In this press conference, we expect to discuss existing problems and solutions as the Small and Medium Scale Entrepreneurship Union of National People’s Power. Although our country’s small and medium-scale industries are neglected, their contribution to the economy is significant both at a global and a domestic level. This industry accounts for more than 80% of the total business sector. This sector employs roughly half of the workforce. However, given the magnitude of the current crisis, the government is not intervening. Small and medium-scale business owners are neglected as individuals. In the current situation, only fraudulent actors with close ties to the government receive assistance. There is no mention of small and medium-scale businesses in the presented interim budget. Instead, steps have been taken to maintain political agendas while spending on defense and providing meager relief to the public. If the current trend continues, small and medium-scale businesses will collapse completely. It has an even greater negative impact on the economy.
These industrialists can no longer work in this field because of the current situation. Exporters are unable to import raw materials. Imported raw materials are expensive. Production costs have risen exponentially. The market has a problem. Financial assistance, which is one of the two main aspects affecting this sector, is at an extremely low level. Even though these businesses have spread as sole proprietorships, joint ventures, and corporations, no ease of doing business has been created for them. It is amidst the struggles that they have to continue this. You are in the field because of your own will and ability, but you are having a difficult time continuing it. If the government does not intervene in this situation, the businesses will close, and the existing employment in this field will turn into unemployment. Therefore, the entrepreneurs approached government agencies, discussed with the government, and requested solutions. However, this issue has not been resolved individually. Even though it has become the backbone of the entire economy, and even if individual people’s questions are answered, the country’s overall economy will not improve. As a result, we, the Small and Medium Entrepreneurship Union of National People’s Power, believe that a joint and collaborative effort should be made to develop the country’s economy. There is no intention of converting those who gather for this into our members or voters. What we ask is that you delegate authority to us to lead it under a specific program. We invite you to put aside your political or other ties and get involved directly under our leadership in a sustainable policy to help our economy recover.
I am going to present some facts representing small and medium entrepreneurs in the export sector. I am working hard to get their products into the international market. The scarcity of raw materials is one of the most serious issues they are currently facing. They are currently in the process of closing their businesses and cannot even be found. Capital constraints, a scarcity of raw materials, and skyrocketing raw material prices are issues. Several entrepreneurs who were present a year ago have completely shut down their operations. The high prices of dyes in the batik industry, for example, cannot be tolerated.
There is a situation in which high-quality raw materials used in the handicraft industry cannot be imported into Sri Lanka. Raw materials imported from China and India in limited quantities are sold at exorbitant prices. This is an untenable situation for small business owners. They are now forced to produce subpar products. However, these cannot be introduced into the highly competitive international market. Exports of dehydrated vegetables and fruits, on the other hand, have come to a halt. Even the kerosene crisis has had a devastating impact on small-scale entrepreneurs.
The packaging facilities needed by small producers are costly now. We have to spend a high price on the packaging which cannot be sold in the international market. We offer good quality products to the world market amidst huge competition with countries like India, Vietnam, Thailand, and China. Day-to-day changes in prices greatly affect the sale of goods. Shortage of raw materials and day-to-day fluctuations in prices are serious problems in the export market. Food products made using eggs are an example. There should be a fixed price in the international market for at least three months, which is difficult to maintain today. Also, the lack of containers, reduced arrival of ships, very high charges in air transport, and limited flights are very serious. Food spoils during export. Due to this, we are under severe pressure. All the exporters have been affected by these conditions. Because Sri Lanka needs dollars, we have to take our exports to the international level, therefore we are working despite all the obstacles. But the biggest problem is the lack of policy by the government. I tell everyone to stand in a place where these situations can be solved in the long run.
Entrepreneurs in Sri Lanka are identified under three main sectors namely agriculture, industry, and services. Inputs, intermediate goods, and spare parts and tools, especially in the agricultural and industrial sectors, are 100% dependent on imports. For example, in the automobile industry, no material is produced in our country for maintenance and repair services. In the field of construction, aluminum, other accessories, iron, etc. are imported. In this environment, import restrictions have been imposed on non-essential goods. The industrial sector has a large number of semi-finished, finished, and service assembly, repair, and maintenance enterprises. Paying salaries to the employees of those companies has become a major issue.
We suggest that instead of working individually for their success and development, a strong union of entrepreneurs should be formed. It is essential. The empowerment of these businesses has not been taken under a national program. Small-scale businesses have between one and ten employees, small-scale businesses have less than 50 employees and medium-scale businesses have less than 200 employees. When considering their situation, about 53% of the total employment in the country is being employed, and there is a loss of jobs due to the shortage of raw materials. On the other hand, the prices of these raw materials are not at the level of 60% – 65% as mentioned in the Colombo consumer price index. Those ingredients are in a hyper-inflationary state. Because of this, a monopoly situation has been created for these raw materials and big issues have arisen in terms of quality and price. There is an artificially created price. For example, there is a monopoly on bathroom accessories, home decor, and aluminum. This is a very disadvantageous situation for small and medium enterprises. They are not a burden to society, the economy, or the government. This is why we need to collect all these people uniquely. A strong unity is needed to overcome these challenges. If not, the invested capital will be lost and everything will collapse.
The main issue we currently encounter is the lack of plans presented by the previous governments for improving our production. As a result, small and medium-scale industries are collapsing. We did not even develop the export substitution industries. Never have we extended a supporting hand to the export industries. We did not prepare a national plan on exports, which provides a collective contribution. It is in such a backdrop that the small and medium-scale industrialists have strived so hard with courage and commitment to bring this country to what it is today. Arbitrary decisions of the governments have resulted in further downfall from where we stand recently. Entrepreneurs are the engine of a country. No production will take place without them. No job opportunities will be created without them. It is the responsibility of a government to take entrepreneurship to the international level. However, small and medium-scale businesses have a number of problems that special large-scale enterprises do not have. Due to inflation, the labour force of people has decreased, the market has contracted and the demand has decreased. Small and medium enterprises have had to close their businesses in this. This is a serious issue that needs to be considered from the political and economic perspectives.
There has been a tendency to submerge the market that small and medium-scale enterprises have occupied until now to large-scale capital. Loss of market competition leads to loss of quality, and consumer protection. Due to the recently imposed import restrictions, there has been a serious shortage of consumer goods as well as industrial inputs and raw materials. Because of this, the structural change in the economy will not lead to the betterment of the country or the consumer. The trend of innovation that was there in the past is now collapsing. The previous governments or the current government do not even understand them. No concerns have been raised about them even in the budget presented. Instead, various patches are being applied to find the daily meal. Imports must be made in large quantities to fulfill consumer needs. The collapse of rice production in our country has resulted in that situation. Egg production, crop cultivation, handicraft industries, and input industries are collapsing and we have to question how to increase exports. Under these conditions, there is a need for a national plan for small and medium entrepreneurs. Therefore, through our energy, and collective action, we should unite for the work to be done by banking systems, educational institutions, and other government institutions. The cooperation that was once formed in an era when we said, “let’s buy our products”, is now needed again. We invite entrepreneurs to face this problem collectively. Consumers are invited to point fingers at the government for not addressing the problems of local businessmen.
Question:- How will the collapse of small and medium businessmen affect the country’s economy?
Answer:-
This effect cannot be taken lightly. Some people are saying that the problem will be solved when three billion comes from the IMF. We are in a deeper crisis than that. This engine is run by small and medium-scale entrepreneurs. Large-scale entrepreneurs can rely on the support of financial institutions for a considerable period of time. With the Easter attack, covid and the current economic collapse, small and medium-scale entrepreneurs are finding it difficult to cope. If the government does not take proper measures immediately, we warn that a more dangerous situation will arise than the current economic crisis.
Question:- IMF has also been agreed to provide an extended credit facility of 2.9 Million dollars. Do you think this can boost the country’s economy?
Answer:-
Extended Fund Facility is provided to avoid balance of payment difficulties or loan repayment difficulties. Arriving at certain agreements has become a basic condition in debt restructuring. Anyway, according to the nature of the economic crisis that our country is facing, it is not possible to get out of it through this. But in the short term, the pressure of the credit crisis can be reduced to some extent. Restructuring the debt to be paid in one year to pay it in a few years can be used for obtaining essential import materials. But all this depends only on making a sustainable loan repayment plan and acting accordingly. Take this loan and pay it back. If these loans are used for repaying the loans or for other unnecessary things, there will be no flow of investment to be used for the purpose of earning dollars. Even if three billion dollars are approved, we will not get it all at once. Therefore, if these loans are used for unsuccessful things, both the general public who are suffering and also the small and medium entrepreneurs of this country will have to pay for the collapse of the economy. If that happens, the government will try to maintain it by levying more taxes. Right now, our country is in a significant juncture. In general, when the economy contracts, inflation should decrease. But our economy is contracting and inflation is increasing. Because of this, it will become extremely difficult for people to live and we cannot tell in which direction it will turn. If a highly conflicted society is created, only violence can continue. That is why we emphasize to the public to act with awareness.
