No immediate gain for apparel from B’desh

• High salary disparities and early orders reasons: Expert
• March data shows 5% growth, 1Q 1.3% 
• Delegations to search for new markets
• Cost inflation a concern

By Cheranka Mendis

As yet another factory tragedy in Bangladesh grabs international headlines, local apparel experts yesterday predicted that the fallout would give little short-term advantage to Sri Lanka due to high salary disparities between the two countries.   

The social situation in Bangladesh will not provide additional benefit to the Sri Lankan apparel industry as higher labour cost proves to be a significant deterrent for global retail companies seeking low expenses.

Sri Lanka Apparel Exporters Association Chairman Yohan Lawrence speaking to the Daily FT stated that the industry has not seen any changes as a result of the situation in Bangladesh so far and is likely to not see any difference due to the price point differentiation.



“We have no competition with the price point offered in Bangladesh,” Lawrence said. “Unless the end customer is willing to pay more, I do not see any immediate shifts to our markets in the near future.”

Bangladesh is known for its cheap labour as opposed to Sri Lanka and entered 2013 with a firm footing as the world’s second largest garment exporter, according to the World Trade Organisation.

“Buyers would have already contracted orders through to winter 2013,” Lawrence said. “If there is to be any change to buying strategies that may take some time to filter through.”

The general value of export of apparel has fallen, he said, however this is not seen as a danger as it is not a problem unique to Sri Lanka.

Apparel exports in January and February 2013 show a decline of 3.5% against the same two months in the previous year. Interestingly, exports to the US have only dropped by 0.7%. But the EU has seen a bigger drop at 10.5%.

Latest data released by the Central Bank on Wednesday showed a 1.3% increase for the first quarter of the year, climbing to US$ 1,050 million from US$ 1,036 million in 2012. The industry showed its highest growth yet for 2013 in March, recording an optimistic 5% growth to US$344.5 million.    

“The overall drop is probably in line with other countries,” Lawrence noted, adding, “However we believe our figures are better than some competitor countries in the USA who have seen much bigger reductions.”   

Industry prospects for the rest of the year are likely to be marred by cost inflation which is likely to be a big challenge for the industry particularly in the light of the depressed market conditions in the West.

The industry is working with the EDB to launch trade missions to help promote Sri Lanka in other markets, with concentration on countries like China, Russia and potentially India.

“This week we have a delegation from China in Sri Lanka looking at opportunities to increasing trade between the two countries,” Lawrence said.

Adding to the series of fires that broke out in Bangladesh apparel factories, on Wednesday a fire broke out at an 11-storey building in the Mirpur industrial District, belonging to the Tung Hai Group, a large garment exporter.

Eight people was reported to have been killed from the fire according to police and industry association officials, as the death toll from the collapse of another factory building two weeks ago climbed to 892. A week before Rana Plaza clothing factory complex collapsed.

Global spokespersons have noted that in the aftermath of these events, the Bangladesh garment manufacturers may face a choice of reform or perish.

Home to five factories that supplied clothing to retailers in EU and US the poorly assembled building’s collapse has put a focus on the high human price paid by Bangladeshi workers.

The tragedies followed the deaths of 112 people five months ago in a blaze that swept through the Tazreen Fashions garment factory in Dhaka and the death of seven in a January blaze.

With four disasters in quick succession, the status of Bangladesh’s US$ 20 billion garment industry, already infamous for low wages and dreary safety record has tumbled.

While the situation caused the international clothing brands and retailers to think twice, a larger blow came from EU when it announced that it would restrict Bangladesh’s access to the EU market if it fails to guarantee that basic labour standards are enforced.

Bangladesh exported garments worth US$ 19.09 in the fiscal year 2011-2012 and was expected to exceed US$ 20 billion in the fiscal year 2012-2013.