Apparel is Sri Lankas top export

Apparel is Sri Lanka's top export

Sri Lanka is eyeing annual clothing exports of US$8bn by 2025 after passing the US$5bn milestone in 2018 – a move seen as especially significant for the country because it has been achieved while maintaining an "ethical and reliable brand."

Total clothing exports reached US$5.05bn last year, posting an annual gain of 4.97% year-on-year, Joint Apparel Association Forum Sri Lanka (JAAFSL) secretary general, Tuly Cooray, told just-style. He added the country is now "eyeing US$8bn exports by 2025."

Furthermore, when compared with regional players such as Bangladesh's US$30bn annual garment exports, Cooray said that while the island nation's exports are clearly smaller, Sri Lanka is by no means "competing with low cost labour countries in the region." Instead, it has successfully differentiated itself as a sustainable and ethical producer catering to a niche market.

And "with a population of 21 million, Sri Lanka's latest garment export data means it has the highest per capita export when compared to Bangladesh and China," he argued.

Earlier this year, Sri Lanka's 2018 export target was revised downward from US$5.5bn to US$5bn, after exports slipped in October to US$403m from US$407m a year earlier, following lower demand from the US. However, an increase in exports of textiles and garments during December has helped lift total export earnings.

The European Union (EU) remains a key market for Sri Lanka's clothing exports. In 2016, Sri Lanka exported EUR890m worth of knitted and crocheted apparel and EUR570m of woven apparel to the EU, according to data from Luxembourg-based Eurostat, the European Commission's statistical office.

In 2017, knitted and crocheted apparel shipments to the (currently) 28-member bloc reached EUR930m, while woven exports increased to EUR600m. And having regained the EU's Generalised Scheme of Preferences Plus (GSP+) privileges for Sri Lankan exports in May 2017, after it had lost these concessions in 2011 over allegations of human rights violations, exports to the EU are set to grow further, Cooray said.

Besides the EU, American consumers buy much of Sri Lanka's garment output, with a US Department of Commerce note last year saying: "Sri Lanka has built its competitive edge on value-addition rather than cheap production cost, with greater emphasis on product quality and its ability to manufacture niche products."

Additional export markets

These two major markets may not be enough for Sri Lanka to hit its ambitious US$8bn target by 2025, however, with Cooray confirming the country needs to "explore new markets while increasing exports to already existing traditional markets."

As a result, he said: "The industry is focusing on adding value to finished garments with new designs and embroidery." And with state-of-the art washing facilities that are among the best in the region, it has given Sri Lanka's exports an edge over the other regional players, according to Cooray.

In terms of additional export markets, Sri Lanka is eyeing non-EU Switzerland and Turkey and also emerging markets such as India and China. These latter countries are currently impeded by a dearth of bilateral preferential market access agreements for Sri Lanka's garments, although Cooray hoped such deals would soon be struck with the Sri Lankan government.

Increasing investment, too, is key to enabling Sri Lanka's manufacturers to increase their garment and textile exports. According to Sri Lanka's Board of Investment, the country is focusing on securing investments into "lingerie, smart textiles with wearable technology, [and] other potential high value clothing items for niche markets."

In its note, the US Department of Commerce also told US exporters eyeing Sri Lanka backward linkages that "there are prospects to supply grey fabric, denim, polyester yarn, and specialised fabric used for lingerie and sportswear" to Sri Lanka's garment sector.

According to the re:source by just-style strategic planning tool, apparel is Sri Lanka's top export, making up nearly 40% of the total. JAAFSL earlier said it expects Sri Lanka to deliver a 4-5% year-on-year growth in apparel exports in 2019.