Industry and the chambers of commerce were delighted on Friday over the decision for state banks to cut interest rates. Newton Wickremasuriya, Chairman, Ceylon National Chamber of Industries (CNCI) told the Sunday Times FT that they were happy with the decision taken by the President to reduce interest rates as this move will pave the way towards revitalising local industries which were badly hit due to their inability to pay high interest for borrowings.
Small and Medium scale Enterprises (SME) in the island will now be able to purchase new machinery, modernise their factories and introduce new technology and thereby increasing productivity, he said . Earlier bank lending amounted to 15% to 20% interest, which killed local entrepreneurs who had to borrow capital at such high rates. As imports were encouraged and tariffs reduced, the local entrepreneurs could not compete and folded up. The result was the closure of local production resulting in increased imports.
The reduction in interest rates will create employment and improve money circulation in the country, he said, he said. Senior Deputy President of the National Chamber of Commerce Sri Lanka Asoka Hettigoda said that the banks should lend money to Small and Medium Enterprises and his chamber plans to monitor as to whether these entrepreneurs are using the borrowings to upgrade their enterprises improving productivity. He added that such a monitoring mechanism is essential to reap the benefits from the reduction of interest rates on bank loans. These industrialists should use the funds for purchasing new equipment, modernizing of factories, and providing training for workers to improve their skills.
He noted that the country has no base to develop its resources and production. Companies and their salesmen decide on what to import and sell and they are based on the profit motive, rather than in the interests of the country. These policies have resulted in a situation that has increased the debt, caused a shortfall in production, and increased prices, unemployment and a reduction in the value of the local currency. This situation should be changed with the reduction of banks interest rates which will give a real boost to business ventures as it enhances the opportunity of access to funds. National Chamber of Exporters of Sri Lanka (NCE) President Rohan Fernando said the reduction in interest rates is very timely as exporters have been agitating for quite some time for a reasonable reduction in the lending rate that will encourage them to focus and make a contribution to the national economy.
Past President of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) Navaz Rajabdeen welcoming this initiative said that it will promote entrepreneurship in Sri Lanka . Small and Medium scale Enterprise (SME) sector and micro industrial sector will be benefited by the reduced interest rates. He said Sri lanka has become a dumping ground for substandard and cheap products and there was no opening for the SME sector as they were unable to borrow at high interest rates.
Welcoming the move, Dakshitha Thalgodapitiya , the Chief Executive of the Chamber of Construction Industry pointed out that it will be an impetus for economic growth. He said the rate cuts are helpful but this is not the sole criteria or condition for a business to be successful venture. It all depends on demand and quality of the product as well as salesmanship of the manufacturer.
The Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) said that anyone who borrows a hundred rupees will have to pay only one rupee a month as the interest component and this could spark considerable new businesses and investments. |
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