SLAMERP alleges media reports on export industry repatriation factually incorrect; misleading

• Value addition and supply chain constraints have impacted foreign exchange conversions due to both domestic and international market conditions
• Global markets also in turmoil with main markets going into recession
• CBSL Governor puts record right on export proceeds
• Calls on to monitor any who violates law and revive exporters forum monthly

The Sri Lanka Association for Manufacturers and Exporters of Rubber Products (SLAMERP) is refuting claims that were published by certain media institutions and some social media journalists deliberate attempts to tarnish the export industry in totality, locally and internationally. 

“These are baseless exaggerated allegations by scratching the surface of an issue or a report or deliberately misinterpreting what is actually told by authorities or interpreting the prevailing law,” SLAMERP Director General Rohan Masakorala said.

“I have started my carrier as a graduate in the export industry 30 years ago, and I know the functions of the export industry from factory floor to the marketplace, because I have practically done the work myself here in Sri Lanka and other countries from a production plant to selling products in the international marketplace and do understand the complexities of the export import industry supply chains said Masakorala.

“The recent publications and bashing on social media of the export sector is simply irresponsible reporting or deliberate attempt by few individuals who have different agendas. This is not the first time we have responded when allegations were made that export proceeds are not brought in by the majority of exporters in general, in 2021 too this was the case. These allegations were done at that time without any facts and figures being provided. 

“The latest allegations came by media after Central Bank Governor Dr. Nandalal Weerasinghe had made some remarks which were misinterpreted and taken out of context by media and used by some social media journalist to multiply many folds. The governor has clearly clarified this position with an interview recently done on a TV channel which give all the facts on what and how it stands today. 

“We as SLAMERP and I also know other major export sectors have closely worked with the central bank in the last eight months to understand the current crisis. We have called on the CBSL to actually name and shame if any exporter is not abiding by the laws of the country for months, we have also suggested mechanisms to monitor with customs and banks. 

“The Central Bank has adapted them since July 2022, and they know the real picture and that is why the Governor was very clear that proceeds are coming in and that the concerned was the conversion rate in comparison to domestic value addition which had some discrepancy.

“There may be few bad eggs in any industry and we as an industry body has always maintained they have to be taken to task but that doesn’t mean a whole industry should be targeted and tarnished and carpet bombed by media without fact checking,” he added.

Commenting on export proceed conversions to the domestic market, Masakorala said the value-added rubber industry which brings over $ 1 billion or more of revenue has been adding value between 50%-65% under normal circumstances for different products, but last three years things have changed, and the domestic foreign exchange crisis has now made things very different to many exporters. Even the local natural rubber production keeps on coming down and we have to import more of that too at higher prices.

Responding further to allegations of dollar holdings overseas he asked when the currency has now stabilised with the unofficial market, interest rates are highest in Sri Lanka in both dollar deposits and rupee deposits. 

Who would want to keep money in low return markets?  The law before 2016 gave freedom to exporters to keep money for investments and business overseas. It was Government policy, how can people question the exporters if some have kept money overseas in the past as per the law of the land?

“During the COVID period the global supply chains were disrupted, the exporters had to book raw materials and other input accessories and machinery parts well in advance to maintain stocks and buffers and process them at extra costs, this required greater foreign exchange in hand at any given time. 

“The pandemic created multiple problems to our buyers, exporter had to hold stocks at intermediary locations, major ports in our main markets Europe and USA got congested for weeks and months then our supply from far east got affected delaying inward shipment and, buyers were asking for more credit and price adjustments, shipments were stuck in ports although they had been exported and customs cleared, so there were delays in proceed coming into some members. 

“One need to track at least 36 months to identify a pattern but minimum 12 months, that has not properly happened in Sri Lanka unfortunately until recent times he said. Then came the domestic shock of declaration of bankruptcy, it was the exporters who helped the Government to bring in fuel, gas medicine and essentials at this juncture, but we also had to support the domestic SMEs who were indirect exporters. 

“Export companies gave and still give dollars to these domestic indirect exporters (intermediaries) to import raw material to produce components they sold to the exporters. We have had an uncountable number of meetings with the president, ministers, and line ministries and CBSL to help Government at this juncture with the crisis. 

“On top of this crisis, the global freight rates went up by 1,000% and we had to pay them in dollars not in rupees anymore, we also had global price increase of import commodities/raw material that are needed for export processing, our exporters had to by fuel for production and electricity generation by paying direct dollars to CPC and IOC and also helped logistics companies to buy fuel to provide transport. 

“Some BOI exporters had requested payments to suppliers through their global head offices or buyers to source raw material and keep extra funds to manage those cash flows. It is disposing to see negative and malicious publicity and reports on the exporters without fact checking and saying they are not bringing in the proceeds according to the law. 

“The critics must realise exporters are employing thousands of people directly and thousands indirectly and have to maintain payment circles on time as salaries, import raw material, maintain plant and machinery, look after intermediary and service providers interest, and also now surrender money to the Government to help bring essential items. How can anyone do these without bringing in money when borrowing costs are at historic levels?” 

Masakorala emphasised: “If one is doing export business, they would know the competition in the international market and the challenges the exporter faces. Now that an economic recession is looming on our main markets of USA and EU, we are having serious problems out there. Exporters are not an industry who are pampered protected by Government laws or having massive subsidies. Some think that the depreciation of currency has made a huge difference to exporters. 

“No, it was only a correction of the market by CBSL and now we have to face the consequences of past mismanagement of the economy with massive domestic inflation and now international inflation too. 

“Salaries to raw material to everything in the supply chain has gone up, water, electricity, transport and transaction costs, freight and now the taxes on profit too has doubled, none of it is an incentive he pointed out, but overall our sector understand that these changes have to be done in the short run to put the economy on track and SLAMERP members are still performing to its best with all the negative publicity about the country is going through wrong media reports, and one must remember buyers are also continuously assessing risk and these kinds of wrong and negative information will only help to reduce orders to the country and affect long term FDI to the manufacturing sector.”

“We urge the Government to have greater communication with us and revive the exporters forum under the President so that a better understanding is made to increase exports which is the need of the hour,” Masakorala said.

He said for those that undermine exports and publish factually wrong articles without fact checking: “What we can say is you are doing a great unpatriotic act to harm the goose that lays the golden eggs at this critical time of the country’s economy and its people.”