Number of closed entities may rise - CNCI Chief | Page 2 | Sunday Observer
- Power and forex crisis

Number of closed entities may rise - CNCI Chief

6 February, 2022
Canisius Fernando
Canisius Fernando

Around 20 percent of the mainly small and medium sector enterprises which are members of the Ceylon National Chamber of Industries (CNCI) have shut down operations since the last quarter of 2021 and this number is expected to rise if the power and forex crisis which is causing port clearance delays and high demurrage costs persists, a top official of the industrial chamber told the Sunday Observer Business on Friday.

He said it has come to a stage that even large scale companies cannot go on with power outages, scarcity of fuel, raw material for manufacture due to the acute shortage of foreign exchange which has led to port clearance delays and issues in opening LCs for imports.

The number of entities that will call it a day will rise if a solution to the crisis is not sought  urgently, said CNCI Chairman Canisius Fernando.

According to importers and exporters, shipping costs had risen by 300 percent since the end of October last year which has aggravated the situation for the sector.

Disruptions to global supply chains too have worsened the plight for merchandise trade which   has slumped sharply since the outbreak of the global pandemic.

The chamber has proposed measures to the Ministry of Industries to ease the burden of importers and exporters foremost in overcoming the domestic power crisis which has taken a hit mainly on small and medium sector enterprises whose revenue is below Rs. 500 million and do not enjoy the luxury of installing generators, Fernando said. The chamber has requested the ministry to either grant concessions for either raw materials or for value added exports.

Local manufacturers are  dollar earners too as they add value to raw material without which the country will have to import spending the much needed foreign exchange, Fernando said adding that the policy makers should recognise the role and contribution of importers and exporters who help save and bring in foreign exchange to the country.

Companies that import raw material under dangerous cargo (DC) category are in hot water as they are unable to clear the consignments from Port due to the delay in endorsing shipping documents in time by banks.

The import-export sector has been battered since the Easter Sunday attacks followed by the global pandemic which forced them to restrict  operations.

Businesses have not come anywhere near the pre pandemic level either in operations or revenue earning.

Most of our members are incurring huge losses while many are even unable to make break even due to the domestic and global crises triggered by the pandemic, Fernando said.

This section reported last week the sad state of industries which are struggling to keep their nose above water with no adequate support from lawmakers who have taken cover under the pandemic and have made it an excuse to come up with viable solutions to the burning issues of the business community.

According to the Sri Lanka Footwear and Leather Products Manufacturers Association the sector is in a precarious state owing to the absence of raw material and components for manufacture.

The sector accounts for over 300,000 direct and indirect employment in the country.

The Joint Apparel Association Forum of Sri Lanka (JAAF), the apex body for the apparel sector has called for intensive dialogue and greater stakeholder collaboration to resolve the current forex crisis, as well as legislative reforms towards a more sustainable medium-long-term trajectory for Sri Lankan apparel.