Sri Lankas exports dipped last year, according to WTO

Sri Lanka's exports dipped last year, according to WTO

Sri Lanka’s apparel sector, which accounts for nearly two-thirds of the island’s manufactured exports, is facing heightened competition from lower cost producers and slumping demand, according to a report.

The report from the World Trade Organization (WTO) said Sri Lanka faces contracted global demand and increased operation costs.

In particular, small and medium-scale garment companies have been “badly affected” in recent years, the report said, due to weak demand in principal markets. The US and the European Union make up over 90% of apparel shipments from Sri Lanka.

The WTO report found that more than 50 factories have been shut as a result, with 2009 earnings from textile and apparel exports contracting 5.6%.

The report, compiled for a review of Sri Lanka’s trade regime by WTO member nations, also highlights that the island’s apparel sector also faces high production costs and is still heavily dependent on imported inputs including yarn, fabrics and accessories.

Moreover, it says the lack of vertical integration also impairs Sri Lanka’s ability to compete globally as it results in long turn-around times implementing export orders.

On a brighter note, the report does say that some major local manufacturers have restructured their industries and have been able to remain competitive by lowering costs and lead times, and improving product quality and design, producing for major international brands and catering to niche markets.

The report says the recent depreciation of the Sri Lankan rupee, although modest, should also help to make up for some of the loss in competitiveness.