Business

‘CBSL forex hoarding statement tarnishes exporters’

  • Rubber industry irked all exporters painted with the same brush
  • Dismayed at CBSL’s failure to discuss before releasing statement
  • Suggests verifying data with detailed analytics with export industry

 

By Shenal Fernando

After the Central Bank of Sri Lanka (CBSL) on Monday (27) disclosed that exporters are hoarding export proceeds without repatriating or converting them, the Sri Lanka Manufacturers and Exporters of Rubber Products (SLAMERP) members expressed dismay yesterday (29) for placing all exporters to be hoarding export revenues.


SLAMERP further stated that the numbers produced by the CBSL may not reflect the actual ground situation for a majority of the exporters as 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.

Therefore, the organisation called on 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 created doubt in the public eye.

The SLAMERP claims that its members have been in dialogue with the CBSL and have followed the requirements that the CBSL had 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 SLAMERP further stated it would have been more practical if the CBSL had discussed, verified, and validated the data with the export industry before releasing it without any detailed analytics.

In addition, the organisation pointed to the fact that the Government has already published guidelines on the monitoring process where Customs and commercial banks will monitor the proceeds with the respective clients and inform the CBSL of any wrongdoers after identifying individual companies that had violated the set out procedures.
The SLAMERP further claimed that prior to arriving at a conclusion regarding export proceeds, any analytics must have a 12-month window and must involve an age analysis of the trading system rather than coming to a conclusion based on three months of data.

This is because it is a common occurrence for the actual shipment dates to be delayed by around eight to 12 weeks from the date when export entries are processed and cleared through Customs, owing to shipping space not being available or containers getting stuck in terminals at origin or destination and sometimes turning over at transhipment ports.

Although the Customs system would mark the exports as cleared, certain SLAMERP members have not been able to ship out up to 40 containers during particular months due to such supply chain issues. 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 mismatching declaration and clearance dates, which will result in proceed receivables getting delayed, particularly, where, as an industry, its members have been going beyond their means to expand and increase export revenues to help the national economy. Consequently, rubber manufacturers and exporters who account for 8% of merchandise export revenue are on target to reach a milestone export target of well over $ 1 billion for the year 2021.

Amidst a foreign exchange crisis, the CBSL has requested exporters to repatriate their export proceeds and convert them, hinting that failure to comply would leave the CBSL with no option but to announce strict requirements akin to regional peers in order to ensure complete repatriation of export proceeds within a reasonable period of time. 
The notice was issued on Monday as over the period from January to August 2021, a monthly average of $ 345 million of export proceeds has not been repatriated, contradicting the true purpose of exports.