Sri Lanka's apparel industry has been told to fight harder in order to compete with regional giants, India and China. Although being singled out as a dynamic sector of the country's industry by the Sri Lankan Central Bank, the Board of Investment has told firms to elevate themselves. An improving economy could however be threatened by renewed violence.
Sri Lanka's economy expanded by 5.9 per cent in 2005, the country's Central Bank recently confirmed.
The apparel sector was highlighted by the Bank as one of the most dynamic parts of the economy contributing to the 6.3 per cent final quarter growth of the year.
Although being singled out by the Bank, the apparel industry has been told to elevate itself by the Sri Lankan Board of Investment (BOI).
The call from the BOI came during the 13th Annual General Meeting of the recent Sri Lanka Garment Buying Offices Association (SLGBOA).
It was especially aimed at improving production against emerging markets such as China and neighbouring India.
Textile mills that had previously been shut down are to be reopened in special export promotion zones, the BOI confirmed to the meeting.
The meeting also agreed that production costs needed to be reduced by introducing new technology and improving workers' skills.
Inflation set to fall
Last year saw strong inflation following the Tsunami which devastated the island's economy.
As a result, the Bank launched an aggressive monetary tightening policy and succeeded in reducing inflation.
It is also optimistic that rates could be further cut in the second half of 2006 so long as inflation is contained and the peace process makes progress.
Inflation for 2005 averaged at 11.6 per cent and declined to 10.3 per cent in February this year.
It is predicted by the Bank to fall to between 7 to 8 per cent for 2006.
Currency getting weaker
The rupee has been getting steadily weaker against important international currencies such as the US dollar, euro and the UK pound.
In 2005, the rupee had gained 2.3 per cent in value following post-Tsunami cash injections from world donors.
The currency is now being pushed down by stronger demand for its products, including apparel, and unstable political and security issues.
Peace between the government and the seperatist Tamil Tigers has held since 2003 and both sides held their first joint meeting in February.
However, violence in the North and East trouble spots of the country may create problems for a scheduled peace conference due to take place in Geneva, Switzerland on 19-21 April.
Fresh violence in the northern town of Jaffna has been reported today with Tamil Tigers killing four Sri Lankan soldiers.
