An Echelon Media Company
Sunday March 26th, 2023

Sri Lanka’s Teejay eyes sales to new apparel plants in Africa, South Asia

ECONOMYNEXT- Sri Lanka’s Teejay Lanka Plc, one of South Asia’s largest fabric mills, is eyeing sales to new apparel factories being set up in the region and Africa, a top official said.

"The increasing trend of locating apparel manufacturing plants in South Asia and the African continent, offer a landscape of many opportunities for the Sri Lankan fabric industry," Chairman Bill Lam told shareholders in the firm’s annual report.
He said many global apparel manufacturers are relocating their apparel plants to South Asia from China, which has so far been the largest global garment producer.
This is due to changing US tariffs on Chinese products, and rising cost of labour in China, Lam said.
Teejay Chief Executive Shrihan Perera said that factories being relocated from China will also help lower costs for the firm.
"A likely decline in demand for cotton in China who is also one of the two leading suppliers of cotton yarn in the global market, could help curtail prices of our key raw material," he said.
Meanwhile, he said that there are only a few fabric mills present in Africa to compete with Teejay.
Therefore, setting up of new apparel plants in the continent offers Teejay sales opportunities, as Sri Lanka is located on a central maritime route to Africa, he said.
New opportunities are also opening up in India, where leading global apparel brands are seeking to capture the spending of the growing middle class, Perera said.
He said that since Teejay already has manufacturing facilities in India, the firm can offer competitive costs and delivery times.
However, the operations in Sri Lanka face high energy costs and infrastructure limitations, slowing expansion, Perera said.
"We are also constrained by the limitations to infrastructure at the BOI Zone," he said.
"Thus, it is our fervent hope that these limitations will be addressed with improvements and additions to the existing infrastructure in the near future."
Teejay, which specializes in making knit fabric recently has ventured into lace production at its Indian plant as well, in the firm’s attempt to diversify income.
In the last financial year, the firm had added two global brands, Nike and Uniqlo to its portfolio, which also includes big brands such as L Brands, PVH, Marks & Spencers and Decathlon. (Colombo/Jul26/2019)

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Your email address will not be published.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 settle India ACU debt, credit lines over 5-years

ECONOMYNEXT – Sri Lanka has requested India to settle payments due to the country under the Asian Clearing Union mechanism and credit lines given in 2022 over 5 years, Indrajit Coomaraswamy, an advisor the island’s government said.

Sri Lanka is negotiating with India to settle the money over a 5-year period, Coomaraswamy, a former central bank governor told an online forum hosted by the Central Bank.

“Our request from the Indians is to settle it over five years,” he said. “That I think is still in the early stages of negotiation. The same with the one billion line of credit.”

Sri Lanka’s central bank owed the ACU 2.0 billion US dollars to the Asian Clearing Union according to a year end debt statement, issued by the Finance Ministry.

Sri Lanka owned India, 1,621 million dollars according to ACU data by year end, excluding interest.

India has given a 1 billion US dollar credit line to Sri Lanka as well a credit line for petroleum.

Sri Lanka in March 2024 has paid 121 million US dollar out of a 331 million US dollar IMF tranche to settle an Indian credit line.

Indian credits were given after the country defaulted in April 2022 as budget support/import when most other bilateral lenders halted giving money. (Colombo/Mar26/2023)

Continue Reading

Sri Lanka coconut auction prices up 1.16-pct

ECONOMYNEXT- Sri Lanka’s coconut auction prices went up by 1.16 percent from a week ago at an auction on Thursday, data showed.

The average price for 1,000 nuts grew to 83,219.45 from 82,260.58 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority on March 23.

The highest price was 92,500 rupees for 1,000 nuts up from the previous week’s 90,600 rupees, while the lowest was 76,500 also up from 70,000 rupees.

The auction offered 900,010 coconuts and 583,291 nuts were sold. (Colombo/Mar 26/2023)

Continue Reading

Sri Lanka in talks for billion dollar equivalent Indian rupee swap

ECONOMYNEXT – Sri Lanka is in talks with India for a billion US dollar equivalent Indian rupee central bank swap, to facilitate trade, Indrajit Coomaraswamy, ad advisor to the government said.

“The amount is still uncertain it could be up to the equivalent of a billion US dollars,” Coomaraswamy told an online forum hosted by Sri Lanka’s central bank.

The money will be used to facilate India Sri Lanka trade, he said.

India has been trying to popularize the use of Indian rupees for external trade and also encouraged Sri Lanka banks to set up Indian rupee VOSTRO accounts.

However the first step in popularizing a currency for external trade is to get domestic agents, especially exporters, to accept their own currency for trade, like in the case of the US or EU, analysts say.

India’s billion US dollar credit to Sri Lanka given during the 2022 crisis is settled in Indian rupees (transaction need).

However the Indian government itself has chosen to denominate it in US currency for debt purposes (future value).

In most South Asian nations, receivers of remittances are willing to accept domestic currencies, leading to active VOSTRO account transactions.

Sri Lanka is expected to repay a 400 million US dollar swap with the Reserve Bank of India next year under an International Monetary Fund backed program for external stability and debt re-structuring.

Central bank swap proceeds sold to banks, which are then sterilized with inflationary open market operations, can trigger forex shortages and currency crises, analysts warn.

Sri Lanka went to the International Monetary Fund after two years of inflationary monetary operations by the central bank’s issue department (money printed to suppress interest rates) triggered the biggest currency crisis in its history and external sovereign default.

Sri Lanka had gone to the IMF 16 times with similar external troubles except for the April 2003 extended fund facility under Central Bank Governor A S Jayewardene which was a purely reform-oriented program with the World Bank (PRGF/PRSP) program at a time when he was collecting reserves with deflationary monetary policy and perhaps the lowest inflation since the Bretton Woods collapsed. (Colombo/Mar26/2023)

Continue Reading