Frontpage Journal – Economic Insights
The question is no longer whether Sri Lanka can become a major manufacturing player in South Asia. The question is how. For too long, the conversation has been about catching up to countries like Vietnam and Bangladesh in terms of scale and cost. But trying to out-cheap Bangladesh or out-volume Vietnam is a losing strategy. Sri Lanka cannot compete by being the lowest-cost producer. What it can do is compete on intelligence, reliability, and strategic value. That’s where the real opportunity lies.
Bangladesh has carved a niche through sheer labor scale and cost competitiveness, especially in garments. Vietnam has mastered the art of agility, constantly adapting to global shifts and aggressively courting high-tech supply chains. Sri Lanka, while geographically blessed and politically stable by comparison, has been slow to reposition itself. But now, with global manufacturing looking for resilience over cost alone, the window is opening. The global supply chain playbook is being rewritten, and Sri Lanka still has a seat at the table, if it chooses to use it wisely.
Competing with regional giants doesn’t mean copying them. It means offering something they can’t. Sri Lanka should be aiming to become the region’s most reliable, sustainable, and ethically compliant manufacturing destination. This begins with moving beyond cheap labor and into smart specialization. In sectors like precision apparel, ethical fashion, electronics assembly, and niche pharmaceuticals, the country can build a reputation for quality, traceability, and trust.
But this only works if the fundamentals are right. Cost is still part of the equation. Sri Lanka must reduce operational friction that inflates the real cost of doing business. Power stability, logistics coordination, port efficiency, and customs responsiveness can all be improved through strategic reforms and digitalization. For C-suite leaders, these aren’t minor issues, they directly impact margins, delivery timelines, and global competitiveness. The more predictable the environment, the more attractive it becomes, even if labor costs are slightly higher.
On the quality front, Sri Lanka already has a head start in terms of compliance and ethical standards, especially in apparel. Brands trust Sri Lankan manufacturers to meet international certifications, labor laws, and sustainability targets. This trust is currency in a world where ESG requirements are tightening. The key now is to translate that trust into new sectors. Cleanroom-certified pharmaceutical plants, green electronics parks, and automated component manufacturing lines are the types of bets the country needs to make.
One of Sri Lanka’s most overlooked advantages is its talent potential. The education system produces a high number of STEM graduates, and there is a strong foundation in engineering and IT. What’s missing is the industrial alignment. Bridging this gap requires a bold, private-sector-driven push to create workforce pipelines for specific industries. Think Vietnam’s model of company-led technical training centers embedded within industrial parks. Sri Lanka can do this, better, even, if the incentives are right.
Government policy must also get sharper. Investment promotion cannot rely on brochures and roadshows alone. It requires credible, sector-specific strategies that speak to the real needs of global manufacturers. That means building custom investment packages around industry clusters, with fast-track approvals, land access, and embedded logistics. It also means building a long-term investment story around sustainability, skilled talent, and regional market access, not just tax holidays.
Sri Lanka has another card to play, its connectivity. Sitting at the crossroads of South Asia and the Indian Ocean trade routes, it is ideally placed to serve as a regional production and re-export hub. India’s manufacturing rise is an opportunity, not a threat. Sri Lanka can offer complementary capabilities, especially in finishing, assembly, and last-mile logistics. If the right FTAs, port expansions, and transshipment solutions come together, the island can plug into larger value chains with speed and efficiency.
The bottom line is this. Sri Lanka doesn’t need to be another Vietnam or Bangladesh. It needs to be the most trusted, efficient, and forward-thinking alternative in the region. That means fixing what slows us down, scaling what sets us apart, and selling what the world is now looking for: not just cheaper production, but smarter partnerships. If it gets this right, Sri Lanka won’t just compete. It will stand out.
