Thursday Nov 28, 2024
Thursday Nov 28, 2024
Thursday, 23 January 2020 02:37 - - {{hitsCtrl.values.hits}}
Sri Lanka’s Confederation of Micro, Small and Medium Industries (COSMI) has called for the deadline of the landmark loan moratorium for SMEs offered by the Government to be extended as most companies would struggle to reach the existing deadline of 31 January, a statement by the Industry and Commerce Ministry said yesterday.
 |
| COSMI Founder President Nawaz Rajabdeen |
“We praise the Government for its determined action last December to revive domestic SMEs by suspending recovery of loans obtained by the sector,” said COSMI Founder President Nawaz Rajabdeen.
“However, there is a catch – the deadline for submitting business plans and reports to banks to obtain the above rebate on the moratorium is 31 January. These documents are comprehensive and most Sri Lankan SMEs are simply not capable of completing them by the 31 January deadline. Many SMEs reached out to us to call for an extension from the Government.”
Therefore the organisation has called on the Government to extend the deadline to “a more reasonable date in future.”
On 20 December 2019 a directive by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa suspended recovery of loans obtained by the SME sector, not exceeding Rs. 300 million for each entity to revive SMEs in the country.
The recently announced tax reform initiatives provide substantial savings to all banks including the Central Bank of Sri Lanka. The Government expects the banks to use part of such savings to revive the SME sector on a priority basis.
Financing and lack of credit are the banes of Sri Lankan SMEs of all types. According to the 2018 Ernst and Young (EY) SME Survey commissioned by the Ministry of Industry and Commerce, ‘Access to Finance’ was the foremost issue faced by SMEs in doing business.
As much as 59% of the respondents in the Ernst and Young Survey said the SMEs were hampered by finances with the Treasury estimating the effective interest rates charged by banks (13%-17%) and non-bank financial institutions (30%-50%) are high and burdensome for SMEs.
The Confederation of Micro, Small and Medium Industries (COSMI) was formed in 2019, and aims to revive and foster the MSME and industry sectors of Sri Lanka.
