Though Sri Lanka’s financial climate is slowly improving, exporters continue to navigate difficulties. While interest rates have eased and imports are allowed, exporters still grapple with various challenges.
This was opined by National Chamber of Exporters (NCE)Chairman Jayantha Karunaratne at their 30th awards ceremony in Colombo on Friday. Lake House was the Print media sponsor for this event again.
Exporters now grapple with new issues, such as unreasonable taxes imposed at an inappropriate time, impacting their operations.
Thin capitalization effective from finance year 20222- 2023 poses challenges for exporters.
“Dealing with huge exchange fluctuation, organizations have to borrow more funds to continue the existing volume of business. Once thin capitalization applies though, exchanges realize gains are taxable major part of the interest cost is not tax deductible. This poses a huge loss to the exporters.”
Furthermore, VAT changes effective from January 2024 are not clear as the tea purchases were not subjected to VAT in the past and may have to pay VAT and huge additional cash flow issues for tea exporters.
This, coupled with high energy and transport costs, renders commodity prices uncompetitive in international markets, prompting some industries to relocate operations overseas.
Merchandise exports for the first 10 months of this year have declined by 10%, signalling a concerning trend that, if continued, will have serious effects in 2024.
Despite the disruptions caused by the 2020 COVID pandemic and the subsequent economic crisis in Sri Lanka, these exporters have persevered through numerous obstacles.
“The challenges have been profound – from disrupted production and increased shipping costs to fluctuating exchange rates and soaring interest rates reaching an unprecedented 33%.”
During the initial stages of the economic crisis, exporters faced difficulties obtaining raw materials, with many overseas banks unwilling to accept LCs or standard payment terms, and insisting on advance payments.
“Amidst these difficulties, exporters strive to maintain their presence in the international market and I salute them.”
Apart from these challenges, exporters grapple with various obstacles in their day-to-day operations. The ease of doing business is crucial, as exporters spend significant time on unproductive and unnecessary issues.
“Authorities must urgently address these concerns to ensure the sustainability of export earnings for Sri Lanka.”
In alignment with our commitment to enhancing the business landscape, we will collaborate with the National Intellectual Property Office (NIPO) to facilitate Sri Lanka’s accession to the Madrid Protocol.
“This endeavour will provide significant benefits to local exporters through a streamlined trademark registration process.”
“Despite the current challenges, the NCE remains optimistic that our resilient exporters will persist in their excellent work, contributing to increased export revenue for Sri Lanka.”
Central Bank Governor Dr. Nandalal Weerasinghe, and several ambassadors were among the special invitees.
Shirajiv Sirimane