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Apparel industry likely to miss export target

The apparel export industry is facing several short and long term challenges following the Easter Sunday attacks, the industry officials said.

One of the key issues faced by the industry is to ‘meet the delivery time set by the buyer community’.

Chairman, Sri Lanka Apparel Exporters Association, Rehan Lakhany said, some factories had to undergo work force absenteeism due to the location of those factories and some exporters managed to continue with tight schedules to meet customers’ demand. “Overall there would be a negative impact on the entire industry which will affect the apparel export target for 2019,” he told Daily News Finance.

Currently, many buyers have cancelled official trips to the island and some have rescheduled their visits in overseas locations. However, there are some buyers who have completely abandoned buyer agreements with the country. “As an Association, we need to assure the International buyer community that the country will be brought back to normalcy soon,” he said.

There will also be an expected drop in the placement of orders but, Lakhany hopes that the industry could be recovered quickly. Further the expansion and investment procedures have been halted and some factories are unable to meet the expected deadline.

“Thus, there will be negative short term as well as a long term impact,” he added. The government needs to do more in terms of security so that the country will be able to win back the International confidence. Unless there will be drastic drawback on the nation’s economy. Managing Director, Bernard Botejue Industries Ltd, Janaka Botejue said that they are not affected so far by the last month’s carnage. “There is no reduction in workforce and our daily processes are done without any difficulty,” he said. However, because of the activities happened, the international buyer community is concerned and if something happens again, a reduction in the demand could happen, he said adding that ‘currently there is no reduction in demand’. Botejue further highlighted that higher security immunity needs to be built within and the government should be well concerned in keeping up the peace and prosperity of the country.

Managing Director, Trendywear Pvt Ltd, Mahika Weerakoon said that they are facing many short term and long term impacts.

Short term impacts include - the delay in clearance of raw material from port due to heightened security and wariness of transporters to undertake transporting of goods due to long wait times and security checks, vessel schedules of import cargo being changed by freight companies, absenteeism of workers causing production delays and service provider and local supplier inability to function regular hours causing delays in garment testing and procurement of locally sourced raw materials.

Cancelling planned buying trips to Sri Lanka impacts the industry in long term. This will result in less order placements for future and some customers contemplating completely pulling out of Sri Lanka. Thus the demand for Sri Lankan products within the world market reduces which paves the way for the competing markets to take the position that Sri Lanka held so far.

“So far we have been able to work out delivery with customers with extensions,” she said. Also on curfew days managers have been loading containers because workers are not capable of reporting to work. The local police have helped with necessary curfew passes to ensure that the goods are shipped as far as possible on time.

Since they had planned deliveries on low capacity after New Year holidays due to general worker absenteeism after the long vacation, less than 5% of deliveries were affected with this sudden calamity.

Accounting for the fact that most western countries still have travel advisory against visiting the Island, buyers are unable to visit for planned buying and other trips even if they are keen to continue work. Hence buyer confidence needs to be built which is not that easy. “Most long standing customers want to continue and support Sri Lanka,” Weerakoon added.

She also said that due to the light loading capacity, if the country gets back to normalcy within this week they will be able to fulfill existing orders. But if the current curfew needs to continue then major delivery slides, airfreight and cancellations will be met.

Moreover, Weerakoon requests the government not to block social media like whatsapp, viber, skype as most customers use these to communicate business deals accounting for the time difference in countries. “When these do not work and we do not respond they think the worst,” she said. Instead the general public needs to be educated on how to use social media appropriately without fully banning them.

The government should bring back peace and stability soon, to win confidence back. It needs to be shown that it is safe to visit and appeal countries to lift travel advisories against Sri Lanka.

“Furthermore we do need to emphasize that the industry should not make use of the current crisis in the country with customers to seek delivery extensions etc to overcome any other obstacles they may be facing as it will hurt the image of the country on long terms,” she said.

Last year the apparel exports grew by 5% thus an annual compound growth rate more than 6% is expected to be achieved this year. By 2025, the industry expects to achieve USD eight billion from apparel exports.

(Daily News)

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