Perilous state of printing industry

The current paper shortages will have severe repercussions in supply of print products for all economic markets

Amid a deepening foreign exchange crisis that forced the Government to impose an indefinite ban on imports last year to save hard currency, hundreds of businesses are fighting for survival. Smaller companies that are mostly affected have shut down, costing many their livelihoods.

Businesses are faced with an issue where they are unable to perform transactions in foreign currency in Sri Lanka as the Government has restricted the transactions using foreign currency within Sri Lanka. This has impacted and affected the printing fraternity severely.

Several members of the Sri Lanka Association of Printers warn that the current paper shortages will have severe repercussions in supply of print products for all economic markets and endangers the rebound of the graphic industry after the pandemic.

Print plays a huge role in everyday life so much so that it is frequently overlooked. Our sector supplies the packaging for goods at the supermarkets, books, newspapers and magazines we read as well as the boxes are digitally ordered food, clothing, and much more are packaged in.

Unable to import surging prices of raw material, printers will be forced to announce to their customers their incapacity to fulfil the orders. The inability to print will cause large financial losses not only to the printing companies, but also to the final customer.

This foreseeable shortage of raw material will severely impact job losses, as companies contemplate downsizing or even closures – a toxic mix that has to be addressed sooner than later.

There are over 6,000 printers across the island and over 150,000 directly and indirectly employed. The Sri Lanka Association of Printers has taken the initiative in building and contributing to the national GDP by way of creating a hub in Southeast Asia for Printing and Packaging. We firmly believe that printers and the printing industry can be the catalysts in increasing exports for Sri Lanka. The printing fraternity of Sri Lanka is considered exporters for their contribution in saving foreign exchange via local production of inputs to the printing industry.

It is correct to say that this restriction will erode the forex earnings base, thereby crippling the ability to source foreign inputs and machinery and force the printing industry to resort to foreign goods.

Sri Lanka doesn’t possess a paper mill; the only paper mill that was restructured in the recent past in Valaichchenai manufactures only ordinary brown wrapping paper. Sri Lanka has all the resources to manufacture paper but due to uncertainties and lack of knowledge, none is interested to at least make an attempt to restart the mills; upon our recent meeting when we raised the question, we were asked to look for an investor.

The restriction imposed on settling in foreign currency for deemed export will incur immense losses on the exchange rate and the printing industry will be in turmoil with the danger of several printers having to even shut down operations. This issue is of serious concern and can be detrimental for printers individually and to the industry as a whole. Most banks in Sri Lanka are running short of foreign currency to finance the import of essential items. State revenue has fallen short drastically. The Central Bank banned forward contracts and spot trading of rupees. It is an outcome of several incidences such as the Easter bomb attacks in 2019, the COVID-19 pandemic, and a series of policy decisions that did not deliver expected results. Sensing an impending crisis, the Government tried to evade it by imposing a ban on imports but that did not go in Sri Lanka’s favour.

Since of late, printers are faced with extreme difficulty in clearing goods from the port as most of the related documents are not released from the banks due to delay and non-availability of foreign currency in the banks. Banks are requesting to extend credit from 90 days to 120 days, unfortunately overseas suppliers are not in favour.

Moreover, the ports authority is charging demurrage as well. This has put the printers in a very difficult situation with regard to their day-to-day business operations since incurring demurrage and appreciating of the dollar has tremendously affected the landed cost of raw materials. This issue has directly affected the export market as well.

Due to the above facts, printers are unable to open L/Cs and import material which has resulted in a scarcity of raw materials such as plates, chemicals, inks, paper, etc. in the market. This situation has forced the printers large and medium scale to shut down their operations which has led to unemployment in the country.

This has also affected the tea exporters, the garment industry and even the education sector as there is an inability to print school textbooks.

Except for construction, the Sri Lankan industry hardly received any Foreign Direct Investment during the last few years. Another reason for this foreign exchange crisis is the country’s high dependence on imports for its essential items.

The Sri Lanka Association of Printers lobbied with the Government to address the critical issues faced by the printing fraternity. The Association repeatedly wrote to the Finance Minister, Minister of Industries, Governor of the Central Bank, Secretary to the President, Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa.

In the hope of receiving solutions to the aggravating problems of the printing fraternity, the Association representatives once again met the Minister of Finance and the Minister of Industries as well.

A slight relief to the printing fraternity was the launch of the Indian Credit Line facility offered by the Government of India. India and Sri Lanka signed the $ 1 billion short-term concessional loan facility in New Delhi, India. It is extended by the Indian Government to the Sri Lankan Government through the State Bank of India. The loan facility was extended to the Government of Sri Lanka for procurement of food, medicines, and other essential items. It is a key component of the four-pillar economic cooperation arrangement agreed between India and Sri Lanka during the Finance Minister’s visit to New Delhi in December last year. The Sri Lanka Association of Printers canvassed the Indian Credit Line facility to all its members and urged them to register for the Indian Credit Line facility before the closing date which was 28 March 2022.

The Sri Lanka Association of Printers anticipates that the required funding allocation under the Indian Credit Line facility for the printing sector will be allocated duly by the Government of Sri Lanka.

Print as an industry is uniquely threatened by the supply chain issues that are rolling economies around the world, especially as it relates to paper shortages. This creates a ripple effect as lack of paper products, marketing materials, packaging and other necessities of business creates a drag on recovery in many different markets. Print is one of the essential requirements for business transactions at all levels of delivery for virtually all goods and services. A concerted effort to alleviate these issues will serve the broader economic recovery.

Print is an essential and important part of our daily life. Many of us rely on printed information. Apart from being a large sector of its own, the printing industry and print products support citizens, culture, and all other economic branches in one way or the other. This support is endangered by the current tensions in the supply chain.

It is now in a position, where it is mandatory for the Government to seek external help to recover from the emergency. Now, it remains to be seen what steps it takes.

(The writer is the President of the Sri Lanka Association of Printers.)