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Business community fears supply chain breakdown

11 Jul 2022

  • Exporters, industrialists concerned over political instability hindering economic growth
  • Urge continuous functioning of local value chain
  • Wants a stable Government as soon as possible
  By Imesh Ranasinghe  Exporters and Industrialists fear a supply chain breakdown in the coming weeks, as the third Sri Lankan Government since April is set to resign after protests on Saturday (9), creating political instability that will hinder economic growth. Speaking to The Morning Business, National Chamber of Exporters (NCE) General Secretary/CEO Shiham Marikar said that exporters want to ensure that the value chain within the country – the Sri Lanka Port Authority, Customs, and other stakeholders that have an indirect hand in trade and exports – continues functioning. He said that exporters want a stable Government in place as soon as possible for such stakeholders to function. “The exporters have already gone through so much, but despite all those things, they have been resilient and have been bringing in $ 1 billion to the country every month,” Marikar said. Moreover, he said, political instability is already having a negative impact not just on exporters, but on trade overall, adding that exporters are facing challenges in retaining international buyers and building their confidence over the past few months.  He added that only the export sector is bringing in a considerable amount of foreign currency to the country at the moment, which is needed to repay any financial assistance acquired from sources like the International Monetary Fund (IMF), India, Japan, and China. He said that exporters, including SMEs, have to be assured that they could continue to operate without any major breakdown. Meanwhile, Ceylon National Chamber of Industries (CNCI) Chairman Canisius Fernando told The Morning Business that most small and medium industries have shut down operations due to the lack of fuel, while only the micro industries continue to function.  He added that the shortage of fuel, especially diesel, had created a huge problem for many industries, as ensuring the transport of employees to their workplaces has resulted in huge overhead costs to industrialists. Moreover, he said that exporters do not have an issue with the purchase of fuel, as they can use dollars to do so, but local industries face many challenges in obtaining fuel and purchasing dollars from banks.  He said that micro industries are operating at the moment, as their employees typically live close enough to the workplace to walk, but that medium-scale industries have completely shut down, as they depend mainly on transport for their operations. He said that the transport of shipments could not be done on time because of the diesel shortage, and added that diesel should be made available to reactivate the economy. “If the supply of fuel is not normalised, then we cannot run companies, which applies to both exporters and the local industries,” Fernando said. He said the situation would grow worse now, as there is no Government to take decisions, and added that a proper solution should be implemented quickly, noting that a stable Government will not be formed right now as an interim Government will be appointed for the time being. However, he said, appointing an interim Government will show the world that the democratic process is working, and thus Sri Lanka would receive aid from the international community and remittances would also start to flow inwards. Moreover, Joint Apparel Association Forum (JAAF) Secretary General Yohan Lawrence said that the apparel sector primarily wants political stability in the country. He said that buyers are conscious of the situation in the country, and will continue to monitor it. Lawrence added that new orders are coming in at the moment, but that buyers are asking a lot of questions, due to which the sector is not seeing orders coming in at the normally expected rate.


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