News
Importers suffer from barriers and forex shortage
Some bathroom fittings that are in short supply
Importers of non-essential items have raised concerns over further restrictions by the government citing the US dollar shortage, saying their businesses are suffering.
But the government says restrictions are only placed on the quantity of imports.
The Finance Minister Basil Rajapaksa and Central Bank Governor Ajith Nivard Cabraal favour further clamps on imports.
On September 8, a 100% cash margin deposit requirement was imposed on imports of selected non-essential and non-urgent goods and it was removed in October. This applied to 623 items including home appliances and butter.
The European Union had also raised serious concerns over broad import restrictions, citing World Trade Organization commitments.
Importers say their business would be ruined as they are unable to clear their shipments.
Rajendran Dushanthanan, manager of a leather and chemicals importing company in Pettah said that he was only able to clear a shipment of leather after negotiating with trade ministry officials for a month.
“Our company imports leather for footwear. There are many local shoemakers who depend on the materials we import. Slipper boards and chemicals used on shoe soles are in short supply,’’ he said.
Banks refuse to open letters of credit and have asked importers to wait for three months to be issued with foreign currency, he said.
“Our company had to fight for an entire month just to clear our shipments, however when we managed to get our shipment cleared we had to pay over one million rupees as demurrage,” he said.
Importers of bathroom fixtures are also concerned.
Imtiaz Zubair 55, the manager of an importer on Duplication Road, Colombo, said suppliers are requesting direct payments.
“Banks are even reluctant to open US$5,000 letters of credit [nearly one million rupees]. The banks tell us to wait for 180 days as they are facing a shortage of dollars,’’ he said.
Mr Zubair said most of his imports are from China.
Suppliers are wary of engaging with banks whose credit ratings have been downgraded.
“Due to the prevailing dollar issue, our stores are depleted, Bathroom items are unavailable and we are losing sales,” he said.
The demand for vehicle parts has also skyrocketed.
An importer, Dulith Prasanna, said cargo can’t be cleared and banks are reluctant to open LCs.
“When we don’t get dollars to pay the suppliers and shipping companies, we are unable to clear the cargo. As a result, we have to pay more dollars as a demurrage to shipping companies and the Colombo Port when ships remain anchored in the harbour due to our payment delays,’’ he said.
Mr Prasanna who has been in the spare parts business in Wattala for over 35 years, said that spare parts need to be imported to halt rising prices.
“People are repairing and using their vehicles as vehicle imports ended during the pandemic. This has increased the demand for spare parts,’’ he said.
However, a senior official at the State Ministry of Samurdhi, Household Economy, Micro Finance, Self-employment and Business Development, said strict import restrictions will not be imposed on non-essential items.
The Additional Secretary of the State Ministry, R.M.P Ratnayake, said importers would not be badly affected by any restrictions.
A decision has not yet been taken to limit non-essential imports. However due to the US dollar issue there are limits on quantity. These efforts are to help the economy recover, he said.
Shehan Semasinghe, the State Minister of Samurdhi, Household Economy, Micro Finance, Self-employment and Business Development, told the Sunday Times, that restrictions are temporary.
If the country receives foreign currency, the government would gladly remove restrictions.
He said the government would be forced to impose more restrictions if people fail to take social responsibility and allow the pandemic to spread.
“The government would like to drop the restrictions and allow the economy to recover, but we can only act on it if the Covid-19 pandemic is controlled. We call on people to follow health guidelines and take all vaccinations,” he said.
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