May 10, Colombo: While Sri Lanka's apparel sector in 2018 has entered a breakthrough year in its history of exports following the reinstatement of the European Union's Generalized Scheme of Preferences (GSP) Plus tariff concession facility, the industry leaders advise the industry to look beyond the GSP plus to new markets.
Industry leaders joined by Minister of Industry and Commerce Rishad Bathiudeen say that increasing apparel exports and receiving trade benefits such as GSP Plus facility, should not blind the sector but the industry should move on and face emerging challenges to advance to the next level.
"After regaining GSP Plus, our apparel exports increased and we are now eagerly looking forward to surpass the $ 5 billion annual exports value this year compared to the $4.8 billion in 2017," said Minister Bathiudeen, addressing the launch of 8th AISEX and FASE apparel industry sourcing expo at BMICH, Colombo on 10 May.
The three day bi-annual event exhibits apparel industry tech and new trends to manufacturers and the next expo in this series is scheduled in 2020.
Minister Bathiudeen added that this year is expected to be a breakthrough year for Sri Lanka's world class apparel sector.
"We can already see this new trend in our 2018 first quarter apparel export performance. In the first quarter of this year our total apparel exports increased by 4 percent to $ 1.26 Billion compared to last year's first quarter exports of $ 1.21 Billion. Last year first quarter $1.21 billion was actually an 8.2 percent decline from 2016's first quarter apparel exports of $1.31 billion. Therefore we expect this year to be a breakthrough year."
While commending the entire apparel sector for their great commitment and excellent performance, the Minister said the apparel industry should not be blind to the present and upcoming challenges to the apparel sector.
"It will be difficult for us to move to the next levels without resolving these issues. Our annual apparel exports are close to $ 5 billion, but we spend close to $ 4 billion to import the raw materials, and therefore we need to improve on the imports bill on our apparel material sourcing. Europe is a key market but it is undergoing changes due to increasing unemployment and policy uncertainties after Brexit. The solution to overcome such possible market pressures is the continuous diversification of our apparel exports to new markets. Adopting sustainable manufacturing, market diversification, sourcing more from nearby locations such as SAARC countries, and switching to emerging technological trends can help us to face these challenges."
Chairman of Sri Lanka Apparel Institute Prof. Lakdas Fernando warned apparel sectors optimism on regaining GSP Plus.
"In my view GSP Plus is a 'transient popup' for our apparel sector. This gain is only for a short period of time. We need to adopt strategic thinking to meet the challenges in the changing scenario. Even to get the best from GSP Concession, a lot needs to be done. The winds of change are rippling across global industries and it is very much evident in apparel sector too-in CAT tech, digital printing and digital designs," said Prof Fernando.
Secretary General of Joint Apparel Association Forum Tuli Cooray said that Sri Lanka is at a critical stage as the country is moving for a very ambitious reform agenda.
"New export strategies, new facilitations, and new maritime changes are brought in to eradicate poverty. In this process various industry sectors, including apparels, play a key role. A majority of our labor force is in this industry and this sector is also a major contributor to our GDP. Therefore, the so called GSP Plus relief will offer you benefits for a very limited period of time. And we have to ensure that we (ourselves) will raise the bar to the next level through new skills and new technologies. Our industry should be exposed to the new global trends, to move forward."
Europe is a key market for Lankan apparels. Last year Sri Lanka earned $2 billion from apparel exports to EU, which was 42 percent of total apparel exports. In the first quarter this year, Lankan apparel exports to EU increased by 5.2 percent to $526 million in comparison to $ 500 million in first quarter of 2017. Apparel exports to US too increased by 5.1 percent in this year's Q1 to $576 million, from 2017 Q1's $548 million.