Local industries under ‘close down’ threat, says CNCI chief

• Says political uncertainty has impeded proper and timely economic policy decision-making process
• Points out SME sector paralysed by issues of material shortages, power cuts and fuel shortages, high interest rates, increasing cost of inputs, etc.  
• Expresses concerns about CNCI’s non-representation in revived China-Sri Lanka Free Trade Agreement negotiations 

Ceylon National Chamber of Industries (CNCI) Chairman Canisius Fernando yesterday stated that the majority of local industries are under threat today nearing ‘close down’.  

In a statement issued to the media he mentioned that the business environment has been tightly circled by an indecisive triangle of economic difficulties, political uncertainty and social unrest.  

“All these broad issues equally hit the industries.  We do understand that the government had to take hard monetary and fiscal policy decisions in the face of dearth of foreign reserves, constant deflation of local rupee and rapid increase of inflation,” he said.

“Although the situation is opportune for exports, we all know that the country’s imports are always high above to that of exports. In addition to the import of essential items namely, fuel, medicines and food items, materials and machines are of paramount importance to the industrial sector.  Restrictions to open up letters of credit, import constraints, clearance delays, high cost of materials due to rupee deflation are in one hand.  Constant power cuts, difficulty in obtaining fuel, employee demands, high interest rates and increasing overheads are on the other hand to sky rocket the cost of production,” he added.  

He also said political uncertainty has impeded the proper and timely economic policy decision-making process by the government, creating uncertainty among the industrial sector, especially in taxation and a lot of others.  
“For example, recently the government started discussions to initiate the China-Sri Lanka Free Trade Agreement, for which we have not been invited, being the only national chamber for industries in the country, which has been incorporated by an Act of Parliament. These discussions have not been organised either by the Industries Ministry, Trade Ministry or Commerce Department. We do have serious concerns about the particular FTA and we would like to make it a point to urge the government to invite the Ceylon National Chamber of Industries for any future discussions related to the industrial sector. Such instability also aggravates uncertainties and struggles, as many other parties trying to gain benefits,” he pointed out.    

“Today, it is a clear fact that there is a huge social unrest for their struggle in meeting ends in the face of dearth of daily essentials and high cost of living, creating room for uncertainty about their future, education, health and survival. As the people struggle today for a change, the employees of both in public and private sectors will soon struggle for higher salaries. This situation will, in turn, be worse when the sustainability of the industries is in question thereby losing their employment. It will be another significant socio-economic blow to the government,” he added.  

Meanwhile, Fernando pointed out that many of the industries in the SME sector have already either been closed or paralysed by the issues of material shortage, power and fuel issues, high interest rates, increasing cost of inputs, etc.  

“Majority of the companies do not have power generators but they use power-driven machines.  Even if the generators are used, feeding them with fuel is another problem. Many SMEs and company employees are spending hours and days in queues to purchase fuel. Many employees often ask for leave to get their bikes and vehicles fuelled. 

Unexpected and high increase of recent fuel prices has become another big issue not only to increase the overheads but also to a substantial number of employees, who travel in motorbikes and cars. If the situation prevails so long, many of such skilled employees will opt to leave the organisations in seeking opportunities overseas, paralysing the organisational functions,” he said.  

“Companies are in impasse to create even a short-term plan today with the futuristic uncertainty.  They resort to day-to-day strategies for survival.  Running without a proper corporate plan hampers operational efficiency.  Letting along the FDI attraction, driving strong the local industries is the timely need to keep the economic healthiness even at this level.  

As a nation, for the country to move forward, the local industries should run uninterruptedly.  We are not supposed to extend any political advice to implement a change but our earnest wish is for the government to take the best solutions always, keeping the country and nation first, in order to create an environment for the industries to operate without hindrance,” 
he added.