Chairman of the Ceylon National Chamber of Industries (CNCI), Canisius Fernando states that the majority of local industries are under threat today nearing ‘close down’.
In a press release he has mentioned that the business environment has been tightly circled by an indecisive triangle of economic difficulties, political uncertainty and social unrest. All these broad issues equally hit the industries. We do understand that the Government had to take hard monetary and fiscal policy decisions in the face of dearth of foreign reserves, constant deflation of local rupee and rapid increase of inflation.
Although the situation is opportune for exports, we all know that the country’s imports are always high above to that of exports. In addition to the import of essential items namely, fuel, medicines and food items; the import of materials and machines are of paramount importance to the industrial sector. Restrictions to open up letters of credit, import constraints, clearance delays, high cost of materials due to rupee deflation are on one hand and constant power cuts, difficulty in obtaining fuel, employee demands, high interest rates and increasing overheads are on the other hand to sky rocket the cost of production.
The political uncertainty barricades to take proper and timely economic policy decisions by the Government creating uncertainty among the industrial sector especially in taxation and a lot of others. Also it paves no way of taking responsibility and accountability.
For example, recently the government started discussions to initiate the China – Sri Lanka Free Trade Agreement for which we have not been invited, being the only national chamber for industries in the country, which has been incorporated by an Act of Parliament.
These discussions have not been organized either by the Ministry of Industries, Ministry of Trade or the Department of Commerce. We do have serious concerns about the particular FTA and we would like to make it a point to urge the Government to invite the Ceylon National Chamber of Industries for any future discussions related to the industrial sector. Such instability also aggravates uncertainties and struggles, as many other parties trying to gain benefits.
Today it is a clear fact that there is a huge social unrest for their struggle in meeting ends in the face of dearth of daily essentials and high cost of living creating room for uncertainty about their future, education, health and survival. As the people struggle today for a change, the employees of both public and private sectors will soon struggle for higher salaries.
This situation will, in turn, be worse when the sustainability of the industries is in question thereby losing their employment. It will be another significant socio-economic blow to the Government. Many of the industries in the SME sector have already either been closed or paralyzed for issues of material shortage, power and fuel issues, high interest rates, increasing cost of inputs etc. Majority of the companies do not have power generators, but they use power driven machines. Even if the generators are used, feeding them with fuel is another problem. Many SMEs and company employees are spending hours and days in queues to purchase fuel. Many employees often ask for leave to get their bikes and vehicles fueled. Unexpected and high increases of recent fuel prices have become another big issue not only to increase the overheads but also to a substantial number of employees who travel in motor bikes and cars. If the situation prevails so long, many of such skilled employees will opt to leave the organizations in seeking opportunities overseas, paralyzing the organizational functions.
Companies are in impasse to create even a short-term plan today with the futuristic uncertainty. They resort to day to day strategies for survival. Running without a proper corporate plan hampers operational efficiency. Letting along the FDI attraction, driving strong local industries is the timely need to keep the economic healthiness even at this level. As a nation, for the country to move forward, the local industries should run uninterruptedly. We are not supposed to extend any political advice to implement a change, but our earnest wish is for the government to take the best solutions, always keeping the country and the nation first in order to create an environment for the industries to operate without hindrance, CNCI Chairman further added.