Present and the past behavior of the garment industry in Sri Lanka

Nalaka Sampath

Sri Lanka's apparel industry began to grow significantly in the 1980s as an alternative to India's garment manufacturers, because of its open economic policy as well as the trade and investment friendly environment. Under the Multi Fibre Agreement, quota regime Sri Lanka became an attractive new venue for businesses. In 1985, Martin Trust, one of the pioneers in the development of speed sourcing for the American fashion retail sector, began working with Sri Lankan textile and apparel companies. In 1986 and 1987 he established joint venture partnerships with The Omar Group (formerly known as LM Apparels and part of the Brandix group) and The Amalean Group which helped make the country more competitive through knowledge transfers and technology, attracting further further foreign investors. These were the first of nearly two dozen joint venture companies in Sri Lanka which made the country competitive in the garment sector. Including Trusts partnership with German brassiere maker, Triumph International, and Sri Lankan company, MAS Holdings, to create a new venture called Bodyline.[7] When the U.S. and other countries eliminated quantitative restrictions on garments produced in China, many garment facilities in Sri Lanka were consolidated. As of 2010, most of the exports to the U.S. are from MAS or Brandix, with a smaller amount coming from the Hirdaramani Group of Companies. Together, these three companies account for a majority of the value of exports of garments to the U.S. market.[8]

Over the next few decades, the apparel industry grew to represent Sri Lanka's number one export. Following a 38% increase in textile-based revenue from 1996 to 1997, in which the industry generated $2.18 billion in earnings, 50 new textile factories opened in Sri Lanka in 1998. As of 1998, the Sri Lanka apparel industry employed about 300,000 people in 800 factories. Sri Lanka nationals are primary owners of 85% of the small-to-mid-sized factories, while larger operations are typically joint ventures or foreign-owned. The end of Sri Lanka's civil war in 2009 relieved pressure on the country's garment industry. After fighting ceased, Brandix, a garment manufacturer with 25,000 employees,[10] announced that its factory in Punani would double its exports. Later that year, Sri Lanka held its largest ever Design Festival, highlighting the country's high-fashion merchandise, upcoming designers and advancing the industry's desire to become known as a hub for design, as well as manufacturing.[1] More exhibits followed once the Conference and Exhibition Management Services began operating out of Sri Lanka in 2010. In doing so, the global company announced three international textile exhibits in Sri Lanka, each to highlight a different aspect of the local textile and apparel industry while allaying fears about political instability and to show that Sri Lanka can compete with the EU market.[12] As of the late 2000s, the Sri Lankan textile industry contributes 39% to the industrial production of the country and represents 43% of the country's total exports. Since the 1970s, the industry has grown to become the country's largest single source of export revenue.

The United States is the main importer of textile goods from Sri Lanka, accounting for 76% of total exports from Sri Lanka. As of 2009, Sri Lanka ranked 12th among apparel exporters to the United States in terms of value. The United States' importance to Sri Lanka has increased since 1999, when it accounted for 64% of its apparel goods and brought $2.1 billion in revenue to Sri Lanka. The U.S.-Sri Lanka partnership was advanced in 2000 in part by setting up logistics centers at key U.S. ports to smooth the importation of Sri Lankan goods. Beginning in 2004, Sri Lankan officials have sought to increase textile deals in North Carolina, the American state with the largest concentration of textile industries.

Export of Apparel Products for the Month of August

Chapter 61-Apparel of knitted fabric Chapter 62-Apparel of woven fabric Chapter 63-Other made-up textile articles

Export of Apparel Products for the Month of August 2007

Chapter 61-Apparel of knitted fabric Chapter 62-Apparel of woven fabric Chapter 63-Other made-up textile articles

A look at Sri Lanka's industry structure, human capital, enterprising nature of the private sector and government support suggests that Sri Lankan garments exports are moving along a path of sustained growth. From USD 3.3 Billion in 2009, the industry's growth is projected to be in the region of USD 5 Billion by 2011. To be able to grow even further we need to strengthen our `fabric to store' offering by making Sri Lanka complete in the value chain. In 2007, the Sri Lankan industry imported USD 1.2 billion worth of fabric, USD 176 million worth of yarn with non-textile inputs accounting for USD 184 million, in all totaling USD 1.6 Billion or 70% of our total requirement.

As part of a robust backward integration program to make Sri Lanka self reliant in fabrics, raw materials and accessories, the Government and private sector have joined hands to set up world class special economic zones and attract international investments for textile development. Apart from the current captive market of US$ 1.6 billion from local Apparel exporters, investors will be able to favorably export under Free trade agreements with India and Pakistan and the EU GSP+ scheme while enjoying unprecedented concessions and incentives.

The following are some details relevant a garment factory which is situated in investment promotion zone

Labour turnover
8% 7% 6% 5% 4% 3% 2% 1% 0% 1999/2000 2008/2009 2009/2010 2010/2011

Manufacturing Carder

800 600 400 200 0 2000 2000 42 5 46 184 36 2011 2011 141 11 136 781 230 finishing Quality sewing Workstudy Cutting Cutting Workstudy Quality sewing finishing

Quality Workstudy Cutting sewing finishing

Actual Overhead

5,400 5,200 5,000 4,854 4,800 4,600 4,400 4,200 4,000 2008/2009 2009/2010 $ 2010/2011 5,153

4,456