SL manufacturers deeply concerned with CB claims of alleged hoarding of export proceeds
View(s):The Sri Lanka Manufacturers and Exporters of Rubber Products (SLAMERP) on Wednesday expressed concern over claims by the Central Bank that exporters are hoarding export proceeds amidst an acute shortage of foreign currency.
“Our members are deeply disturbed on recent media publications placing all exporters to be hoarding export revenues, following a report and a press release published by the Central Bank (CB). As an industry, our members have been in dialogue with the CB and have followed the requirements that the CB has stipulated in receiving foreign exchange and cashing them to help the government to manage a difficult situation while exporters are also facing their own challenges. The rubber industry exporters just as any other major export sector has its challenges in sourcing raw material, continuation of production due to COVID-19, supply chain destructions due to the shipping crisis and the highly volatile global market where higher cashflow is needed to sustain the inventories and production,” it said in a statement.
The SLAMERP pointed out that it would have been a more practical gesture by the CB if these numbers were discussed, verified and validated with the trade prior to releasing of such data without detailed analytics with the industry. “In fact, the government has published guidelines on the monitoring process where Customs, commercial banks will monitor the proceeds with the respective clients and inform CB of any wrong doers after identifying individual companies that had violated the set out in procedures. In our view it is incorrect to tarnish the whole export industry at a time where the finance minister has clearly appreciated the export growth and the commitment of the exporters to increase the country’s export revenue under trying circumstances,” it said.
The association said that the industry is aware that although sometimes export entries are processed and cleared through Customs the actual shipment dates have become eight to 12 weeks delayed due to shipping space not being available or the containers get stuck in terminals at origin, or destination and sometimes turning over at transshipment ports. Some of the SLAMERP members could not ship out up to 40 containers per month due to such supply chain issues. Although the Customs system would declare exports cleared, either the shipments are sitting at a terminal or in a ship without reaching the buyers. Similarly, there are instances where international buyers hold goods at third party locations to manage inventory. All these can lead to delays in documentation and creates a mismatch between declaration and clearance dates which will result in proceeds receivables getting delayed, the statement said.
SLAMERP is of the opinion that before coming into any conclusion on export proceeds, any analytics must have a 12-month window and need to do an age analysis of the trading system rather than coming into conclusion based on three months of data. A short window data analysis will give a wrong picture. “In our opinion it is near impossible for a full scale exporter to work without one third of their export revenues to run factories maintaining raw material, labour, related services, settling loans and inventory management for future orders, may be a few million dollars of mismatch can be reconciled easily as these have to be also justified to the Inland Revenue Department for VAT purposes as well .Therefore, the numbers produced by the CB may not reflect the actual ground situation for a majority of the exporters,” it said.
The SLAMERP requested the government to do a thorough analysis of the data before publishing such information to the media, which has tarnished the image of the export sector in one go and creating doubt in the public eye. “It does not help to motivate or to build the image of the country and the multinationals who have kept faith in the sector, SLAMERP also believes it will not help the country by any means by painting all exporters as hoarding foreign currency for personal benefits. We call upon the CB and government to implement the proper system and identify any violations and take the due process on such violators and appreciate the efforts of the greater majority of the export sector,” the statement said.