An Echelon Media Company
Sunday May 19th, 2024

Sri Lanka apparel industry appeals for re-opening, salary support over Coronavirus crisis

ECONOMYNEXT – Sri Lanka’s apparel industry has asked for early re-opening of factories to avoid competitors taking their business, suspension of provident fund contributions and support and more credit without collateral to pay 400,000 direct workers.

The industry is expecting to lose 1.5 billion US dollars of order in the next quarter, hitting 400,000 workers and over 2.0 million indirect workers, Sri Lanka’s Joint Apparel Association Forum said.

Unless factories are re-opened “a very serious trade shift that may take place in favor of our competitor countries,” the JAAF said.

Competitors like Vietnam and Cambodia are open, the group said.

Vietnam is actively tracing contacts but the country is largely operating.

“Suspension of EPF/ ETF for 6 months for employers and employees is another temporary relief requested to increase worker income plus aid in the current working capital dilemma of companies,” JAAF said.

Vietnam has also suspended social security contributions for all workers.

JAAF said there was no substance for workers especially small firms. While exporters have lost markets, apparel firms catering to domestic market was also hit with no sales.

The central bank is re-financing loans which have been limited 25 million rupees per company, the JAAF said.

The JAAF is asking for loans above the 25 million limit for smaller firms to pay a two month basic salary to workers.

Sri Lanka is waging battle to stop Coronavirus and is making strong progress with confirmed count at 190 a month after the first Wave II infections from third countries began in Sri Lanka.

Related

Sri Lanka plugs gaps in Coronavirus contact tracing as incubation of SARS-Cov-2 suspected to top 20 days

Sri Lanka has slapped nation-wide curfews as part of the effort, though authorities have said they would consider relaxing controls around the third week of April.

The full statement by JAAF Chairman Mr. A. Sukumaran on

The Impact on Sri Lanka’s Apparel Industry Due to the Prevalence of Covid-19

As the novel coronavirus (Covid-19) pandemic continues to spread across the globe, people around the world find their daily lives and means for subsistence affected in numerous ways. The impact of this phenomenon on the apparel industry in Sri Lanka is unprecedented and second to none. Currently, the apparel industry in Sri Lanka is home to over 400,000 direct employees and in the last fiscal year recorded $5.6 billion of exports.When compared to the last fiscal year, the Joint Apparel Association Forum (JAAF) foresees an immediate contraction of US $1.5 billion in Sri Lankan apparel exports during the 3-month period ending in June. However, the damage does not stop there as we expect further demand contractions that could result in reduction of apparel exports by an additional 30 – 40% after June, in a best-case scenario.

The reduction forecasted above is due to a multitude of factors such as mass cancellations by buyers of orders currently in production or already produced, orders that Sri Lankan entities have assumed liability for through the purchase of necessary raw materialforce and orders for future.These circumtances coupled with forced, discounts, delayed payment terms, have led to a decimation of working capital across the industry and significantly hindered the future prospects of revival to the normalcy. The situation alluded to above is further compounded when the effects of the current closure with no clear date of resumption are factored in.

The primary concern of ours at this point of time is the health and well-being of all employees and bearing this in mind the current curfew is prudent to prevent the accelerated spread of the novel coronavirus. However, it is inevitable that the extended curfew will lead to additional losses to those projected above as more and more orders in production get cancelled as a result of delays in production. The impact of the curfew is compounded and may result in trade shift due to countries like Vietnam, Cambodia, and Indonesia, our main competitors, being completely operational. The few orders Sri Lanka could be getting are being diverted due to the uncertainty related to when the country will begin work again.

The members of JAAF believe that extreme measures are inevitable unless there is intervention and support to avert the impending disaster. While most companies have pledged to pay March salaries, a vast majority of the industry will struggle to pay salaries from the end of April onwards due to the factors outlined above that have led to the evisceration of the industry’s working capital.

Despite the challenges of the situation, the primary goal of industry participants is to do what is best by the workforce. While measures such as pay cuts are inevitable,most players are considering relative income bands and ensuring any reductions are reasonable and do not adversely impact lives to an unreasonable degree.

The JAAF played a key role in working with the Government to obtain certain relief measures such as the concessionary working capital loan and others granted through Central Bank circular nos. 4 and 5.

We are extremely grateful for these provisions however, we look forward to working closer with relevant authorities to further explore what can be done to mitigate the current situation as the problem has evolved since these measures were granted.

When these relief measures were granted, Sri Lanka’s primary issue was a supply chain problem related to raw materials coming in from China. Currently, the problem has evolved to become one of demand contraction. This new problem would require further measures to avert the disastrous outlook for the industry.

Keeping the well-being of our employees as our primary focus and the development of a scheme that would enable us to do what is best for our workforce, our current mission remains working with all parties involved, including the government, to develop a modality that can benefit those dependent on the apparel industry for their sustenance despite the low demand projections in the coming months.

Further, industry players are exploring all new markets in play, including those related to new products currently in demand in Europe and North America. Despite the presence of other markets, it is unlikely any of them will compensate for the losses the industry is and will be facing.

The sustenance of this industry is vital to over 400,000 direct beneficiaries as well as over 2 million indirect beneficiaries. Sri Lanka’s apparel industry has a proud history and we implore that all avenues are explored to ensure the continued survival and growth of an industry that is vital to countless individuals and this country we all call home.

Failure to intervene at this stage will result in the inevitable doom of the industry with a large proportion of participants being forced into staying at home with no work to fulfill.

With this situation in mind JAAF tabled the following proposals for urgent consideration .

They are to reopen apparel factories in their full capacity as early as possible to avoid a very serious trade shift that may take place in favor of our competitor countries. Since our competitors like Bangladesh, Cambodia, Vietnam, and Indonesia still remain open for business despite the presence of COVID 19.

Secondly JAAF requested a means of sustenance for employees who will have no work to perform from April, for Companies employing less than 3,000 people .JAAF is confident that large and strong players will have their own mechanisms to face force majeure circumstances like this of course only for a given period.

Suspension of EPF/ ETF for 6 months for employers and employees is another temporary relief requested to increase worker income plus aid in the current working capital dilemma of companies.

Finally a request was made to that directions be given to the banking community to grant the loan beyond Rs.25mn and sufficient enough to pay a minimum of two months basic salary being paid by an applicant company who is willing and capable of bearing that liability since we are advised by commercial banks that Central Bank had instructed outside the circular to limit the loan to Rs.25mn per company for better distribution and that banks be directed to provide above loan without collateral but under the refinancing scheme of the government.

We requested that these proposals are treated with the utmost urgency.

Failure to do so would result in the non-existence of an industry to reopen once the global economy normalizes.

Export oriented SME are at very difficult situation compared to large players and our members who are catering to the domestic market also will be in a dire status as a minimum of 50% of their turnover is totally lost as a result of missing this festive season.

Thus the fate of Sri Lanka’s apparel industry where 2 million citizens of this country relies is dependent on the effectiveness and speed at which these proposals can be implemented.

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka seeks to draw youth into agri-entrepreneurship with 1.6bn funding

ECONOMYNEXT – Sri Lanka’s Ministry of Agriculture and Plantation Industries has earmarked 1.6 billion rupees for the establishment of 160 model farms across the island, that are to be owned and operated by youth agri-entrepreneurs.

“The Ministry of Agriculture and Plantation Industries has taken steps to allocate 1,600 million rupees to establish 160 villages in 25 districts with 6 youth agri entrepreneurship villages in each district,” Minister Mahinda Amaraweera was quoted in a statement.

“Arrangements have been made to provide an amount of one million rupees to each village under the first phase.”

The Minister said the aim of the program is to attract youth to agriculture and to introduce them to new agricultural technology, so they could target local markets and exports.

Under the initiative vegetables, fruits, plantation crops, and fish are to be harvested, and livestock products are to be produced in the villages. (Colombo/May18/2024)

Continue Reading

Sri Lanka Navy nabs fishermen engaged in illegal fishing

ECONOMYNEXT – Sri Lanka’s Navy apprehended eight persons engaged in illegal fishing in the seas off Ambalanpokkanei, Mullaitivu, Poduwakattu, and Trincomalee, this week.

“The operations also led to the seizure of 3 dinghies and unauthorized fishing gear employed for these illegal acts,” it said in a statement.

“The Sri Lanka Navy remains vigilant and conducts operations to combat illegal fishing in its sea and coastal areas, with a view to supporting legal fishing activities.”

The fishermen were engaging in light-coarse fishing and using unauthorized fishing nets.

They were intercepted by the SLNS Gotabaya and SLNS Walagamba of the Eastern Naval Command.

The individuals were identified as residents of Mullaitivu, Kuchchaveli and Poduwakattu, aged between 21 to 53 years.

The fishermen, dinghies and unauthorized fishing gear were handed over to the Assistant Directorate of Fisheries – Mullaitivu, and the Fisheries Inspector of Trincomalee for legal action, the Navy said. (Colombo/May18/2024)

Continue Reading

Fifteen years after the end of the war, victims still await justice at Mullivaikkal: Amnesty

ECONOMYNEXT – Speaking at a commemoration marking the 15th anniversary of the end of Sri Lanka’s internal armed conflict on 18 May 2009, which culminated in the brutal Mullivaikkal offensive where countless civilian lives were lost, Secretary General at Amnesty International Agnès Callamard said:

“Today’s anniversary is a grim reminder of the collective failure of the Sri Lankan authorities and the international community to deliver justice to the many victims of Sri Lanka’s three-decade-long internal armed conflict.

It is sobering to stand in the same place where, 15 years ago, countless civilian lives were lost during the last days of the war.

Ahead of this event, we have witnessed clampdown on the memory initiatives, including arrests, arbitrary detentions and deliberately skewed interpretations of the Tamil community’s attempts to remember their people lost to the war. Authorities must respect the space for victims to grieve, memorialise their loved ones and respect their right to freedom of expression and peaceful assembly.

UN investigations have found credible evidence of crimes under international law and other violations of international human rights and humanitarian law committed by those on both sides of the conflict, yet there has been little in the way of an independent or impartial national inquiry into such serious crimes.

Meanwhile, the families of those who were forcibly disappeared during the conflict have been left to search desperately for their loved ones. It is truly heartbreaking to hear from victims how long they have been demanding justice in vain.

The Sri Lankan government is best placed to provide answers to the victims, however numerous domestic mechanisms to establish accountability in the last 15 years have been mere window dressing.

The report by the UN Office of the High Commissioner for Human Rights released earlier this week too reiterates the gaping deficits in Sri Lanka’s accountability initiatives that has contributed to impunity remaining deeply entrenched.

Tens of thousands of victims and their families continue to suffer in anguish as they await truth, justice, and reparations. We stand in solidarity with them here in Mullivaikkal today.”

Background:

During the internal armed conflict from 1983 to 2009, Sri Lankan government forces and their armed political affiliates committed extrajudicial killings, enforced disappearances and acts of torture against Tamils suspected of links to the Liberation Tigers of Tamil Eelam (LTTE).

The LTTE also launched indiscriminate suicide attacks on civilian targets like buses and railway stations, assassinated politicians and critics, and forcibly recruited children as fighters.

Violations of international human rights and humanitarian law peaked in the final months of the conflict, most notably in May 2009 when some 300,000 displaced civilians were trapped between the warring parties.

It was at Mullivaikkal, a small village in Mullaitivu district in the Northern Province of Sri Lanka, where the final offensive between the Sri Lankan forces and the LTTE took place, killing at least 40,000 civilians according to UN estimates.

Each year, on 18 May, a memorial event at Mullivaikkal brings together thousands of war-affected Tamils to commemorate those lost to the war and demand justice and accountability.

The Office of the High Commissioner for Human Rights (OHCHR) this week released a report on accountability for enforced disappearances in Sri Lanka.
(Colombo/May18/2024)

Continue Reading