Thumbs up from JAAF on Cabinet decision to set up fabric park as strategic venture

•  Says decision a relief to apparel manufacturers looking to source more fabric locally
•  A 275-acre plot located in the Batticaloa district to be dedicated for fabric processing park
•  Infrastructure cost to set up facility to be around Rs. 5 billion
•  Five companies have expressed interest in setting up plants in the zone

By Shabiya Ahlam
The Cabinet decision to set up a Fabric Processing Park in Eravur as a Strategic Development Project, under the Ministry of Industries was welcomed by the apparel sector which acknowledges that the establishment would help iron out issues faced in the sourcing of 
raw materials.

“Particularly in the post COVID-19 era this additional string to the bow of the apparel sector will be a welcome relief to apparel manufacturers looking to source more fabric locally thereby increasing both speed and value addition to the operating model of the industry,” said the Joint Apparel Association Forum (JAAF) in a statement to the media yesterday.

A Cabinet decision was taken recently to allocate a 275-acre plot located in the Batticaloa district for the fabric processing zone. The infrastructure cost to set up the zone is around Rs. 5 billion, and to-date five companies have already expressed willingness to setup plants in the park.

The government has proposed that construction in the new zone would commence early next year and that by early 2022, the first production from the new mills 
will commence.

“The establishment of Eravur Fabric Processing Park will help reduce the import of fabric as apparel manufacturers would be able to replace a part of their imported fabrics with fabric sourced locally,” JAAF said.

In 2019, Sri Lanka imported 255,437MT of fabric, both for export-oriented apparel manufacturers and for consumption in the local market. The import bill amounted to US$ 2.2 billion.

“There are currently 7 textile mills manufacturing fabric for the export-oriented sector and these mills are capable of producing the finest quality of fabrics,” said JAAF while adding that the daily output of these mills is around 175MT.
JAAF stated this (the fabric park) is a vital component in increasing the industry value addition to over 52 percent even after accounting for the yarn imports of the local mills, as sales from these seven fabric mills to the BOI-registered apparel exporting companies amounted US$ 499 million in 2019.

The apparel forum also highlighted that as Sri Lanka continues to qualify for GSP Plus, both to the EU and to the Post Brexit UK market, unfortunately in apparel, whilst the utilization of GSP Plus has been on the increase, the 2019 figure remains relatively low at under 53 percent.

“The Eravur Textile Park will help the industry to improve this percentage as apparel manufactured from Sri Lankan fabric will qualify for GSP Plus. Duty free market access puts Sri Lanka on par with our competitor countries like Bangladesh which has duty free access without any restrictions on the origins of fabric,” noted JAAF.

Earlier this year, during the early onset of the pandemic, Sri Lanka’s apparel industry received a massive hit as it was unable to source fabric to feed the supply chain for production continuity. The lockdown in China, which was the epicenter of the virus, posed challenges to import the necessary raw materials to process orders, leading to massive losses.

The industry has repeatedly highlighted the need to expedite the establishment of the fabric park so that the local sector does not have to depend on global suppliers, and in the event of a crisis, such as the pandemic, the impact would be reduced.