Sri Lanka's largest export industry the garment sector is dealing with a fall in apparel order volumes as the corona virus outbreak has slowed down in key export markets, official sources said.
Early stages of data collection indicate an impact of US$ 500 million on the apparel industry as a result of the corona virus outbreak due to the unavailability of raw materials, although the apparel exports industry is yet to identify the impact of the drop in orders, especially from European markets..
The original impact of the corona virus outbreak was on the supply of raw materials, Sri Lanka Apparel Exporters Association Chairman Rehan Lakhany said, explaining that Sri Lanka depends on China for raw materials.
“There have been some major delays in shipments for supplies from China and the impact has been different from factory to factory and customer to customer,” he said.
This has also resulted in a backlog, which is further impeding the local apparel industry.
The impact may be felt until mid-May or even beyond May and there is a lot of uncertainty within the industry regarding the impact of the corona virus outbreak, he added.
“Some Chinese suppliers have said they started production and the factories have opened but we hear that they are not operating with a full labour force,” Lakhany said, adding, “Due to that, we expect that production won’t be at the usual level.”
While alternative sources for raw materials seem like a solution, Lakhany said that there were certain limitations to this.
“It takes a long time to develop those sources and technology,” he said, adding that alternative sources for certain raw materials cannot be found outside China.
“All garment manufacturing countries like Vietnam and Cambodia are looking at alternative sources and they are all going to these limited sources. There is a limited capacity,” he said, adding that there was going to be a shortfall given the sudden increase of demand from sources with a low supply.
Due to the unavailability of raw materials to continue production, some local factories are planning to shut down operations for two to three weeks. In addition to this, the Sinhala and Tamil New Year holidays in April pose an added challenge to the industry
(LI)