22 April 2024 04:35 am Views - 180
Opposition Leader Sajith Premadasa yesterday called on the government to develop a targeted programme to
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Sajith Premadasa
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assist the country’s micro, small, and medium-scale enterprises (MSMEs) grappling with multiple crises.
He emphasised the urgent need to ensure these businesses have access to affordable capital and working capital, especially during the current suspension of separate executions by banks.
He cautioned that failing to do so, the country’s MSMEs is likely to have another rude awakening after the 31s December this year, once the current suspension of parate execution ends.
“We believe that the end of this temporary halt (of parate execution by banks) shouldn’t result in a shock as similar to the end of the moratorium. Many of them (MSMEs) started to curse the moratorium once they got to realise the actual cost of the moratorium,” Premadasa said addressing the launch of Ceylon Federation of MSMEs in Colombo yesterday.
He pointed out that some of the auctions implemented via parate executions by banks were purely motivated by “supernormal profits” with no shred of humanity.
“After the remaining 6-8 month period, the banks will again start auctions by publishing advertisements on media,” he added.
Therefore, he stressed a separate programme to support MSMEs to rebuild themselves by restructuring their finances and other activities associated with it is needed.
“Access (to capital) alone is not sufficient, it has to be affordable. MSMEs should be able to meet these needs at a cost which is affordable to them,” he said.
Premadasa also highlighted that banks prefer to disburse loans to their ‘safe’ customers, in implementing credit programmes of multilateral donor agencies such as ADB which are aimed at supporting the MSME sector. Hence, he noted that “We need to come up with a solution to this problem,” he added.
He also backed development banking as a pathway to meet the funding requirements of the underserved MSME sector.
“I believe that this can be implemented in a few steps. First, we need to encourage the government to start a development banking arm within the existing banking system. Once this is underway, we can discuss the establishment of a development banking institute and look at capital requirements,” he explained.
To effectively support MSMEs, he underscored the need for a major shift in government policy.
“We cannot talk of supporting and ensuring the survival of MSMEs through a government policy of economic contraction,” he added.