Exporters sound alarm on impact to revenue and Sri Lanka's credibility

08th June 2022

Joint export associations and chambers yesterday urged the Government to take immediate steps to find solutions to the ongoing energy crisis, as the prevailing situation has begun to impact productivity and that could impact revenue earned by the industry for the country.

The associations pointed out that the shortage of power and diesel for logistics is already impacting production and supply chains, and warned the situation could significantly impact Sri Lanka's reputation and credibility as a destination that could deliver.

"The key in this our reputation. Sri Lanka always had a reputation for delivering, and now our reputation is going down because we are not in a position to give a clear indication when our problems will be solved. We were all advised that by the fifth March there would be no power cuts and enough diesel. Here we are on seventh and we are back to the same situation. What the buyers will do is very simply move orders away from Sri Lanka to other countries," averred Yohan Lawrence from the Joint Apparel Associations Forum.

He added that the apparel sector is aiming for $ 6 billion in exports in 2022, but the prevailing crisis has put a damper on this figure, with costs mounting due to impacts stemming from the crisis.

Losing credibility is very dangerous, the participants echoed, as it would impact the future and remarked that it would be very difficult to attract buyers back to Sri Lanka. Over the past two years, industrial exports sustained the foreign income of this country and these industries need to be protected, the associations said.

The associations and chambers urged the Government to allow the market to determine exchange rate, as control was impacting the economy and operations. If the dollar is free floated it will benefit exporters who provide a significant part of the revenue to Government, they said.

"If we are to keep our factories running and to keep exports going, we need power to be supplied to our factories as crisis is creating a lot of issues to our commitments and production. Some of our machinery and equipment that cannot be run on generator power and we need power off the grid. The other large issue we face is also to do with fuel.

We feel the issue is getting compounded due to the foreign exchange crisis and that is also due to the prevalent exchange. We feel a certain amount of intervention is necessary, but we also feel that it should be driven through a free-market economy if we are to get out of the crisis, we are in. We have limited options available, and we urge the Government to take whatever the necessary steps urgently," said Ravi Dadlani from the Sri Lanka Association of Manufacturers and Exporters of Rubber Products.

The Ceylon Tea Traders Association lamented the lack of diesel had impaired transporting teas to the Colombo Tea Auction last week, which had then been shifted to this week. Its Chairman Manoj Udugampola, added value addition in terms of packaging and marketing was essential for Ceylon Tea to maintain its edge in the world market, and Sri Lanka's position was now under risk due to delays and shortfalls stemming from the crisis.

"We are beginning to lose that competitiveness because we can't supply some things on time. This will have a long-term effect as it is not easy to build up reputation. We can continue like this but we will go down," he added.

It is very inefficient for the industry to work with generators, as its costs about Rs. 30 per kilowatt over grid power they revealed. What is happening today is yet to yield its full impact on the export sector, and the country needs to act now and avoid a disastrous situation the exporters associations said.

They urged the Government to draw up a plan with viable sustainable solutions that can offer medium stability to all sectors. They added that full information must be shared so all sectors could become part of the solution, and remarked that better communication can help everyone to tighten belts and contribute in a more meaningful manner.

Russell Jurianz from the Sri Lanka Shippers Council warned if the US decides to sanction Russian fuel, global prices will move up sharply and only those with credible facilities with suppliers will get their fuel.

"If we don't have a plan of action, we will be facing severe consequences. So, we urge the Government to have a plan. We are getting solutions on a day-to-day basis, we need a plan of action that gives credibility to the country," he said.


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