CMA advocates for SME Development Act for greater accountability

By Nuzla Rizkiya  

Prof. Lakshman R. Watawala

As Sri Lanka works hard towards economic resurgence, the CMA Sri Lanka called for enhanced legislative support to ensure greater accountability in the country’s small and medium-sized enterprise (SME) sector. 

CMA Sri Lanka Chairman Prof. Lakshman R. Watawala stressed the need to enact an SME Development Act, to provide structured and effective support in empowerment efforts. 

He pointed out that the banks today are facing issues in collecting loans because no proper records are maintained.  

“Even the Companies Act mandates maintaining the books of a company, not records. But if you want to get the cost of a product, then you must get a cost record,” said Prof. Watawala. 

“There are lots of authorities who can ensure the banks will maintain cost records, so that the interest rates charged could be justified. Through a Development Act, we can ensure that all what is done to the micro, small and medium sized enterprises (MSMEs) are going through it and they (MSMEs) are responsible for that,” he added while addressing the MSME Development Summit last week.

He also urged the government to provide a standard definition for MSMEs, in order to ensure national recognition and regulated support to the sector.  

Moreover, he shared that the CMA Sri Lanka is actively pursuing the establishment of export houses, to strengthen the efforts aimed at increasing foreign exchange in the country.   

“We are going to take up export houses to promote MSME exports and cash flow management. It is a successful concept implemented in many countries. Many MSMEs are unable to do exports on their own, as there are no incentives for it. The Asian Development Bank has already agreed to support us on this,” Prof. Watawala said. He went on to emphasise the importance of improving timely financial management skills among local enterprises and capitalising national resources through the use of technology and e-commerce across the sector.   

“Accounting, finance costing and maintenance of cost records are of great importance (for MSMEs) but the time factor is the main thing. Another area we really have to look at is digitisation and e-commerce. During the COVID time, we really made use of it but unfortunately, when periods are good, we forget good things” he opined.  

Economists label Sri Lanka’s SMEs as the backbone of the economy because the sector accounts for more than 45 percent of employment, 52 percent of gross domestic product and 20 percent of exports, while comprising more than 75 percent of the island’s enterprises.