Eravur Fabric Park left with just one operational investor

By Nishel Fernando 

​Sri Lanka’s apparel sector is sounding the alarm over the country’s continued failure to attract and retain vital foreign direct investment, a crisis that is now visibly threatening the viability of key strategic projects like the Eravur Textile Manufacturing Zone.

​Despite initial strong interest, the dedicated fabric park in the Batticaloa district is struggling to maintain its momentum. Highlighting the severity of the situation, Joint Apparel Association Forum (JAAF) Chairman Felix Fernando revealed that out of an initial four to six investors who had expressed intent to commence operations in the zone, only one has actually seen the process through. 

This stark drop-off underscores the systemic bureaucratic hurdles and uncompetitive investment climate that are actively deterring the capital injections required to elevate the industry.

​Speaking at a recent press conference in Colombo, Fernando delivered a critical assessment of the country’s investment landscape. He pointed out that while Sri Lanka harbors an ambitious national target to reach US$ 30 billion in exports by 2030, a recent World Bank study indicated the country currently only possesses the capacity and infrastructure to achieve up to US$ 22 billion. Bridging this massive gap relies entirely on securing fresh, large-scale investments. 

However, Fernando noted that Sri Lanka is currently attracting a mere US$ 600 million to US$ 1 billion in annual foreign direct investment, a figure he deemed grossly inadequate to meet the country’s broader export and GDP targets.

​The struggles at the 300-acre Eravur facility directly reflect these wider operational challenges. Conceptualised as an environmentally sustainable, state-of-the-art raw material base designed to localise fabric production, improve supply chain traceability, and reduce foreign exchange outflows, the zone heavily relies on significant foreign and local capital. However, Fernando emphasised that investors are increasingly questioning the value proposition of setting up operations in Sri Lanka.

​The lack of critical market access through free trade agreements, coupled with outdated customs laws, Board of Investment regulations, and complex tax structures, act as massive deterrents that ultimately push potential investors toward regional competitors.

​Fernando urged the government to urgently address these operational bottlenecks before more opportunities are lost. He acknowledged that while the macroeconomic environment has shown slight improvements recently, entrenched bureaucracy and old ways of operating continue to stall real progress. 

For landmark initiatives like Eravur to succeed in increasing the local apparel industry’s value addition, Fernando stressed that the government must exhibit the courage to clear all administrative obstacles and transform Sri Lanka into a truly attractive destination for global investors.