Sri Lanka’s Joint Apparel Association Forum (JAAF) secretary-general Yohan Lawrence tells Just Style in terms of the value, this is “nearly a loss of $125m per month for the next three months.”
A loss of buyers’ confidence in the industry because of the “political instability” is a real risk, he says. With apparel accounting for on average 40% of Sri Lanka’s total export revenue, there is an urgent need to maintain buyers’ confidence in the industry adding “the perceived threat to the sector” has been very damaging.
Moreover, the lack of a steady supply of energy is affecting small-to-medium scale apparel makers although Sri Lanka’s large apparel manufacturers have managed to continue production because they “have been among the most effective adopters of renewable energy technology, particularly solar energy.”
Lawrence is urging the government to “secure bridge financing” immediately until there is a definite timeline on an International Monetary Fund (IMF) bailout.
This is designed to ease the budgetary and financial crisis faced by Sri Lanka, fuelling ongoing public protests urging President Gotabaya Rajapaksa to quit highlighting how people are struggling to buy fuel, drugs, and staple food. On 9 April, an apolitical public protest known as ‘Aragalalya’ (uprising) began in the country’s commercial capital Colombo’s seafront stretch of land known as Galle Face. Since then, protestors have set up camps, food stalls, a library, a health centre, and hosted musical events, dubbing the site ‘Gota Go Gama’ (Gota go home village) and vowing to continue until the President resigns.
He has not. But he has appointed a new Prime Minister – Ranil Wickremesinghe on 12 May – the sixth time Wickremesinghe has served as the country’s premier. Nevertheless, daily queues to buy scarce supplies of fuel continue, and on certain days the government has advised people against forming queues saying there were no stocks left. Yesterday (13 June) has been declared a public holiday because the country has run out of petrol. The UN has also warned that Sri Lanka is on the verge of an acute food crisis with a considerable number of the country’s 22m population facing starvation.
Back in April, the IMF said it “will support Sri Lanka’s efforts to overcome the current economic crisis by working closely with the authorities on their economic programme”. Since then, it has called the country’s public debt “unsustainable” and urged the government for “sufficient assurance” as to how it plans to emerge from crisis, which the government has yet to deliver. These problems have impeded the securing of bilateral financial support.
Nevertheless, Lawrence says JAAF is pressing the government to “immediately commence discussions with credible policy and industry experts towards rapid development of a practical, apolitical ‘Roadmap for Sri Lanka’s Economic Recovery’”. While there are ongoing efforts to get bilateral funding “it is nowhere near enough,” he said adding: “This is a very real problem” that needs sorting.
With foreign reserves down to almost nothing, imports have come to a near standstill. That said, the supply of imported raw materials needed for the apparel export sector has so far continued to flow. This is because the sector has been allowed to use money from export earnings to buy raw materials inputs: “So, we have been using part of our inward remittances [export revenue] as outward remittances to buy the raw materials we need…and the balance of the money will be converted to local currency,” Lawrence adds.