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Thursday December 1st, 2022

Sri Lanka’s Brandix focusing on worker safety as exports face triple whammy

COVID CHECK: A Bradix staffer going through a thermal imaging scanner as part of anti-Coronavirus measures

ECONOMYNEXT- Brandix, an apparel group employing over 70,000 staff worldwide is fighting a twin battle to keep workers safe and earning export revenues vital to keep the pandemic hit Sri Lanka stable, while also overcoming price competition and rising costs, an official said.

Sri Lanka’s exports fell after the first quarter of 2020 as supply chains got hit at the start of the pandemic foreign demand for goods evaporated with lockdowns in the US and Europe.

Sri Lanka managed to contain the pandemic and get cases down to zero by May 2020 making the island an oasis of stability for manufactures.

But one year later in 2021 Sri Lanka is battling a new wave and the country is in a lockdown with workers under movement controls.

Opposite Situation

“The situation is the opposite of what we faced in 2020,” Hasitha Premaratne, Group Finance Director Brandix said.

“Due to the aggressive vaccination drive, the Western world has recovered much faster than we anticipated. As a result there is a pick up in the orders.

“But we are constrained by the new wave. Our primary focus is worker safety in these difficult times.”

In 2020 Brandix shifted to personal protective equipments as demand fell away for regular clothes. The PPE work kept workers in jobs though health regulations and placed constraints on output.

In September one factory near the airport got infected, after a variant of Coronavirus. The so-called Nordic variant was suspected have leaked from a hotel where transiting air crews were housed, officials have said.


Brandix workers probably got Covid from a foreign source – Minister

In the last week of May 2021 Sri Lanka went into a nation-wide lockdown as surgical isolation of small areas failed to contain the pandemic after the April New Year.

Lockdowns created further constraints.

Export factories were allowed to operate during the lockdown with workers provided company transport.

Worker Safety

Workers in areas under strict isolation stay at home, increasing absenteeism. Brandix has been operating a health protocol in its network involving pre-screening and temperature checks. Based on red flags workers are asked to stay home with pay.

“The screening will check whether they attended a public gathering, for example,” Premarate said. “If they fail the screening they will be paid the full salary at home.”

During the first Coronavirus wave April 2020, Brandix gave a factory in Punani to the government to be used as a quarantine centre.

In October, a Brandix factory in Pinnawala was given to be used a quarantine centre.

In the latest wave, a factory in Seeduwa was given to the government be used an intermediate care centre. The Army converted it to a hospital and it is run by the Health Ministry.

Brandix continues to provide power and other utilities to keep the hospital centre running. Brandix workers can also get treatment at the centre.

“While we work during these difficult times and do our best to prevent our employees getting infected, if there is an infection to any of our employees then we ensure that they have appropriate care,” Premaratne said. “That is where this facility helps.”

The firm had also appointed counselors to the factories to help workers cope with psychological stresses of coping with Covid lockdowns. In the second wave some workers faced pressure from the community requiring support.

Sri Lanka’s export industries have also been calling on the government to vaccinate their workers, given the need to earn foreign exchange.

Sri Lanka has been facing forex shortages, and balance of payments deficits as the central bank embarked on an unprecedented money printing spree de-stabilizing the external sector, analysts have said.

The health ministry has ramped up vaccinations over the past two months and also started to vaccinate workers in industrial zones.

About a third of the Brandix workers have now been vaccinated Premaratne said.

Triple Whammy

Though the global economy is opening, with stimulus and handouts in the US putting more money in consumers’ hands, new challenges are also emerging in the form of price competition and soaring raw material price in addition to the Covid challenges.

“The price competition is quite severe, as suppliers who were left out by the brands in the first wave are now coming back, and try to win orders at any cost,” Premaratne says.

“As a result buyers also expect us to offer lower prices which led to significant pressure on prices.”

“Though people have money due to stimulus, retail brands expect us to lower prices.”

Meanwhile the Federal Reserve through its money printing is firing commodity bubbles, along with asset price inflation in stocks and digital currencies.

“Cotton prices have gone up significantly, also 40-50 percent in the last 12 months and this is having an impact on our raw material prices and our margins,” Premaratne said.

Covid related expenses and additional heath protocols and usable were also adding to overheads.

“While the orders are there, we have a huge challenge on profit margins. So we are operating under a very challenging business environment, improving internal efficiencies, bringing in technology, automation and digitize to improve productivity.

“These measures have been adopted to mitigate these challenges and stay on course. So we are coming up with measures to counter this triple whammy. (Colombo/June18/2021)

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Sri Lanka China-backed port to welcome second cruise ship

ECONOMYNEXT – Sri Lanka’s China-backed Hambantota Port said it was getting ready to welcome MV Azamara Quest, a cruise ship, as another passenger vessel departed.

Mein Schiff 5, operated by TUI had departed Hambantota International Port for Pulau Penang Island, Malaysia on November.

“As well as being her maiden call at the port, Mein Schiff 5 is the first passenger cruise ship to call at the port since the pandemic began,” said Johnson Liu, CEO of Hambantota International Port Group (HIPG) said in a statement.

“It was undoubtedly a great boost for the tourist economy in the south when the vessel called at the Hambantota International Port.”

Mein Schiff 5’s passengers had also visited the Bundala National Park, Hambantota Botanical Gardens, Galle and Kataragama.

Passengers had explored Hambantota by tuk-tuk, while others had enjoyed the beaches in the Shangri La Hotel, the port said.

MV Azamara Quest will arrive in Hambanota on on December 05. (Colombo/Dec01/2022)

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Sri Lanka’s shares gain in mid market trade

EXONOMYNEXT- Sri Lanka’s shares gained in mid market trade on Thursday (1), pushed up by strong positive sentiments on interest rates easing in line with inflation and speculation on government to hold talks with multilateral creditors ADB and World Bank for a possible loan facility.

Market has continued to gain for the past four sessions.

“Shares were moving on positive strong sentiments flowing in from yesterday (30), we are seeing a rally in the hotels, while the retail favorites such as LIOC and Expolanka,” analysts said.

Positive investor sentiments have been established, from positive comments from the Governor of the Central Bank over market rates eventually seeing an ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

Analysts further stated that, Treasury related stocks are also activated due to downward movements in yield.

All Share Price Index (ASPI) gained by 1.4 percent or 123.41 points to 8,774.64, while the most liquid share gained by 1.31% or 35.68 points to 2,765.

The market generated a turnover of 1.6 billion rupees at 1130 hours. (Colombo/Dec1/2022)

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Sri Lanka electricity losses from overpriced fuel, no tariff hike considered: regulator

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board’s high operating costs are partly due to excessive prices paid for fuel and no tariff hike is being considered, Chairman of the Public Utilities Commission of Sri Lanka, Janaka Ratnayake said.

The CEB itself does not buy fuel but depends on state-run Ceylon Petroleum Corporation and Lanka Coal, another state firm to buy fuel. Both firms are periodically caught in procurement scandals.

“They are paying about 385 plus rupees per litre for furnace oil,” Ratnayaka told EconomyNext.

“That is too much. From the global market we can buy it to much lower price. It can be imported below 200 rupees,”

“I ask the government to take the necessary steps to create a system to import furnace oil, like they did for fuel, to be imported at the lower price levels. If that happens, we can go without going for a price hike.”

Sri Lanka’s CEB generally gets furnace oil and residual oil from the domestic refinery and usually do not import furnace oil.

The refinery however is not regularly operating due to inability to get crude amidst the worst currency crisis in the history of the island’s intermediate regime central bank.

Ratnayake had earlier brought to light import costs of the CPC.

Pushing for operations efficiency of the CEB is a role of the regulator. Regulating costs based on global benchmark prices to push for procurement efficiencies is a standard practice. However the PUCSL is not the official regulator of the petroleum sector.


Sri Lanka power tariff revisions sought in Jan and July: Minister

Power and Energy Minister Kanchana Wijesekera told parliament that cabinet approval was sought to twice yearly tariff hikes in January and July of each year.

No Electricity tariff hikes are being considered yet, Ratnayake said.

Wijesekera blamed the regulator as well as successive administrations for not regularly revising power prices and pushing the sector into crisis.

In Sri Lanka activists had also blocked cheap coal power. (Colombo/Dec01/2022)

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