Garment Buyer Order Outflow

A recent survey showed that from the mid 2005 to the present, many large international apparel Buyers moved their business out of Sri Lanka into cheaper manufacturing destinations. During that time, 75 factories in 7 provinces were closed, 24 of which were closed in the past 6 months. The survey was conducted in February 2009, conducted by a private consultancy, Roy Dawson.

The survey found that many foreign buyers of Sri Lanka clothing closed their offices in Sri Lanka in the past three years and shifted their manufacturing orders to other countries.

Of the approximately 50 major international apparel procurement companies registered in Sri Lanka's apparel purchasing office Association, 12 units have closed their offices in Sri Lanka in the past three years. These procurement offices are mainly turning to Singapore, India and Pakistan. Production mainly shifted to India, Bangladesh and Vietnam.

So far, about 20 stable foreign buyers are no longer operating in Sri Lanka. One of the main reasons for their transfer of business is the relatively high production cost in Sri Lanka, and the unstable security situation is also a printing. Buyers, for example, find it difficult to send technicians to local factories for regular factory supervision, which is a concern for safety.

The survey also found that in the 75 garment factories surveyed in 7 provinces, in the mid 2005 to 2009, only 24 factories closed in the past 6 months. These factories are mainly located in the free trade area of Katunayake, Biyagama, Koggala and Seethawaka Pura.

Some factories are registered in the Investment Bureau, and some factories are registered in the textile department of the Ministry of industry development. In addition, the unemployment and foreign exchange losses caused by the closure of these garment factories also hurt other related industries. This includes embroidery factories, garment washing plants, folds manufacturing plants, label manufacturing plants, silk manufacturing units, plastic pylon and polyethylene bag manufacturing units, transport service providers, shipping agencies, freight forwarders, customs settlement technicians, food providers, sub contractors providing services, such as cloth cutting, ironing and packaging.

The survey shows that between 1980 and 2004, there were 650 large and medium-sized garment manufacturing factories in Sri Lanka, which increased direct employment for 450 thousand people and provided indirect employment for 100 thousand people. However, since the termination of the multi fibre agreement and the end of export quotas since 2005, the clothing industry in Sri Lanka has steadily contracted.

This is mainly attributable to the relatively high production costs of Sri Lanka and other garment manufacturers in Asia. The current global recession has also hit the clothing industry. Over the past 6 months, the frequency of factory closures has increased.

Editor in chief: Xu Qiyun