 percent YoY. 
Accordingly, the cumulative exports for the first four months of the year recorded at US $ 1.8 billion, a 17 percent decline from the corresponding period of the previous year. 
“Demand for apparel globally has seen a downturn over the past months and Sri Lanka is being affected by this. 
The USA, which is Sri Lanka’s single largest market, has reduced its apparel imports by 20 percent, globally in the first three months of the year. This is reflected in Sri Lanka’s exports of apparel, which have been showing degrowth for the past seven to eight months,” said JAAF Secretary General Yohan Lawrence. 
It must be noted that Bangladesh’s exports of apparel to the USA fell 13 percent in the first three months of the year and Vietnam recorded a drop of 24 percent. 
However, the situation with the EU and UK is slightly different. Lawrence pointed out that as a result of Sri Lanka’s inability to meet the Rules of Origin conditions of the GSP+/DCTS schemes, countries such as Bangladesh, which have unrestricted access to those markets, are able to offer products landed in the country at prices lower than the island nation.  
“This is a particular challenge that we need to overcome,” he asserted.  As the drop in demand for apparel now going into the eighth month, manufacturers are pushed to restructure and reorganise their operations to remain in business.  

“Most companies are looking for avenues whereby they can both protect employment and keep factories running at lower volumes, so that they can build back capacity when orders come back to normal levels.  
In that context, we welcome the efforts taken by the Labour Ministry to reform our labour laws to be more flexible and allow for the protection of employment in these situations,” Lawrence said.
He reiterated the need to have the FTAs with India and China brought to fruition, as it would then open up those markets for Sri Lanka’s apparel. 

Hirdaramani confirms closure of Meepe facility

Hirdaramani, one of Sri Lanka’s leading apparel manufacturers, yesterday confirmed its facility in Meepe would be closed.
The leased facility MRC Associates Garment (Pvt.) Ltd will stop operations and its employees will be given the opportunity to relocate to other factories of the manufacturing giant that are across the island, Hirdaramani Group said in a social media update to set the record straight about the factory closure.  
The management shared that the decision is primarily driven by the current global economic situation, which has led to a decrease in demand for apparel in key markets.  

However, the group said it expects this reduction in capacity to be temporary and remains optimistic that normal demand will be restored in the near future.
“Hirdaramani Group has no intention of reducing overall manufacturing capacity in Sri Lanka and is committed to continuing investing and expanding as part of its long-term strategy to foster the growth of the apparel sector in the country,” the management said.