Apparel exports grow slow in 1Q18

Sri Lanka’s apparel exports grew at a slower pace than the industry expectation during the first quarter this year, recording a growth of 4.1 percent to reach US $ 1.269 billion, compared to the US $ 1.219 billion recorded in the first quarter of 2017, the latest apparel export data released by the Joint Apparel Association Forum (JAAF) indicated.

The apparel exports to the European Union (EU) grew by 5.2 percent year-on-year (YoY) to reach US $ 526 million, while the exports to the United States grew by 5.1 percent YoY to reach US $ 576 million in the first quarter of the year.

However, the exports to the EU slowed down during March, recording only a marginal growth of 0.5 percent YoY to reach US $ 191 million.

In contrast, the apparel exports to the United States grew significantly by 17.7 percent YoY to reach US $ 180 million as the Sri Lankan apparel exporters appear to be benefiting from the trade dispute between the US and China.

Speaking to Mirror Business, Sri Lanka Apparel Exporters’ Association (SLAEA) Chairman Felix Fernando said: “The trade dispute between the U.S. and China is helping somewhat Sri Lankan apparel exports to the US. If we had a larger export capacity, it would have helped us in a bigger way.”

The provisional custom data provided by the Export Development Board (EDB) showed that both apparel and textile exports during the first quarter of 2018 growing by four percent YoY to reach US $ 1,324 million from US $ 1,272 million recorded during the first quarter of 2017.

The apparel industry has targeted to achieve US $ 5.5 billion in apparel exports this year with a minimum 10 percent growth in exports to the EU countries.

However, Fernando noted that the export order quantities to the EU countries have drastically reduced this year and it will be more visible in export statistics in the coming months. Hence, he was doubtful in achieving the apparel exports target for 2018.

“There’s a concern on the European markets due to the weather condition. Because of the long winter in Europe, the retail sector has slowed down as the long winters cause people to spend lesser time in shopping,” he elaborated.

Fernando also pointed out that despite regaining the GSP Plus concession last year, most of the manufactures have not expanded their capacity and they have been unable to increase their capacity due to the lack of apparel workers in Sri Lanka.

Highlighting the main issues that hinder the apparel industry to reach its potential, Fernando said, “We have GSP Plus but on the other side, we also need to look whether we have increased the capacity. That’s another problem, which we need to look at. GSP Plus alone will not generate an automatic growth; the industry needs to work towards that, particularly in terms of automation and attracting more workers to the industry. A lot needs to be done.”

He also emphasised that some manufactures are still engaged in manufacturing basic apparels despite the country gaining the GSP Plus concession last year.

“People who were making the basic T-shirts prior to GSP Plus are still manufacturing the same products. The industry is slowly progressing but a lot needs to be done,” he added.

The competitive strengths of Sri Lanka’s apparel industry are value addition, quality and on-time delivery. Therefore, Fernando insisted that Sri Lanka should market itself internationally basing on those strengths. (NF)