Business

10th March 2002

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Cashew output falls
Cashew nuts being cleaned by a worker at Vanathavillu in the Puttalam district. Exports have dropped sharply owing to poor harvests in recent years and increased domestic consumption, prompting the government to allow imports of raw nuts for processing and re-export. 
Pic by M. A. Pushpakumara
Contents

Daytime power cuts disrupt industry

With power cuts being extended, manufacturing industries have been badly affected having to face mounting costs, disrupted production cycles, and an inability to meet orders on schedule. The worst affected are small industries and energy-intensive industries such as glass, cement and ceramic manufacture. 

"Power cuts are playing hell," said Tissa Fernando, managing director of Banalona Garments, a banian-knitting business which employs about 40 people. "Production has dropped but I still have to pay my staff. We're not in a position to buy generators because of the cost." Fernando said he was forced to stop production for two and a half hours every day and now finds it difficult to meet the competition from garment exporters in India. 

"The power cuts will kill industry," declared Dr Bandula Perera, managing director of Ceylon Glass Co. and head of the Industrial Development Board. Energy-intensive industries like glass were suffering badly, he said. 

"A 30-second power cut cost Rs. 50,000 - such is the impact on heavy industry," he said. Ceylon Glass pays Rs 4.5 million a month for electricity, he added.

The introduction of staggered power cuts which keep changing daily makes it very difficult for industries to prepare production schedules, said Asoka de Z. Gunasekera, chairman of the Ceylon National Chamber of Industries. "Power cuts have now unfortunately shifted to the daytime," he said. "This has aggravated the situation." 

The chamber has asked the government to encourage industries to relocate themselves at specified industrial estates that would have all basic infrastructure facilities such as power by giving incentives like tax breaks and duty waivers, Gunasekera said. 

The recent Ceylon Electricity Board move to increase the rate at which it buys power from the private sector and allow power sharing was "encouraging," he said. 

The chamber was doing a survey of its members to find out the impact of the power cuts on their businesses, he said. Industrialists had reported losing orders because they were unable to ensure delivery on time, he said.

Production costs had also gone up with factories being forced to schedule overtime work because of the daytime power cuts, Gunasekera said. But, he said, industrialists were aware that the power crisis was the result of "the sins of the previous government". 

They found the new government's attitude towards the business community and liberal economic policy and commitment, encouraging, he added. 

Dr. Bandula Perera said small businesses which account for 90 percent of domestic industry, were badly affected, not having the required turnover to sustain themselves during lean periods and not being able to afford stand-by generators. "Those guys are dying," he said. Many businesses were "not running fulltime and were bleeding," he said, adding that it would be a matter of time before they go under. 

K. U. Sumanasena, vice president of the Sri Lanka Chamber of Small Industries, said that small and medium-scale industries were finding it very difficult to cope with the power cuts.

"The daytime power cuts have made it very difficult to schedule production," he said. "They disrupt batch processing production." Most small industries were not equipped with stand-by generators because they were unable to afford them, he added. The need to re-start production lines after power cuts meant extra costs, Sumanasena said. 

"Sometimes factories run for only a few days of the week and then shut down," he said. "Exporters are badly affected," he added. "They can't meet delivery times and have lost orders."

Lyn Fernando of garment exporter Creations and a former head of the Exporters Association said big apparel exporters were managing with the crisis because they had stand-by power and the ability to import accessories in case their local supply was disrupted by power cuts. "Most of us have generators and we're using them to the fullest capacity," he said. "We are co-operating with the government. Our only concern is that these are stand-by generators, we have been running them for sometime, so there is a fair amount of wear and tear - they are not meant to run 10-12 hours a day." Factory staff was "feeling the strain" because their schedules were disrupted by the power cuts, he said.


CB eases foreign exchange controls

By Hiran Senewiratne
The Central Bank has decided to relax exchange control restrictions, allowing those travelling overseas to carry more foreign currency in cash and making it easier for companies to invest abroad.

Controller of Exchange H.A.G. Hettiarachchi said that a new Foreign Exchange Management Act has been drafted to replace the existing Exchange Control Act.

The amount of foreign exchange Sri Lankans travelling abroad can take in cash has been increased to $5,000 from $1,000 and the value of unused foreign exchange they can retain on their return has been raised to $2,000 from $500.

Restrictions on exporters retaining their proceeds in offshore domestic banking units are to be relaxed while procedures for companies wanting to invest abroad are to be streamlined, cutting the red tape that delay such investments, Hettiarachchi said.

These measures are being taken under the government's 100-day programme.



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