T H E A P PA R E L & T E X T I L E S I N D U S T RY O F
SRI L ANKA Made by Seth Mark
SCAD • FASM420 • Professor Donald Levy
CONTENTS
POL I TI C A L S TA B I L I T Y
SRI L ANKA JA F F N A
S OC I A L FAC TO R S TE C H N OLO GI C A L / E CON O MI C FAC TO R S
TRINCOMALEE
E COLOGI C A L FAC TO R S POL I TI C A L FAC TOR S S TATE O F T H E I N D U S T RY TR A D E /T R A N S P ORT
B AT T I C A LOA
NEGGMBO C O LO M B O
K A N DY
B A N DA R AW E L A
S UPP L I E R S /S H I P P I N G CULTUR E BI B L I OGR A P H Y
GA L L E M ATA R A
C O U N T RY OV E RV I E W
Sri Lanka is currently developing as a country for the future. A long and bitter civil war between the majority Sinhalese and the Tamil minority in the northeast ended after more than 25 years in May 2009 when government forces seized the last area controlled by Tamil Tiger rebels. Urbanization is at the forefront of development for the country and includes the development of the garment industry.
LO C AT I O N
RELIGION
Sri Lanka is located just southeast of India in the Indian Ocean.
70% Theravada Buddhists, 12.6% Hindu, 9.7% Muslim, 7.4% Christian
GOVERNMENT
L A N GUAGE
Semi-Presidential Constitutional Republic
Sinhala is spoken by 16 million people;
President Maithripala Sirisena
English and Tamil are also common.
P O PU L AT I O N/S IZE
ECONOMIC BRE AKDOWN
20.48 million people (2016) 25,322 square miles
GDP: $78.8 billion ($11k per person)
ETHNIC GROUPS
Unemployment rate: 4.6%
GDP average growth rate: 6.12% (2003-2016)
Sinhalese 74%, Tamils 12.6%, Indian Tamils 5.5% (View themselves as separate from Sri Lankan Tamils)
Labor force: 53.3% Government Debt: $59,435.13 million Government Revenue: $989,792,313
ME D I A N AG E/S E X R AT I O
Inflation rate: 4.2
The median age is 31.2 years old. 92.95 males for every 100 females
Exchange rate: 1 SLR = 0.0068 USD
T R A D E OV E RV I E W
INDUSTRIES
In 2014, Sri Lanka imported $21.4 billion,
Main industries include: rubber processing,
and exported $11.5 billion. Top exports
tea,
include: tea, women’s suits, and women’s
telecommunications,
undergarments.
include:
tourism, shipping; clothing, textiles; cement,
petroleum, planes, cars, and light weight
petroleum refining, information technology
rubber fabric
services, construction
Top
imports
coconuts,
tobacco,
agriculture;
insurance,
banking;
S O C I O E C O N O M I C S TA B I L I T Y
Sri Lanka’s main focus for economic stability is to develop themseleves into a competive garment sourcing nation. The garment industry is currently the highest earning econmic sector, and continues to grow. Former President Mahinda Rajapaksa, and his family members, who ruled the island for ten years, are now being charged with corruption, human rights violations, and the extrajudicial killing and disappearance of journalists and political opponents– showing the effort to stop coruption. Garment workers are paid fair wages– with little discrimination, sweatshop practices, or child labor.
P O L I T I C A L S TA B I L I T Y
Mutual interests and a shared commitment to the ideals of democratic governance are the basis of relations between the United States and Sri Lanka. Following the end of decades of civil conflict in 2009, the United States is a strong supporter of ethnic reconciliation in Sri Lanka. While the civil war has ended, some tensions still exist between the Sinhalese and Tamils. The United States has delivered more than $2 billion in development assistance to Sri Lanka since its independence in 1948, and seeks to broaden and accelerate economic growth, develop democratic institutions, and promote the reconciliation of multi-ethnic and religious communities in Sri Lanka through the U.S. Agency for International Development (USAID). The January 2015 Sri Lankan presidential election ushered in a new political era and opportunity for renewed U.S. diplomatic and development engagement to support the country’s ongoing reforms. Sri Lanka as a cutting edge garment manufacturing hub with continued development and urbanization. More than $5 billion was spent on research and development in 2008 by Sri Lanka, which is helping to position it as a top global competitor in the manufacturing of apparel and textiles.
S O C I A L FAC TO R S
Sri Lanka is known for its vast and diverse culture that mixes modern elements with traditional aspects, and includes many customs and rituals that date back more than 2000 years. Cultural influences include art, sculptures, architecture, food, and religion. The Sri Lankan way of life is very simple and filled with humility and happiness, and is one of the reasons Sri Lankans have a very great sense in appreciating the simple things in life such as nature.
P O PU L AT I O N/S IZE
AGE BRE A KDOWN
20.48 million people (2016) 25,322 square miles
0-14 = 24.35% (2,760, 821 m / 2,652,747 f) 15-24 = 14.7%
25-54 = 41.71% (4,544,253 m / 4,729,544 f)
L A N GUAGE
Sinhala is spoken by 16 million people; English and Tamil are also common.
70% Theravada Buddhists, 12.6% Hindu, 9.7% Muslim, 7.4% Christian ETHNIC GROUPS
Sinhalese 74%, Tamils 12.6%, Indian Tamils 5.5% (View themselves as separate from Sri Lankan Tamils)
The median age is 31.2 years old. 92.95 males for every 100 females
55-64 = 9.89% (1,018,357 m / 1,181,060 f) 65+ = 9.35%
(882,740 m / 1,197,057 f)
I M P O R T A N T H O L I D AY S ( 2 016 )
RELIGION
ME D I A N AG E/S E X R AT I O
(1,660,402 m / 1,608,022 f)
April 14
Sinhala and Tamil New Year
May 21
Vesak Full Moon Poya
July 19
Esala Full Moon Poya
Holidays are extremely important in Sri Lankan culture. Some celebrations are cultural and others are religious. The national holiday list includes over 20 holidays, but the three listed are the most important respectively, and include the dates they fell on in 2016.
DIVISION OF L ABOR
The division of labor in Sri Lanka has been largely based on caste, gender, and ethnicity. The largest and highest status Sinhala castes are typically land holders and recipients of service obligations from the lower castes. The lower status service castes are associated with hereditary crafts such as mat weaving, jewelry making, and clothes washing. There is a strong tradition of both men and women working, with men focusing more on income opportunities and women focusing on the household.
T E C H N O LO G I C A L FAC TO R S
Because the garment industry is growing, technology is state of the art. This advance technology is positioning Sri Lanka as an innovative manufacturer in the global market. Sri Lanka’s technology allows for Design-to-Delivery, which means garments can go from production to stores in 14 days. T E C H N O LO GY
Tuka Tech, Gerber Automatic Spreading System, Microsoft Dynamics ERP, Pocket Welting Machines, Loop Attach Machines, Smocking Machines, Automatic Cutters
E C O N O M I C FAC TO R S
With a GDP of around $242 billion, Sri Lanka has one of the largest GDPs in South Asia. Per capita, the GDP is $11k, and has had an average growth rate of 6.12% since 2003. With investments in research and development, Sri Lanka is working on growing its economy. Sri Lanka’s average tariff rate is 6.3 percent. The government’s import substitution policy interferes with trade and investment. Agricultural imports face significant trade barriers.
EXPORTS
GDP
Tea, women’s suits, and women’s undergarments are the top exports.
$242 billion ($11k per capita) G D P G ROW T H R AT E
E X P O RT D ES T I N AT I O N S
6.12% on average from 2003-2016
USA, UK, India, Germany, and Italy G R O S S N A T I O N A L S AV I N G S IMPORTS
Petroleum, planes, helicopters, spacecraft, cars, and light weight rubber fabric are the top imports.
IMPORT ORIGINS
25.9% of GDP
L ABOR FORCE
Unemployment rate: 4.6% Labor force: 53.3%
India, China, United Arab Emirates, Singapore, Japan
D E B T/ R E V E N U E
ME D I A N AG E/S E X R AT I O
CURRENCY
The median age is 31.2 years old. 92.95 males for every 100 females
Government Debt: $59,435.13 million Government Revenue: $989,792,313
Inflation rate: 4.2 Exchange rate: 1 SLR = 0.0068 USD
E C O LO G I C A L FAC TO R S
Sri Lanka’s environmental and disaster risk issues are significant. For every one dollar invested in risk reduction, four dollars are saved in disaster response. Several government agencies have been set up to create laws and regulate environmental impact.
C L I M AT E
Sri Lanka climate is tropical and consists of distinct wet and dry seasons. The Yala monsoon brings abundant rainfall to the country’s western and southern regions from May to September; the area experiences its dry season during December through March. The southwest receives around 4000mm of rainfall each year. The Maha monsoon affects northern and eastern Sri Lanka weather and lasts from October to January, with the dry season usually lasting from May to September. This region receives approximately 1000mm of precipitation annually, significantly less than the other half of the country. There is also a period in October and November during which rain and thunderstorms occur frequently across the island.
UNDP
E N V I RO NME N TA L CO N C E RN S
The United Nations Development Programme has built a relationship with government agencies and will support the national agenda for sustainable development.
Deforestation, soil erosion, wildlife (poaching
CEA
Certification requires that a project meets
The Central Environmental Authority was established in August 1981 under the provision of the National Environmental Act No: 47 of 1980.
certain requirements or prerequisites, plus
ME&NR
The Ministry of Environment and Natural Resources, which was established in December 2001, has the overall responsibility in the affairs of the CEA with the objective of integrating environmental considerations in the development process of the country.
and
urbanization),
coastal
degradation
(mining), and pollution. L E E D C E RT I FI C AT I O N
meets enough other credits that provide points to meet a minimum certification level. The level of certification depends on the total number of points a project achieves. The lowest level of certification is referred to as Certified, then goes up to Silver, Gold, and, at the top, Platinum. FAC TO R I E S
Many of the garment factories in Sri Lanka are certified Gold and Platinum.
P R E S I D E N T M A I T H R I PA L A S I R I S E N A
Sri Lanka’s government is a Semi-Presidential
Executive, Legislative, and Judicial like the
Constitutional Republic. It has a mixed legal
United State’s government. Sri Lanka is ranked
system of Roman-Dutch civil law, English
83rd least corrupt of 175 countries according to
common law, and Jaffna Tamil customary law.
the Corruption Perception Index. Sri Lanka’s
The
Independence Day is February 4th.
three
branches
of
government
are
P O L I T I C A L FAC TO R S
Sri Lanka’s average tariff rate is 6.3 percent. The government’s import substitution policy interferes with trade and investment, agricultural imports face significant trade barriers, and foreign investment in some sectors of the economy is restricted. Corruption remains significant, and the current legal and administrative framework is inadequate to stop it. In April 2015, the prime minister alleged corruption running into billions of dollars at the state-owned airline under the government of former President Mahinda Rajapaksa. Secured interests in property are generally recognized, but many investors claim that protection can be flimsy. Concerns about politicization of the judiciary are growing. Former President Mahinda Rajapaksa, and his family members, who ruled the island for ten years, are now being charged with corruption, human rights violations, and the extrajudicial killing and disappearance of journalists and political opponents.
OVERVIE W
The garment industry in Sri Lanka is the most significant industry for the country, and has seen significant growth over the last four decades. Sri Lanka has earned over $3 billion in export revenue over the last five consecutive years. The United States and UK are the top importers (USA=$1 billion & EU=$1.5 billion)
S TAT E O F T H E GA R M E N T I N D U S T RY
INDUS TRY
FAC TO R I E S
HUMAN RESOURCES
• Product categories
• 300,000 people are
industry and dynamic
span sportswear,
directly employed
contributor to Sri Lankan
lingerie, loungewear,
government
bridalwear, workwear, and
• The most significant
• Experienced significant growth over the last four decades
childrenswear. • Provide sophisticated solutions in BPO services, fashion, R&D, and
• Primary exchange earner at 40% of total exports • Entirely privately owned
innovation centers. • Ten factories are under construction in the north east (after civil war) • Top three factories are among the world’s 50 most important suppliers • First eco-friendly factory cut energy usage in half and water by 70%
• 600,000 people are indirectly employed • Garment workers are paid fair wages– with little discrimination , sweatshop practices, or child labor • Wages range from 8,970 SLR – 11,330 SLR per month based on skill level ($60-$76)
T R A D E AG R E E M E N T S
There are currently no trade agreements between the U.S. and Sri Lanka. However, competition from TPP participants, such as Vietnam, could harm the apparel export industry, which currently employs half a million Sri Lankans. “[Sri Lanka was] duty-free to the E.U., and due to various reasons, we lost [the status],” he said. “We believe we will regain it by the end of this year, so we’re very bullish on the European market. Already, we [see] buyers coming in anticipation of the GSP+ (Generalized System of Preferences Plus) coming in by early next year,” said Ashroff Omar, CEO of Brandix.
T R A N S P O R TAT I O N I N F R A S T R U C T U R E
I N T E R N AT I O N A L
SRI LANK AN
SRI LANK AN
AIRPORTS
PORTS
INFR ASTRUCTURE
While there are several ports in Sri Lanka, Colombo is currently positioned as the exporter for apparel.
Rail transport in Sri Lanka consists of a heavy rail intercity network that connects major populations and commuter rail serving Colombo commuter traffic.
FROM COLOMBO TO
Road transport accounts for about 93% of the land transport in Sri Lanka. The Colombo– Mataraexpressway is a 126 km long motorway, linking Colombo, Galle, and Matara. The Colombo-Katunayake expressway is Sri Lanka’s second express highway, which links Colombo with Bandaranaike International Airport,Katunayake and Negambo city.
• Bandaranayake International Airport Katunayake, Sri Lanaka • Ratmalana Airport Colombo, Sri Lanaka • Mattala Rajapaksa International Airport Mattala, Sri Lanaka
S AVA N N A H , G A
22–41 Days • $1,372 LOS ANGELES, C A
13–54 Days • $1,490 (Air freight is dependant on weight of product)
N E W YO R K , N Y
19–36 Days • $1,357
S H I P P E R S / M A N U FAC T U R E R S
SRI LANKA C E Y LO N S H I P P I N G C O R P O R AT I O N LT D
27 Bristol Street Colombo, Sri Lanka +94 11 2 328772 B A N DA R A N AY K E I N T E R N AT I O N A L A I R P O R T
•D
____
S R I L A N K A S H I P P I N G C O M PA N Y L I M I T E D
Robert Senanayake Building 46/5 Navam Mawatha Colombo, Sri Lanka
•B
C O LO M B O
•E
+94 11 2 336853
•A
__
R AT M A L A N A A I R P O R T _ _ _ _ _
•C
M AT TA L A R A JA PA KS A I N T E R N AT I O N A L A I R P O R T _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Undergarments
7th Lane, off Borupana Rd. Kandawala Estate, Ratmalana www.masholdings.com
A B
B R A N D I X A P PA R E L S O L U T I O N S Casual, Undergarments, Bras
•
TRINCOMALEE
409 Galle Road, 3rd Floor Colombo 03 www.brandix.com
C
H I R DA R A M A N I I N T E R N AT I O N A L E X P O RT S
B AT T I C A LOA
•
Garments, Tshirts, Jackets
Lot S-2, Seethawaka Industrial Park Avissawella www.hirdaramani.com
OM E GA L I N E LT D
D
F Undergarments/similar items, Tshirts, Singlets, Vests
Singakkuliya Road Irabadagama, Sandalankawa reception@omegaline.com
HEL A CLOTHING
___
______
M A S I N T I M AT E S (P V T ) LT D
Wide range of male/female garments
E
No. 304, Grace Land Building, 1st Floor Peliyagoda www.helaclothing.com
C U LT U R E
Regionalism, religion, language, and caste are all factors that need to be taken into account when doing business in Sri Lanka. Of all the cultural influences that most impact Sri Lanka business culture, hierarchy plays a key role. Family-owned businesses often reward allegiance more than competitive skills. Disagreements can be acerbic and can sometimes lead to frustrated and vindictive conduct. An executive’s ‘contacts’ have considerable weight in career advancement. Social contribution and environment protection have generally not been voluntary activities in corporate Sri Lanka, and have mostly been induced by tax-saving schemes or strict rules by the Government or intervention by court.
ETIQUETTE
Sri Lankan business etiquette is usually more formal. Guests are given some leeway in terms of appreciating all the cultural nuances, but it is still best to try and adhere to some of the local customs. It is considered rude to be late for meetings. When entering a meeting room you must always approach and greet the most senior figure first. Meetings should always commence with a relationship building conversation. In fact a first meeting with a company should be approached as purely a relationship building exercise. When addressing a business person, always use the appropriate formal title followed by the surname, or if you do not know their names, then Sir or Madam would be sufficient. Business cards are usually exchanged after an initial handshake and greeting. Titles and qualifications are important so be sure to add them to your card. Having one side of your business card translated into Sinhala or Tamil is a nice touch but not crucial.
N E G OT I AT I O N
If your business dealings in Sri Lanka involve negotiations, always bear in mind that they can be slow. If trust has not yet been established then concentrate on building a rapport. Decisions are always made at the highest level of management. If the owner or Director of the company is not present, the chances are these are still early stage negotiations. Low price is a major factor in clinching deals, and financial negotiations can be bargained very hard. Sri Lankans do not base their business decisions solely on statistics, empirical data and exciting PowerPoint presentations. They use intuition, feeling and faith to guide them.
R I S KS
BENEFITS
• Potential collapse of the garment
• Competitive pricing in the garment
industry based on the TPP trade
industry with fair wages
agreement.
• Sustainibilty in mind with the
• Continous development could
construction of factories
possibly drive up the cost of goods.
• Continued development of garment industry and technology
C O N C LU S I O N
Despite Sri Lanka’s tumultuous past, it’s under continous development, and is a great choice for garment manufacturing. The industry continues to grow with technology and sustainibilty in mind, and the garment workers are paid fairly with ethics in mind.
RESOURCES
http://globaledge.msu.edu/countries/sri-lanka/economy http://slembassyusa.org/trade/trade-relations-between-sri-lanka-and-the-us/ https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html http://www.everyculture.com/Sa-Th/Sri-Lanka.html http://www.srilankabusiness.com/blog/sri-lankan-apparel-industry.html http://www.cnbc.com/2016/04/27/tpp-trade-deal-to-challenge-sri-lankas-apparel- export-sector.html http://www.thesundayleader.lk/2012/07/08/environmental-protection-and-sustainable-development-in-sri-lanka https://www.searates.com/reference/ http://www.hirdaramani.com/apparel/production_srilanka.php http://www.srilankabusiness.com/exporters-directory/hirdaramani-international-exports-pvt-ltd-703.html http://www.thaibizsrilanka.com/lk/about/page.php http://www.bbc.com/news/world-south-asia-11999611 http://www.slpa.lk/port-colombo/galle http://www.thaibizsrilanka.com/lk/about/page4.php http://www.expatknowhow.com/Documents/doing%20business%20in%20sri%20lanka%20.pdf http://www.worldbank.org/en/country/srilanka/overview http://www.tradingeconomics.com/sri-lanka/government-budget http://www.officeholidays.com/countries/sri_lanka/index.php http://www.salary.lk/home/salary/minimum-wage/garment-sector-wages http://www.srilanka.travel/festive http://state.gov/r/pa/ei/bgn/5249.html http://www.srilankatourism.com http://www.everyculture.com http://lk.undp.org/content/srilanka/en/home/ourwork/environmentandenergy/overview.html