SMEs ask government for relief and restructuring of loans
Small and Medium Scale (SME) industries have made a clarion call on the Finance Ministry and the Central Bank to restructure their loans and extend a concessional financing scheme helping them tide over the present difficult economic situation.
Most of these enterprises are facing liquidity and cash flow issues due to the loss of sales and the delay in revival and this could lead to bankruptcy and the closure of their businesses and loss of jobs of workers, the National Trade Protection Council (NTPC) warned.
Addressing a media conference in Colombo recently President of the Council Mahendra Perera noted that they are burdened with numerous issues which could lead to the closing down of the majority of SMEs soon.
The government’s inaction to remedy the situation and lack of any concern on the plight of the SMEs and favouring large scale companies by authorities have pushed SMEs into dire straits, he pointed out.
According to a recent survey conducted by the Industrial Development Board, over 80 percent of these enterprises either had to close operations or faced significant falls in revenue.
The value addition from this sector to the GDP will come down to very low level from 52 percent of GDP posted before the 2019 Easter Sunday terror attack and COVID-19.
Among the main reasons for this setback was the difficulty in finding raw materials and necessary inputs for the production process of factories and the drop in demand for finished goods during the period of recession, the survey revealed.
The main issue faced by the industry is apparently the breakdown of their supply chain due to lockdowns and curfew.
In addition, majority of them face working capital problem as they do not receive payments for goods supplied and other income sources have also reduced.
The challenge of the Government will be to implement measures for the sustenance of business and minimise job losses, the survey pointed out.
The NTPC has urged the government to suspend COVID-19 affected business loans for three years allowing businesses to recover and start paying at a concessionary rate of interest.
The Council has made a request to the President to issue an order to all banks to stop auctioning properties mortgaged by small and medium entrepreneurs and suspend the Parate Execution powers granted to banks.
They also proposed to suspend accumulated VAT payment dues and income tax for three years giving some relief space for businesses.
National Construction Association of Sri Lanka Chairman Susantha Liyanaarachchi told the media conference convened by NTPC that their customers cannot pay more to compensate the ever increasing costs for raw materials after giving the contract and the advance to building contractors under the present economic situation.
Cement prices have sky-rocketed along with the prices of other materials like cement, steel, tiles, sanitary ware, sand etc amidst the shortage of such items, he said adding that house building and repair work have become costly affairs for the people.
President of the
Sri Lanka Footwear and Leather Products Manufacturers Association P.G.D. Nimalasiri urged the Finance Ministry to change the present tax structure for the benefit of local manufacturers in the forthcoming Budget 2022.
He also suggested permitting duty free import of quality accessories not manufactured locally requesting concessionary or interest free loans to fund machinery tools, and working capital.
Vehicle Importers Association of Sri Lanka President Indika Sampath Merinchige said that the import of Japanese vehicles which are at least within seven years from the vehicle manufacture date will have to be allowed to rescue motor traders.
The other option was to request large scale vehicle assembling companies to promote their products in the country or allow local vehicle importers to import electric cars to support the economy.