Business

Exporters lament new rules on export conversion

  • Significant gap between USD selling, buying rate discourage exporters: NCE
  • Encourage exporters instead of imposing these regulations: COSMI

By Imsha Iqbal

Exporters expressed their dismay over the new rules that were issued concerning the repatriation of export proceeds into Sri Lanka and conversion of such export proceeds to Sri Lankan rupees (LKR) due to further diminishing forex by the Central Bank of Sri Lanka (CBSL).

Speaking to The Morning Business, National Chamber of Exporters of Sri Lanka (NCE) Secretary-General and Chief Executive Officer (CEO) Shiham Marikar stated: “First is the country. If the country is facing a shortage in foreign currency, and if the country needs exporters to convert the currency, there is no problem in that,” he said, adding that export conversion has become a need of the hour, and the exporters are willing to do so. 

However, Marikar suggested that there is a necessity for a mechanism for the exporters to pay their suppliers, and pay for the raw materials that are needed for the export production “without any hassle”.

He further said that this particular mechanism needs to fulfill the need to convert the currency to US dollars while there should not be a considerable gap in the buying as well as the selling rate, explaining: “It is because the exporters are not in a position to bear additional expense resulting in currency conversion since they are working on thin margins.”

He added that the exporters are worried about sustaining their business in terms of maintaining price to the international buyers while bearing the additional expenses that were created due to the pandemic.

The Morning Business also contacted Confederation of Micro, Small, and Medium Industries (COSMI) Founder President Nawaz Rajabdeen, who said: “This will have a drawback on the exporters,” saying that the exporters already have encountered revenue decrease with the adverse impact due to the pandemic.

“Exporters bring here (to the country) dollar value, at least they should give an incentive,” he said.

He said that there are 1.4 million micro and small sectors, and 70% of them are dead or affected. Regarding the vehicle import halt that is in place due to the forex crisis, he added: “600 or over 600 car importers are suffering since the last two years, which subsequently has created unemployment. We (COSMI) have suggested alternatives since we (Sri Lankans) do not have dollars. The Sri Lankans who live abroad over three years can send ‘gift cars’ which would revise the economy of the country and its people.”

Rajabdeen further suggested that before the upcoming Budget, the Finance Minister Basil Rajapaksa needs to summon all the regional as well as the district chambers for their views on the matter, stressing that these decisions need to be people-centric so that those chambers also can contribute to better decision making, foreseeing the shortcomings of the people, saying that one cannot draw up a Budget in an air-conditioned room.

The new rules that were issued by the Monetary Board of the CBSL of repatriation of exports were said to be applicable for both exporters of goods and services in Sri Lanka under the Extraordinary Gazette No. 2251/42, dated 28 October 2021.

Accordingly, CBSL issued five authorised payments for as outward remittances in respect of current transactions, withdrawal in foreign currency notes as permitted, debt servicing expenses, and repayment of foreign currency loans, purchases of goods, and obtaining services including one-month commitments and payments in respect of making investments in Sri Lanka Development Bonds in foreign currency up to 10% of the export proceeds.