Diversifying exports thro’ incentives for entrepreneurs
Sri Lanka is to diversify its export products considering the current demand in the export market and develop a mechanism to reach non-traditional destinations, Finance Ministry sources revealed.
This initiative launched under the Enterprise Sri Lanka Programme has given priority to encourage the existing exporters and start-ups and strengthen the supply chain of the export products, Finance Minister Mangala Samarweera said at a top level official meeting recently.
Sri Lanka’s exports were being concentrated on a few products such as tea, gems, fruits and spices, he pointed out emphasising that there is a huge export potential for the organic agro products, spices, handicrafts, biodegradable products, Ayurvedic products, ceramic and porcelain etc.
According to the external sector performance report of the Central Bank, in February 2018, earnings on merchandise exports recorded a moderate growth, reflecting the impact of a low base for comparison in February 2017 when earnings contracted.
In nominal terms, export earnings in February 2018 amounted to US$916 million. This meant a break in the recent momentum in merchandise exports, which recorded double-digit-growth rates year-on-year basis for seven consecutive months.
With the aim of improving this situation, a special loan scheme titled “Jaya Isura” has been introduced to assist exporters; he said adding that they will be given loan facilities through state owned and private banks two times higher than the loan amount of other borrowers.
A sum of Rs.400 million will be distributed among exporters of agriculture, fisheries, tourism and IT fields.
The aim is to create a large number of new entrepreneurs by providing all necessary facilities for them, Minister Samaraweera said adding that Sri Lanka has been able to achieve one of the best export performances last year and it will record a new high this year.
Small enterprises with an annual turnover between Rs. 10 million to Rs. 250 million and with an employment cadre of 5 to 50 engaged in a range of specified activities are eligible for a maximum loan amount of Rs.100 million with the interest subsidy of 50 per cent and a lending rate at 6.75 per cent.
Medium entrepreneurs with an annual turnover between Rs. 250 million to Rs. 750 million and with an employment cadre of 51 to 300 who are engaged in the same sectors are eligible to a maximum loan of Rs. 400 million with an interest subsidy of 25 per cent and lending rate at 6.75 per cent.
In another loan scheme named “Swashakthi, a credit facility up to a sum of Rs. 200,000 will be extended at a concessionary interest rate of 5.5 per cent through 17 public and private banks while a non-recovery financial grant of Rs.50,000 will also be given along with the loan to meet the preliminary expenses of the business.
Meanwhile, a sum of Rs.250,000 will be extended for developing the existing businesses at the same concessional interest rates.
These loan sachems will come into effect from next month, he pointed out adding that the banks will be encouraged to move from collateral based lending to cashflow based lending which is more helpful to entrepreneurs.