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Exporters upset about CBSL’s forex ‘allegations’

03 Aug 2022

  • Export Chamber demands figures on exporters not remitting proceeds in full 
  • Says most exporters are ethical and put country first
At a crucial point where Sri Lankan exporters have committed to supporting the economy, the recent statement by the Central Bank of Sri Lanka (CBSL) alleging that exporters are not remitting their full export proceeds to the country has raised concerns, according to the National Chamber of Exporters of Sri Lanka (NCE). The NCE has thus requested the CBSL to verify its figures, noting that when Sri Lanka Customs releases export figures each month, it should be matched against the approved credit period for the repatriation of export proceeds. The NCE stated that under the Repatriation of Export Proceeds into Sri Lanka Rule No. 5 of 2021, published by a Gazette Notice, the CBSL enforced exporters to remit foreign exchange earnings and convert them into Sri Lankan rupees, with the exception of allowed payments. In this regard, the figures provided by the CBSL ought to be thoroughly investigated and action taken as per prevailing laws and regulations, the Chamber noted, adding that it is the responsibility of the CBSL to monitor the repatriation and conversion of export proceeds to the country with the support of a robust system and to penalise those who do not conform to such formalities. In this regard, the NCE said: “The statement by the CBSL clearly accused exporters for not remitting export proceeds earned overseas, denying the country much-needed foreign currency during this unprecedented economic meltdown.” Further, the NCE mentioned that exporters have registered export invoices with the CBSL through the Customs Declaration system (CUSDEC). As per the ruling by the CBSL, they have to remit the full export proceedings to Sri Lanka within 180 days, resulting in a penalty if the stipulated days are exceeded.  However, if such delays were due to genuine reasons for not accepting goods on time, the CBSL has recalled the penalties imposed. Yet, the CBSL should have a mechanism to check the time difference between filing the customs declaration and remittance of export proceeds, making a note that exporters are permitted to have 180 days of credit. In a practical world, export proceedings of the previous month will be affected anytime between one and 25 weeks.  “A majority of Sri Lankan exporters are considered to be ethical traders who put the country first. Despite many drawbacks and challenges created by stakeholders on poor governance, fraudulent practices, depletion, and lethargic responses, Sri Lankan exporters have sustained the export industry, and as of today, have become the sole foreign exchange earner to the country generating a significant portion,” the Chamber noted.  The NCE stated that the CBSL, being the apex body for managing the fiscal condition of the country, ought to play a massive role in stabilising the country’s economy. “Simply highlighting long years of malpractice by exporters for not remitting forex earnings is only showcasing the ineffective governance of this highest State authority,” the Chamber emphasised.  “We are surprised to hear that even a year ago as stated by CBSL, Sri Lanka Customs reported $ 985 million worth of exports during the eight months from January to August 2021. During July/August that year, exporters repatriated an average of $ 640 million a month,” a senior official of the NCE stated. According to the Chamber, they have discussed this matter with their members and have emphasised the importance of following the CBSL’s rules regarding forex remittance, especially during this crisis, as Sri Lankan exporters are duty-bound to do so. The NCE further added, however, that most export sectors such as apparel require export proceedings to import raw materials. Moreover, exporters have to pay for logistics, packaging, and also fuel in US dollars. In some cases, imports of raw materials account for 60-65% of export revenue.  The NCE is of the view that systemic change should begin with exporters and the Government to introduce an incentive scheme for the repatriation of export proceeds through accurate invoicing. Heavy penalties for non-compliance will certainly bring the expected change in a country’s forex inflows. There has to be a system to funnel export remittances to the CBSL through the banking system where the CBSL can make allocations for imports, the Chamber noted. The NCE stated it is committed to supporting the authorities to engender change in rebuilding our economy through exports.   


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