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Politics pricks a hole in Christmas sales balloon
With just a month to Christmas, the trade sector is grappling with the repercussions of the political turmoil, with business slowing, imports scaling down, the rupee rising against the US dollar and uncertainty over the future. Several large-scale importers in Pettah claimed sales were down nearly 45 per cent compared to the 2017 festive season.
“The situation is serious. These politicians are playing with our future and the people are helpless,” one trader lamented.
This December’s sales will be poor, the importer said, saying the public was reluctant to spend money in uncertain times.
“Those who have answered government tenders have been kept waiting for payment because the government is in disarray,” he added, pointing out that without timely payments by the government, small and medium-scale importers and traders found it hard to carry on with business.
A senior Customs official who did not want to be named said officials had noticed a decline in imports mainly due to the depreciation of the rupee as well as previous taxes and restrictions imposed on non-essential items.He is of the view that most businessmen and importers are biding time until the Budget.The travel and tourism sector also foresees problems.
IATA Agents Association President Rizmi Reyal said the travel advisories issued by several foreign countries about visiting Sri Lanka could lead to higher premiums being charged for travel insurance.He said maintaining law and order is paramount for the tourism industry and expressed concern about the damage to the brand name “Sri Lanka” through negative publicity in the international media.
“Our neighbours and regional competitors are capitalising on our loss,” he pointed out.
The hotel industry is grappling with cancellations of advance bookings.In the retail sector, the managing director of a leading clothing store said he did not believe politics would have a major impact on his sales next month.“The delay in the Budget will not have a direct impact on our sales,” he said, but added that the depreciation of the rupee did adversely affect his business.
He said the decrease in the Value Added Tax (VAT) on imported fabric and the increase in the VAT threshold from Rs. 50 million to Rs. 100 million were encouraging factors for his business.On the other side of the spectrum, Abdullah Azeez, the founder partner of fruit importer Sunchoice Import and Export, said sales had plummeted even before the Christmas season began.
He predicts sales would be down 20 per cent compared to last December, citing the depreciation of the rupee and the instability of the economy as the prime causes. B.L. Anushka, partner of a company that imports confectionery items, says sales have dropped compared to last year and said if taxes are increased his business would suffer further.
| Falling rupee not our fault, says minister The political tumult has brought on an economic crisis with an increase in official interest rates from 5.62 per cent to 9.89 per cent affecting the sale of sovereign bonds and leading to an increase in foreign borrowing, UNP MP Eran Wickramaratne said. “Loan repayments of US$1 billion taken in January 2018 and $500 million in April 2018 are now affected by this uncertainty. US$165 million has been lost in the debt and equity markets. The currency depreciation will also see imported commodities and vehicles go up in price,” Mr. Wickramaratne said. Imports of essential items such as dhal and onions could cost more, due to the depreciation of the rupee, he said. The Minister of International Trade and Investment Promotion, Bandula Gunawardena, blamed the rupee’s depreciation on the United National Party government. He said the rate to the US dollar was Rs. 131 in 2015 when the UNP took over and Rs. 144 in 2016, and that the rupee had continued to fall in value to where it is almost Rs.180 now due to poor economic management by the Ranil Wickremesinghe UNP administration. The Central Bank said the action by Moody’s “does not properly reflect the country’s macroeconomic fundamentals, and therefore unwarranted”. The Ceylon Chamber of Commerce (CCC) expressed deep concern last week about the political situation in a statement issued together with the International Chamber of Commerce Sri Lanka, Joint Apparel Association Forum and The Women’s Chamber of Industry and Commerce. “The events of the last few weeks have resulted in absolute instability which is a situation that Sri Lanka simply cannot afford,” the institutions warned. | |