Although the apparel industry has been through the wringer over the last couple of years, the outlook for 2024 and beyond is optimistic, according to the Group Chief Operating Officer of MAS Holdings Shakthi Ranatunga.

With operations stabilising, import restrictions being lifted and seamless access to energy, the industry outlook is seemingly positive.

This optimism is shared by regional players such as Bangladesh, which is capitalising on favourable trends arising out of market dynamics in the US and UK. Observing that “Bangladesh is a very formidable force in the industry,” Ranatunga pointed out that Sri Lanka should not try to compete with the massive US$ 40 billion industry player.

He explained: “I’m not sure that is the route Sri Lanka should take or has taken because we don’t have that level of scale. And we continue to be very effective in the way we’ve set up; therefore, we need to ensure that we get the most of what we have as a nation.”

Ranatunga outlined how Sri Lanka should differentiate itself: “We have the capability since as a fashion apparel manufacturing destination, Sri Lanka has all the top brands in its portfolio. It has invested in process excellence and technology. The industry as a whole has invested heavily in terms of bringing newness and innovation; that’s the differentiation that Sri Lanka as a competitor should focus on.”

“We have always differentiated ourselves in terms of our ethical practices,” he opined, adding that with sustainability being a key differentiating criterion today, Sri Lanka has a strong platform to compete on.

Yet, the journey towards sustaining the country’s competitive edge isn’t a bed of roses, mainly due to the “nature of how things have transpired in the last five to 10 years,” he cautioned – including changes in customer demand.

He noted that customers are looking at mitigating the risk of “putting all their eggs in one basket” when it comes to sourcing locations: “They will minimise or mitigate that risk by looking to other countries and regions that can give them a competitive advantage.”

The Group Chief Operating Officer of MAS Holdings believes that to differentiate itself, Sri Lanka “must play to its strengths and also try to do things that others cannot do.”

“We’re still in a good place but we have to work harder today [because] others have caught up,” he added. Collaboration is key to gaining a competitive edge – especially when it comes to market access.

Ranatunga elaborated: “In the past, Sri Lanka benefitted from certain trade agreements, which helped us propel this industry. Historically, the US and UK – and still today, Europe and the US – remain our biggest markets but we don’t have the best benefit of being in those markets right now.”

He stressed the need to seek market access in Asia, which is poised to be the next growth region: “We must be aggressive in terms of building relationships and getting access to those markets for us to benefit from Asia’s growth.”

Adding to this, he emphasised that India should be Sri Lanka’s top destination for strong collaborations and relationships, given its accelerated growth, market size and proximity.

As for collaboration, the vertical integration of supply chains is becoming extremely important. Ranatunga noted: “There is more of a drive [towards] regionalising the complete value chain from the fabric maker all the way to the finished goods. Today, we see a lot of fabric manufacturers crossing the line into apparel manufacturing.”

“That doesn’t mean you need to have [the value chain] as a one owned entity,” he stressed, noting that “it’s about building the necessary infrastructure in your region or locality to be able to service customers.”

And Ranatunga explained that “there is a requirement for greater collaboration between manufacturing, finished goods and the supply chain,” adding that it’s an important angle for Sri Lanka to improve.