In 1983, Sri Lanka experienced civil conflict and many foreign investors, including foreign garment industrialists, shied away from the country. Some moved to Bangladesh; others moved to newly emerging low labor-cost East Asian countries, such as Cambodia and Viet Nam. Labor costs were comparatively low in these countries and, by the mid-1990s, Sri Lanka could no longer compete on the basis of low-cost labour and measures had to be taken to improve the productivity of the sector. Low productivity has offset to some extent the low labour-cost advantage of Sri Lanka.
A study on the productivity of the garment sector shows that there are a number of issues pertaining to low labor productivity in the garment industry and that there is substantial room for improvement (Kelegama and Epaarachchi, 2002). One area that requires upgrading is the development of human skills to deal with the technological changes taking place in the garment industry. To meet the growing demand for semiskilled workers in the industry, two training institutions, viz, the Textile Training Center and Service Center and the Clothing Industry Training Institute came into operation, both in 1984. In addition, a private sector training institute, the Phoenix Clothing Training Institute, was established in 1998.