Sri Lanka export apparel demand still weak, competition in PPE

ECONOMYNEXT – Demand for Sri Lanka’s apparel exports is still weak, though much better than feared at the beginning of the Coronavirus crisis and the industry is also seeing competition in personal protective equipment, an industry official said.

The industry’s key focus is to survive the next few months and be ready for a pick in global demand in 2021, Sri Lanka Apparel Exporters Association President Rehan Lakhany said.

Up to now, demand is better than originally feared, but the industry is still suffering.

“There has been an improvement in orders but definitely not to the pre-COVID levels but better than the predictions we made during the lockdown period,” Lakhany told EconomyNext.

“There is an improvement in that sense.

“There are still factories running at partial capacity due to both lack of orders and the requirement of health guidelines. So, the factories are not still running at 100 percent capacity”.

Exports from apparel were down 20 percent in June to 402 million US dollars but were up 83 percent from 218 million US dollars in May.

Sri Lanka reported an uptick in manufacturing (including domestic) activities in May and June immediately after the Coronavirus lockdowns were relaxed and economic activities resumed.

Sri Lanka’s manufacturing Purchasing Manager’s Index (PMI), published by the Central Bank, rose 18 points to 67.3 points rising above a 50-points threshold in June.

“This increase in manufacturing PMI is underpinned by the significant improvement in Production, New Orders and Employment, especially in the manufacturing of food & beverages and textiles and wearing apparels subcategories,” the Central Bank said.

Many apparel manufactures switched to PPE production at the height of the coronavirus pandemic in Sri Lanka as orders for regular clothes dried up.

One of Sri Lanka’s largest apparel manufacturers Brandix is also making PPE at the factories elsewhere in South Asia.

Sri Lanka was one of the first countries to open up and resume production. But now there is competition from other countries.

“Factories which opened post-COVID started with a lot of PPE orders but now we are seeing a decline of PPE orders with the supply coming in from all the regions,” Lakhany said.

According to the Export Development Board, Sri Lanka has exported 106.46 million US dollars worth PPE related exports in June 2020.

Lakhany said the key strategy of the apparel industry is hunkering down over the next few months and survive till next year when overall demand is expected to pick up with Coronavirus crisis gradually easing.

“As we expected from August to December is going to be a challenging month for the industry,” Lakhany said.

“So everybody is looking to survive through these five months but after January the industry is expecting the things to get better.”

“As an industry, our main target is to somehow survive this crisis as a whole and be able to be in business when things start picking”.

Lakhany said the industry is following health guidelines and a recent uptick in Covid-19 cases due to an outbreak at a drug rehabilitation made the sector cautious.

“We have taken orders with commitments for deliveries again and if you are unable to deliver those on time then the delayed deliveries are considered canceled,” he said.

“So yes, there is a worry, but we are watching how it turns up.” (Colombo/July21/2020-sb)

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