Sri Lanka’s Planters’ Association says the plantation sector has still not received the government’s promised relief package to tide over the industry’s problems. The Association says the crisis that continues to escalate, affects not only the tea industry but also coconut and rubber plantations.
In a statement this week, the Planters’ Association of Ceylon noted that the government assistance package includes one months’ working capital at a subsidised rate for the Regional Plantation Companies (RPCs) and setting up a stabilisation fund of Rs. 1.5 billion.
“Unfortunately, none of these measures have been implemented so far and no funds have been released,” said the statement from the Planters’ Association.
Tea Board response
However, when contacted by the Sunday FT, the Tea Board said the relief measures are on the way.
“The relief package indicated on October 24 by the President included a promise of the re-establishment of the Stabilisation Fund, Rs 4-5 billion as loans to the sector through the banking system and an interest subsidy through the Stabilisation Fund,” said the chairman of the Tea Board, Lalith Hettiarachchi.
The Stabilisation Fund has now been set up and the industry credit is in the pipeline, said the Tea Board. “The Treasury, in association with the Ministry of Plantation Industries, have agreed to present a Cabinet Memorandum asking for approval to give one months’ working capital as a loan on concessionary terms,” said Mr Hettiarachchi.
“The package would be to grant such loans through the commercial banks, but for the Stabilistation Fund, which is already established, to reimburse 6% of the interest to the banks, as an interest subsidy,” said Mr Hettiarachchi.
However, the Association noted that the recent budget also promised a 15% reduction in electricity rates but instead, electricity rates were increased. “In actual fact the Ceylon Electricity Board has increased the industrial tariff,” said the Chairman of The Planters’ Association of Ceylon, Mr. G.D.V. Perera, in the statement.
The industry says it has also been slapped with more taxes including a 1% National Building Levy (NBL). The NBL is expected to increase industry liability by Rs. 350 to Rs 400 million per year.
The planters also say that although export industries are exempted from the NBL, plantation companies are not, although 94% of plantation production is for export. The industry says that even the zero rated status it enjoyed on VAT is now withdrawn.
The sector says that its production costs have also increased while export demand has reduced drastically. “Further, fuel, electricity and fertilizer costs still remain high despite reductions in other producer countries, and have a direct bearing on our high cost of production,” said Mr. Perera. The plantation industry says that relief packages by governments of other producer countries, will also make it more difficult for Sri Lanka to remain competitive.
The Association says the tea industry is the country’s largest employer, providing jobs directly and indirectly to over one million people. Under the current situation, livelihood of around 250,000 plantation workers in estates managed by RPCs, will be seriously jeopardised, said the Planter’s Association. Tea smallholders, accounting for over 60% of the tea output in Sri Lanka, also face the same serious consequences of the global crisis, said the Association. |
E-mail