SL Apparel sector moves closer to reach the US$ 6 billion revenue target
As Sri Lanka struggles with the ongoing economic crisis, the country’s trade balance recorded a surplus last July. While this surplus reflects the continued decline in import expenditure, it is also reflective of the contribution the apparel industry continues to make towards Sri Lanka’s economic recovery and growth.
Overall, Sri Lanka has attracted more than $228m in FDI during the first quarter of 2022, a 17% increase compared with the corresponding period.
Sri Lanka has set a target of US$6 billion for the apparel industry export revenue for the year 2022.
With seven months in to the 2022, As per the Export Development Board of Sri Lanka, by end of July 2022, total value of apparel exported stands at US$3.4 billion.
It includes, US$1.4 billion to USA, US$ 965 million to EU, US$455 million to UK and another US$485 million to other countries such as Middle East, Japan, and Australia.
This leaves US$2.7 billion to be made over the period from Augustto December this year as compared to year on year (YoY) figures, for the first seven months, apparel exports have increased to all the destinations. This is encouraging and needs to keep the trend going, industry sources said.
According to calculations made by the Joint Apparel Association Forum (JAAF), total apparel exports in July 2022 (USD 522.14 million) experienced a 22.4% increase in comparison to July 2021 apparel exports ($425.75million).
The exports to Sri Lanka’s major apparel export markets – the US, EU and the UK and other countries recorded an increase of 16.93%, 32.3%, 29.32%, and 15.77% respectively.
Apparel & Textile exports increased by 19.73% to US$ 2,967.39 Mn during the period of January to June 2022 compared to the same period of 2021.
Except Made-up Clothing Accessories (-8.7%), Yarn (-21.38%) and Textile Floor Coverings (-3.28%); exports of other sub categories of Apparel & Textiles sector increased.
Secretary General of JAAF, Yohan Lawrence highlighted that trade agreements are essential to sustaining the performance of Sri Lanka’s apparel exports.
Sri Lanka is to benefit from UK’s new Developing Countries Trading Scheme (DCTS) and the apparel industry has consistently highlighted the importance of retaining GSP+ post-December 2023.
The current schemes unfortunately only have a utilization of around 50% for apparel due to the restrictions on the Rules of Origin on fabric which mean that only fabric from a SAARC country are permitted for cumulation purposes.
JAAF has highlighted this constraint and has requested that this aspect be addressed in future iterations of the GSP scheme.
As per the Central Bank Annual Report 2021, of Sri Lanka’s industrial exports, textiles and garments amount to 43.5%. Textile and garments export value in the same year amounted to USD 5,435.1 million.
The resilience of the apparel industry, along with policy support received by the government amidst the prolonged crisis, has enabled the industry to continue this positive start to 2022, while aiding the country’s economy.