Commends resilience of SMEs with zero-closures; urgent support imperative to boost recovery
13th December 2023: The Sri Lanka Chamber of Garment Exporters (SLCGE) commended the remarkable resilience of its apparel SME membership for rapidly adapting to tough global market conditions and ending the year with zero closures.
As the apex body for SMEs in the apparel sector, the SLCGE comprises 76 members – all of which operate outside of Sri Lanka’s Free Trade Zones (FTZ). “Over the past year, our industry has been hit hard with the 20% reduction in orders,” stated SLCGE Chairman Bandula Fernando. “SME apparel producers are among the worst impacted. However, they have also been among the first and fastest to respond to market contractions. Hence, even as the order book contracted, they have ensured that all existing orders have been completely fulfilled to the highest quality standards.
Their success in these trying times is a phenomenal achievement and a testament to their resilience and adaptability. But it is now imperative that our industry, the Government and all stakeholders work together to support a rapid recovery in the SME apparel sector.”
He added that the industry’s first priority was to double-down on trade facilitation in order to strengthen market access for these SMEs to at least get to the same level their regional competitors currently enjoy.
“Sri Lanka’s largest apparel firms have already set their sights on high-value niches in new and emerging markets across the globe. While these larger firms already have most of the capital, marketing, logistical and innovative capacity required to break into these markets, apparel SMEs are much more reliant on Government-Government engagement, trade concessions and facilitation to secure similar opportunities. “
He added: “While these SMEs have certainly been hit hard by the 20% reduction in orders, they can also benefit first and fastest from any progress we can drive in opening up new markets for them to compete in. We urge all stakeholders to add their support to this vital effort.”
Responding to concerns over a reported 20% reduction in apparel sector jobs over the past 12 months, Fernando explained how the SLCGE’s members had successfully mitigated the worst impacts on jobs and livelihoods by avoiding retrenchment. “Instead, we placed a freeze on new hires,” he explained.
“The majority of the 20% reduction in employment from the apparel sector was contained to natural attrition, which in turn prevented the mass job losses that had been the cause of much speculation over the past year. Some companies did request employees to stay at home, but these decisions are made in discussion with the individuals involved and responsible authorities, ensuring arrangements are in place to minimize impact on their livelihoods.
“But there is no question that all of these are stop-gap measures. As an industry that accounts for half of all national exports, we cannot afford to simply sit back and wait for a gradual recovery. We have to take proactive steps to uncover new and untapped opportunities, with special emphasis on how apparel SMEs can be integrated into these supply chains on an urgent basis. We call on our industry colleagues, the Government, regional partners, and the entire global apparel industry to support this vital endeavour,” Fernando stated.
The majority of Sri Lankan apparel SMEs primarily export to the United States, United Kingdom, EU and India, reflecting the industry’s regional partnerships. To address these challenges, the SLCGE has taken proactive measures, engaging in direct market access initiatives through buyer and consumer engagement. In particular, the Chamber is focused on strategic exploration of untapped markets in East Europe, the Middle East and East Asia.
“Factories are eager to diversify their market presence and identify new opportunities in non-traditional markets with growth potential. It is essential that we help apparel SMEs to increase their visibility and network in these emerging markets, encouraging them to participate in trade exhibitions, showcase their capabilities and establish new commercial partnerships.”
Fernando asserted that locally, Sri Lanka needs to move ahead with the difficult but essential work of improving ease of doing business and investing in technology and R&D to strengthen productivity and competitiveness. “In this manner we need to establish a new value proposition for Sri Lankan apparel that leverages on our unique strengths as an integrated sustainable, ethical manufacturing hub for global apparel brands to drive an industry-wide resurgence.”