Thursday 22nd May, 2025
British apparel manufacturer, NEXT, has closed its production unit in Katunayake, causing a loss of 1,400 jobs. However, it will continue operations at its other factories, according to media reports. It has cited high operational costs as the reason for its decision to close down the Katunayake factory.
The factory closure in question should be considered a wake-up call for Sri Lanka in view of the vulnerability of its export sector, especially the apparel industry, vis-a-vis the ongoing big power tariff wars, the rising global protectionist trend, and free trade agreements among other apparel manufacturing countries and the developed nations. One can only hope that the disturbing news from Katunayake will jolt the government and the Opposition into stopping their political battles and making a joint effort to strategise to navigate the daunting challenges the country’s export sector is facing.
Gomi Senadhira, an expert on international trade policy, who served as Sri Lanka’s Permanent Representative to the World Trade Organization, has, in an article published in this newspaper today, sounded a prescient warning, which must not go unheeded. For many years, he has written extensively about challenges and problems Sri Lankan exporters are facing and suggested how to overcome them, but it is doubtful whether successive governments and policymakers ever take such expert opinion on board. Commenting on the Free Trade Agreement India and the UK have inked recently, Senadhira has warned that the prevailing conditions in the UK market, 12% duty as against 0% duty for Vietnam, Bangladesh and Cambodia, don’t augur well for the bulk of Sri Lanka’s apparel exports. Duty-free access to India would further aggravate the situation, Senadhira has said, for it will reduce Sri Lanka’s apparel exports very significantly unless urgent action is taken to improve the conditions on market access through the Developing Countries Trading Scheme or other arrangements. He has called for a proactive intervention by the government to save Sri Lanka’s apparel sector.
Negative global economic developments not only take their toll on Sri Lanka’s export sector, resulting in a drop in foreign exchange reserves, but also have the potential to wipe out tens of thousands of jobs, giving rise to serious social problems and political instability. Hence the pressing need for strategic planning to face any eventuality. But the government and the Opposition are busy fighting a political battle over some local councils.
The government is apparently labouring under the fatalistic belief that the US tariff issue will go away, and it will be plain sailing for Sri Lankan exporters thereafter. The Opposition is apparently cherishing the delusion that it will be able to fix the economy without much effort if it is voted into power.
Ironically, when Opposition Leader Sajith Premadasa’s father, President Ranasinghe Premadasa, launched his ambitious garment factory project, the JVP let out a howl of protest, inveighing against him for what it described as making Sri Lankan women ‘stitch underwear for white women––suddhiyanta jungi mahanawa. It also coined a pithy slogan, ‘Kellanta garment, Kollanta pavement’ —’garment factories for girls and pavement hawking for boys’. Today, the JVP has had to protect the garment factories and save jobs. It must redouble its efforts to achieve that end, and the Opposition led by President Premadasa’s son should assist the government in that endeavour. There is no gainsaying that a long-term solution is for Sri Lanka to diversify its exports and export destinations while entering into free trade agreements with other nations. But as the apparel industry is one of the mainstays of the country’s economy at present, everything possible will have to be done to ensure its wellbeing.
Meanwhile, it is only wishful thinking that Sri Lanka will be able to achieve its development goals unless urgent steps are taken to stop the flight of young human capital. It behoves those who are wielding political power, others in pursuit of it, and public officials to put their heads together and make a serious effort to eliminate the factors that are driving the country’s youth away. Sadly, the government and the Opposition are at each other’s throat over political issues.
