Financial Times

Garment sector picking up

Export orders coming in again
By Dilshani Samaraweera

Sri Lanka’s garment sector is on the path to recovery from global recession impacts, says one of the country’s biggest garment exporters, the Timex Group. Sri Lanka’s garment exports, have been on a down trend for the three months of May, June and July, with the biggest drop in orders seen from the US.
“The garment sector is beginning to pick up now.

Exports should turn around from October this year, because the world is coming out of recession and there is also seasonal demand. Recovery will take some time but the orders are starting to come in. Some categories of garment exports may take a little longer to recover than others, so the recovery will not be uniform,” the Managing Director of Timex Garments, Arshad Sattar told the Sunday Times FT.

The Timex Group, with 16 garment factories in the country, says its order books are full up from October this year until May 2010. The company says prices have been forced down despite the recovery in volumes. But price recovery too, is expected mid-next year. “Prices have come down over the last few months, but I think by mid-next year, prices will return to normal, because demand is recovering and there are some supply shortages. In China, in some categories, prices are increasing because a lot of factories closed down. So this supply shortfall will push up prices,” said Mr Sattar.

Timex, that specialises in mid to high end dresses, says it may even have to acquire additional factories to cope with the orders. “We are thinking of expanding two factories to meet the order volumes. We may even have to acquire one or two factories, because our customer have committed to the capacity,” said Mr Sattar.

Unlike many other garment factories, the Timex Group is not affected by the GSP plus duty free export scheme when exporting to the EU. Because of the type of items exported, the Timex Group does not benefit from the GSP plus facility. The group says it has captured European export orders without the GSP plus duty advantage.

However, many other local factories depend on the GSP plus to secure export orders to the EU, on the basis of the price advantage ensured by the scheme. This year, total export earnings from garments decreased by 5.3% in the first seven months of the year, compared to last year. Export incomes from the US dropped by a large 27.1% over the seven months of January to July. Export earnings from the EU on the other hand recorded a slight growth of 1.8%, compared to last year.

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