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| Sunday, 19 March 2006 |
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Business |  |
| News Business Features Editorial
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Severe competition hits Lanka's apparel exports in 2005 by Gamini Warushamana The apparel industry in Sri Lanka, a major export earner and the largest employer in the country is under intense competition after the phase out of the Multi Fibre Agreement (MFA) in December 2004.
In the US market, in terms of value, exports have increased only by 6.27% while in the UK market exports have declined by 3.65%. In terms of volume Sri Lanka lost in US and UK markets by 3.23% and 17.04% the report said. US market The total exports to the USA market in 2005 recorded US$ 1,745.6 million compared to US$ 1,642.6 million in 2004, a US$ 103 million increase. During the first seven months of 2005 exports increased by US$ 136 million or 15.74%. In the last five months it declined marginally by US$ 33 million or 2.26% compared to the previous year. During the year the world apparel exports to the US market increased by 3.92% in terms of volume and 6.04% in value. According to the report, Sri Lanka is the only loser in terms of export volume among seven countries in competition in the market. China is the largest gainer and China's exports increased by 51.62% and 57.56% in terms of volume and value. Statistics show that most of our competitors are better off in a new competitive environment. Their export value increase in 2005 in the US market is as follows. Bangladesh 20.94%, Cambodia 19.98%, India 36.43%, Pakistan 10.70% and Vietnam 5.84% compared to Sri Lanka's 6.27%. UK market Exports to the UK market declined by Sterling 13 million from 360 million sterling in 2004 to 347 million in 2005. Data shows the difficulty to compete in a fully competitive environment. Though export figures in 2005 have not shown a sharp decline during the year, in the UK market the improvements can only be seen in the last five months of the year probably owing to EU trade restrictions against China and GSP+ scheme. In the first seven months exports to UK declined by 27.6 million Sterling or 13.7% and the trend reversed in the last five months and exports increased by 14.4 million Sterling or 9.2%, compared to the corresponding period of the previous year. In the UK market Sri Lanka's exports declined in terms of volume by 17.04% and in value by 3.65%. Again China is the largest gainer with exports increasing to the UK by 73% in volume and 69.53% in value. The other gainers are India and Vietnam. India's exports increased by 39.62% and 41.72% in volume and value while Vietnam's figures are 53.84% and 44.95%. On analysing the data it is clear that the main competitor or main threat to the country's export was China as predicted at the beginning. Up to August, China's exports to the UK market increased continuously from 85 million sterling to 185 million sterling. From September China's exports to the UK market started to decline and it continued until December when China's export to the UK market recorded 98.5 million Sterling. In the USA market too China's exports increased continuously till June and then declined. However, the positive trend is the increase in value addition of Sri Lanka's Apparel in the post MFA era. The average unit price of Sri Lanka's apparel in the US and UK markets increased by 14.55% and 16.14% during the year. Sri Lanka is the only country that shows this improvement in value addition. This positive trend can be observed from 2003 and it indicates that Sri Lankan industries are moving towards high end products as per the five-year strategy of the Joint Apparel Associations Forum (JAAF) adopted in 2002. It emphasised that Sri Lankan manufacturers' focus their attention on
moving up the value chain by supplying more value added high fashion
garments and increasing their presence in the premium market segments of the
global apparel industry. |
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| Produced by Lake House |
According to export statistics of 2005, published by Oxfam in its final
report of the impact of phasing out of the MFA on Sri Lanka's apparel
industry, Sri Lanka is hardly maintaining its share in terms of value and
volume in its main markets US and UK. 
