Apparel industry holds crucial meeting today to assess virus hit

• Key discussion points to be presented to President Gotabaya Rajapaksa 
• Manufacturers fear going out of work temporarily due to supply chain disruptions
• Sri Lanka’s apparel industry currently imports about 25% of its textiles from China
• Sri Lanka earned a record US $ 5.3bn from apparel exports in 2019, up 5.1% from 2018

By Shabiya Ali Ahlam
The representatives of Sri Lanka’s apparel sector will meet today to assess the impact of the coronavirus (COVID-19) outbreak on the industry, which is also in fear of going out of work in the immediate term, Mirror Business learns.

The heads of garment factories and Joint Apparel Association Forum (JAAF) leadership will be getting together to take stock of the situation by taking into account the damage thus far, explore the avenues of recovery and identify the assistance required from the government, to sustain the industry in the immediate term. The in-depth discussion and analysis carried out today would later be presented to President Gotabaya Rajapaksa.

Meanwhile, Sri Lanka Apparel Exporters Association (SLAEA) Chairperson Rehan Lakhany shared with Mirror Business that one of the biggest fears currently is the possibility of losing work, due to the delays in importing raw materials from China, namely fabric.

Sri Lanka currently imports approximately 25 percent of its textiles from China. Sri Lanka imported US $ 218.1 million worth of cotton and US $ $ 132.6 million worth of knitted/crocheted fabric from China in 2018. 

According to Lakhany, some apparel manufacturers are exploring the option of halting operations for a few weeks as they may struggle to pay their workers who would go idle due to the non-availability of fabrics. 

Labour costs account for about 30 percent of the overall expenditure of garment factories, which Lakhany said is a substantially high cost to be shouldered by the factories in the event of no work.

“While certain garment factories would have an issue meeting deadlines, which is a minor problem at the moment, the bigger problem is that we fear our factories will go out of work,” Lakhany said.

He shared that with the April Sinhala/Tamil New Year holidays coming up in a few weeks, a number of factories are considering closing down until after the holiday season. 

The local apparel sector targets a 6 percent year-on-year (YoY) growth in export earnings this year. 

The country earned a record US $ 5.3 billion from apparel exports in 2019, a 5.1 percent growth compared to the previous year.  

According to the Customs provisional data, apparel exports fell 0.5 percent in January 2020 from a year ago to US $ 472 million.  

Apparel exporters expect sales hit by June

The apparel exporters expect a massive impact on their sales by mid-year, with the country’s key apparel exporting markets struggling to confront the fast-spreading virus.

Sri Lanka Apparel Exporters Association (SLAEA) Chairman Rehan Lakhany said the manufacturers expect the sales values and volumes to experience a significant decline by June, with the slowing down of global economic activities. 

The United States Federal Reserve on Tuesday cut interest rates by half a percentage in an emergency move to shield itself from the impact of coronavirus.

Sri Lanka’s key apparel export markets, the US (46 percent), UK (14 percent) and Italy (10 percent), have either declared public health emergency status or increased their risk status and that is expected to have a major implication on their buying patterns.

“We expect our sales to be hit by June. Activities in our major importing countries are at a standstill with precautions laid out by their respective governments. It will impact us and we will feel it from June,” said Lakhany, who noted that the biggest concern at the moment is sales in Italy.