Foreign remittances, the main economic driver, drying up in the north
Foreign remittances to the northern city of Jaffna are drying up now compared to earlier when the city was built on this input, according to a Jaffna chamber official.
This view was expressed by K. Poornachandran, President, Chamber of Commerce and Industries of Yarlpanam speaking at the launch of the 6th Jaffna International Trade Fair JITF) held in Colombo last week.
Rishard Bathiudeen, Minister of Industry and Commerce said that the Northern Province recorded the highest regional GDP growth, reporting 26 per cent growth in 2012, mostly contributed by industry and service sectors, banking and people in the Northern Province (NP) have more money than in other provinces, due to relatives abroad who remit essential foreign exchange.
JITF is scheduled to be held from 23 to 25 January 2015 and it would be a meeting place for investors as there are new territories in various aspects of trade and industry. FITF is expected to feature construction, travel industry, food and beverages, packaging, automobile industry, ICT, finance, apparel, agriculture and consumer goods.
K. Poornachandran, President, Chamber of Commerce and Industries of Yarlpanam said that the event is considered as a pivotal meeting point for the business community in Jaffna.
While the minister said the Tamil diaspora is pumping in a lot of money, Mr. Poornachandran said that foreign remittances are gradually drying up and there is no industry taking place in the province.
He said that industrialists in Jaffna are still struggling with financial issues and said that the progress in the region is very slow. Added to this, he said that there is lack of financial assistance and investment.
He told the Business Times that before the war there were around 1,300 corporate entities which number now is reduced to a mere 100 companies. Industrialists have no money and raising capital is an uphill task.
He said that even though there are 125 bank branches their collateral demands are high. In addition, the industrialists cannot pay 12 to 13 per cent interest rates. Even though the Central Bank has introduced financial schemes they have not been successful on a large scale, he pointed out.
Most of the development in the area is from government-sponsored infrastructure projects and little has been funneled into developing businesses, Mr. Poornachandran noted. He said that they expect the things to be better when the infrastructure development is completed and then with the infrastructure in place the investments would be increased.