Rubber product exporters express concern over CBSL allegation on repatriation of earnings

The Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) yesterday in a statement expressed its deep concern over the Central Bank assertion that nearly $ 3 billion of earnings had not been repatriated back to the country.

“The Sri Lankan economy’s backbone is wealth and employment creation through exports. Today the country is going through a critical need of foreign exchange and our members are going beyond their means to expand and increase export revenues to help the national economy,” SLAMERP said, adding rubber manufacturers and exporters, which accounts for 8% of merchandise export revenue, will reach a milestone target well over the $ 1 billion set for 2021.

“However, our members are deeply disturbed by recent media publications placing all exporters to be hoarding export revenues, following a report and a press release published by the Central Bank of Sri Lanka. As an industry, our members have been in dialogue with the Central Bank and have followed the requirements that the Central Bank had stipulated in receiving foreign exchange and cashing them to help the Government to manage a difficult situation while exporters are also facing their own challenges,” the statement said.

It said rubber industry exporters just as any other major export sector had their challenges in sourcing raw material, continuation of production due to COVID-19, supply chain destructions due to shipping crisis and the highly volatile global market where higher cash flow was needed to sustain the inventories and production.

The SLAMERP pointed out that it would have been a more practical gesture by CBSL if these numbers were discussed, verified and validated with the trade prior to releasing of such data without detailed analytics with the industry.

Noting that the Government had in fact published guidelines where Customs and commercial banks would monitor the proceeds with the respective clients and inform the Central Bank of any wrongdoers after identifying individual companies that had violated the set-out in procedures, SLAMERP said it was incorrect to tarnish the whole export industry at a time where the Finance Minister had clearly appreciated the export growth and the commitment of the exporters to increase the country’s export revenue under trying circumstances.

“We in the industry are aware that although sometime export entries are processed and cleared through Customs, the actual shipment dates have been delayed by eight to 12 weeks due to shipping space not being available or the containers are getting stuck in terminals at origin, or destination and sometimes turning over at transhipment ports,” SLAMERP said.

“Some of the members could not ship out up to 40 containers per month due to such supply chain issues. Although the Customs system would say export cleared, either the shipments are sitting at a terminal or in a ship without reaching the buyers. Similarly, there are instances where international buyers hold goods at third party locations to manage inventory. All these can lead to delays in documentation and mismatch between declaration and clearance dates which will result in proceeds receivables getting delayed. There are also NFE exporters that will have to be looked at carefully.”

SLAMERP opined that before coming to a conclusion on export proceeds, any analytics should have a 12-month window and an age analysis of the trading system was needed rather reaching a conclusion based on three months of data. 

“A short window data analysis will give a wrong picture. In our opinion it is near impossible for a full-scale exporter to work without one-third of their export revenues to run factories maintaining raw material, labour, related services, settling loans and inventory management for future orders, may be a few million dollars of mismatch can be reconciled easily as these have to be also justified to the Inland Revenue Department for VAT purposes as well. Therefore, the numbers produced by CBSL may not reflect the actual ground situation for the majority of the exporters.”

SLAMERP requested the Government to do a thorough analysis of the data before publishing such information to the media, which it said had tarnished the image of the export sector in one go and created doubt in the public eye.

“It does not help to motivate or to build the image of the country and the multinationals who have kept faith in the sector. It will not help the country by any means by painting all exporters as hoarding foreign currency for personal benefits. We call upon the CBSL and Government to implement the proper system and identify any violations and take the due process on such violators and appreciate the majority of the export sector,” it noted.