JAAF commends industry’s resilience as apparel export earnings rise 30% YoY in May
The Joint Apparel Association Forum (JAAF) thanked all industry stakeholders for their outstanding resilience in ensuring that the sector continued to meet its commitments in the face of unprecedented challenges, as apparel export earnings expanded by 30% Year-on-Year (YoY) up to US$ 446 million in May 2022.
Accounting for approximately 6% of Sri Lanka’s Gross Domestic Product (GDP) and almost half of all merchandise exports, the apparel sector serves as a bulwark of the nation’s economy. While the sector continues to face significant limitations from continuing disruptions in energy supply and logistics, cumulative export earnings from the sector increased by 16% YoY up to US$ 2.2 billion as at May 2022.
“We are still hopeful of achieving the sector’s target of US$ 6 billion by the end of 2022, however we acknowledge that there are significant obstacles ahead that we will first have to overcome. It is therefore essential that all possible support is provided to the sector to continue operating.
“In addition to ensuring that large manufacturers are able to maintain production, much more needs to be done to prioritize support for SME apparel producers, who are an equally essential component of the industry that is also facing severe challenges in day-to-day operations.” JAAF Secretary General, Yohan Lawrence stated.
Despite unprecedented domestic volatility, unstable global market conditions and escalating raw material and logistics costs, Sri Lanka’s apparel sector has provided extraordinary support to the national economy, including direct surrender of export proceeds to the Government.
“All apparel companies receive payments through the formal banking system, which is visible at all times to the Central Bank. Once they receive these funds, they are permitted to use these dollars to fund raw material imports, which in previous years stood at approximately US$ 2.5 billion annually,”
“On a monthly basis, the balance of our industry’s export proceeds are then converted into Sri Lanka Rupees. Once converted, the dollars are then available within the banking system to go towards payments for essential imports such as fuel, gas, food and medicine,” Lawrence explained.
These extraordinary measures have been commended by the Prime Minister’s office as having provided vital assistance in mitigating issues around energy, transport and healthcare in the country.
“Moving forward, the apparel industry remains totally committed to doing all we can to help our nation move past this unprecedented crisis. There is still a great deal of potential for new investments, and capacity expansions including domestic production of raw materials to supply our manufacturing base. Such development hinges on the extent to which the Government delivers on the wide-spread and clear demands of the Sri Lankan people for meaningful economic and political reforms,” Lawrence reiterated.
Despite the ongoing crisis, the outlook for Sri Lankan apparel is still considered positive, as evidenced by the continuing Foreign Direct Investment (FDI) inflows to Sri Lanka which have mirrored upward trends in export performance, recording 17% YoY growth up-to June 2022. At present, US$ 73 million worth of investments have been committed for expansions in the apparel sector in 2022, out of a total apparel investment pipeline of US$ 94 million.
“We are extremely grateful to all our employees for their commitment towards keeping the industry running, against all odds. We will continue to work hard to maintain our global reputation as a reliable sourcing destination for high-end apparel, while also doing our utmost to support the economy at this time,” Lawrence stated.