Friday Mar 20, 2026
Friday Mar 20, 2026
Friday, 20 March 2026 00:00 - - {{hitsCtrl.values.hits}}
The unfolding disruptions caused by the Middle East crisis are impacting industries differently, business leaders weighed in yesterday.
Sri Lanka’s tourism sector is losing between $ 80-100 million a month due to cancellations triggered by the Middle East conflict, The Hotels Association of Sri Lanka (THASL) President and Siddhalepa Group Chairman/Managing Director Asoka Hettigoda said, as private sector leaders across apparel, tea, and rubber industries outlined mounting cost pressures, supply disruptions, and emerging demand risks from the same crisis.
Speaking at a webinar hosted by the Institute of Certified Management Accountants of Sri Lanka (CMA Sri Lanka), Brandix Group Managing Director Hasitha Premaratne, Tea Exporters Association Member and Stassen Exports Ltd., Chief Executive Officer Niraj de Mel, and DSI Samson Group Chairman Dr. Kulathunga Rajapaksa said their sectors are already seeing early signs of impact through higher petroleum-linked costs, freight disruptions, and uncertainty across key export markets, with risks likely to intensify if the conflict persists beyond the next few months.
Hettigoda said the shock has hit the tourism sector at its most critical earning window, with nearly 60% of annual revenue generated between December and March. “We are seeing, at least for the month of March, a 30 to 40% reduction in Europeans,” he said, noting that European travellers drive a disproportionate share of revenue. “Even though in headcount, we are down only 40%, I think in terms of real revenue, we are down by at least 50%.”
He said daily arrivals of around 5,000 to 6,000 continue, but are increasingly dominated by lower-spending segments. “The tourists that we are attracting—may that be Indians, may that be others—are not the high spenders,” he said, adding that revenue has lagged despite higher overall arrivals compared to previous peak years. “I think we are losing at least $ 80 to $ 100 million a month.”
Hettigoda said forward bookings for May to July are weak, with “no real numbers other than Asians,” and warned that rising travel costs and uncertainty are discouraging long-haul travel. “People are now looking at, ‘are we going to spend twice the amount of money for the same services, or shall we wait till the crisis finishes?’” he said.
He added that travel advisories linked to fuel shortages and concerns over mobility within Sri Lanka are also affecting sentiment. “There is suspicion created: ‘am I going to get stuck halfway through?’”
Premaratne said the apparel sector has not yet seen immediate disruption to orders, but warned that cost pressures will begin to build from April if current conditions persist. “We haven’t seen too much of damage on order books,” he said, noting that shipments continue in the short term. However, he cautioned that “from about April onwards, these will start impacting in a meaningful way.”
He said petroleum-linked raw materials are the primary concern. “The challenges are primarily around the raw material cost related to the synthetic fabrics, which are based on petroleum,” he said, adding that dyes, chemicals, and utilities will also be affected. “The utility costs, especially the diesel, furnace oil, and even the electricity, there is a possibility of the prices going up.”
Premaratne also flagged rising logistics costs. “Freight charges have gone up and are going up,” he said, warning that this will add to overall cost escalation. He said while short-term operations remain stable, the longer-term risk lies in demand. “If the situation continues, then that can lead to a demand drop as well,” particularly in key markets such as the US and Europe.
de Mel said the tea sector faces immediate exposure due to its reliance on Middle Eastern markets, which account for around 55% of export volumes and 50-52% of foreign exchange earnings. “The initial reaction was, don’t ship any tea going towards Iraq, Iran, Kuwait, Syria, or Jordan,” he said, noting that shipments were halted and some cargo in transit redirected.
He said the disruption has extended to trade routes, particularly via Dubai, a key re-export hub. “Certain shipping lines just offloaded the cargo at different ports,” he said, adding that exporters are now dealing with logistical uncertainty and higher costs. “There are surcharges and insurance—all that is going to eat into the ultimate tea price.”
While auction prices initially weakened, de Mel said they have stabilised over three weeks due to alternative demand. “The prices seem to be stabilised. Many other countries are coming in with orders,” he said. However, he warned that prolonged disruption could create structural challenges. “There is warehousing capacity that we need; you can’t keep unlimited tea stocks,” he said, cautioning that pressure will ultimately fall on smallholders.
Dr. Rajapaksa said the rubber manufacturing sector is already facing a sharp cost shock, driven by its dependence on petroleum-based inputs. “We depend on imports for over 90% of our inputs, mostly petroleum-based,” he said. “All our raw materials and synthetic rubber prices have gone up by 50%.”
He said supply chain disruptions are compounding the problem. “Our shipments are being very badly delayed – new orders are asking for high insurance premiums and even the freight charges,” he said, adding that some supplier facilities have also been affected. “Some of the companies have been closed down, so naturally, the supplies are affected.”
While existing inventories provide a temporary buffer, Dr. Rajapaksa warned of a near-term crunch. “We should be able to manage for the next few weeks but after that, we are in a sort of a dark situation,” he said, noting that unfulfilled orders and supply constraints could disrupt production after the Sinhala and Tamil New Year.
He also highlighted operational risks linked to energy and labour mobility. “We need fuel for transport of workers, and that is not happening,” he said, adding that continuous production processes in rubber manufacturing limit flexibility. “If it’s not ending, we will have to face a serious situation.”
Business leaders said the impact of the Middle East conflict is being transmitted across sectors through energy prices, logistics disruptions, and demand uncertainty, with the extent of the fallout dependent on how long the crisis persists.
