Sri Lanka Textiles 2003 - Global Business Reports

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and Ocean Lanka, respectively. There
has also been the establishment of a
number of joint ventures with local
operators such as Courtaulds Lanka
or MAS Holding.
Like many industries, the garment
sector in Sri Lanka has evolved to
become increasingly consolidated. In
2001, 12% of local exporters
generated 72% of the country’s
export revenue in the garment sector.
Having established themselves as the
leading companies, with established
production facilities and strong
customer ties, these companies are
now concentrating on moving
upmarket. This has entailed
developing more of the value-added
services that high-end buyers expect
from their suppliers. From the initial
fabric design, through to the final
delivery, these firms are becoming
increasingly competent in providing
the complete solution to their clients.
The issues faced by the industry
today are many and varied – issues
that will ultimately have an adverse
effect on growth. The lack of a local
fabric-production base means that
most producers can only provide a
90-day lead time, as opposed to the
60-day standard that many other
Asian countries are able to work to.
Other factors include low levels of
productivity and, of course, the
internal conflict that has scared many
buyers who may have otherwise
been tempted.
Despite these handicaps, the
growth of the sector has been
constantly good to the extent that, if
the country manages to solve these
issues, its advantages will become
even more compelling. Given the
high literacy rate, developed social
compliance regulations and low
labour rates, the country has many
attractions.
After numerous attempts at peace,
the current ceasefire and subsequent
negotiations in Thailand have given
the whole country the feeling that
the end of the conflict is finally in
sight. The garment sector is naturally
anxious for current talks to continue
and ultimately succeed in bringing
lasting peace, which would in turn
bring improvements in infrastructure,
business climate, investment
potential and, of course, living
standards.
Like many other countries, Sri
Lanka is under pressure to put in
place an attractive economic
environment and an up-to-date
industry before the complete liberalisation
of the world apparel market in
less than two years. Locally, many
view 2005 as the death knell for
small to medium-size enterprises,
which only exist today through the
protection that current quotas bring.
The government and key-players are
aware of the threat and have already
decided to launch a common
strategy for the next five years, to
equip the industry and the whole
society for the challenges of 2005.
With the peace process bringing
prosperity and stability to Sri Lanka,
the country has one less major
headache to worry about.
Many, among the 25 top exporters,
have already provided, or are on
their way to providing, integrated
services with a good level of
compliance with production and
social standards. At the same time,
they have to maintain competitive
prices and market their abilities to
their customer base. They also want
to have a more balanced market
between the US and the European
Union, and – by improving efficiency
and the services expected by the
more discerning buyers at the top
end of the market – to continue
moving up the value scale.
The island of Ceylon has a long
tradition of trading between Asia
and Europe. Today’s Sri Lanka wants
again to become a regional hub on
the back of its thriving garment
industry. Much of the groundwork
has already been done, as the
country is already established among
some of the biggest buyers in the
industry, despite its obvious
handicaps. Now the country has
identified the ways in which it must
concentrate its resources, and how it
must apply itself to meet the new
challenges it will face in 2005. There
is still every chance that Sri Lanka can
become the shining Asian star that
the World Bank once predicted – it
may just be a matter of time. FBI
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