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SMEs support a resolution with a show of hands during their first ever meeting at the BMICH yesterday in their fight against parate executions - Pic by Kithsiri de Mel
Small and Medium-scale Enterprises yesterday requested the Government to temporarily halt parate executions allowing them time to rebuild after suffering major setbacks following the Easter Sunday terror attacks and the COVID-19 pandemic. They urged the Government to also take steps to reform the law to suit modern times and restructure loans obtained by SMEs.
Addressing the Anti-parate Activists Business Forum held at the Bandaranaike Memorial International Conference Hall (BMICH) National Construction Association of Sri Lanka (NCASL) Chairman Susantha Liyanaarachchi said businesses have failed to gain any support from the banking sector following the Economic crisis.
He said that Sri Lanka’s declaration of bankruptcy was the cause, prompting all banks to tighten up and refrain from offering any relief to businesses. “They refused to even approve a temporary overdraft for businesses,” he noted.
According to Liyanaarachchi, many SMEs in the country’s South have now closed shop which has led to a drop in Sri Lanka’s Gross Domestic Product (GDP). The prominent businessman noted that SMEs had previously contributed to around 51% of the GDP.
He said that while SMEs used their own funds to protect staff post-COVID-19, these businesses are currently experiencing significant hardships. “Our businesses have started to collapse. I am in construction and our economy has suffered immensely,” he stressed. He disclosed that despite entering into numerous agreements for construction projects, they have failed to fulfil them, leaving not only businessmen but also their staff unemployed.
“At a time, our businessmen are repaying their debts with great difficulty, the parate law has caused great distress to us. Both State and Private Banks have carried out over 1200 parate executions,” he said.
Anticipating more challenges for businesses in the upcoming year due to the rise in direct and indirect taxes, Liyanaarachchi remarked that SMEs had secured loans when Sri Lanka’s economic growth rate was at 4.5%. He urged the Minister to consider temporarily suspending parate executions, at least until Sri Lanka achieves that growth rate again.
Meanwhile, Small and Medium-scale business owners who participated in this discussion passed a resolution advocating for the abolition of the parate law. They urged for the temporary suspension of the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990 until the country reaches an economic growth rate of 4.5% as it was before the crises in 2019. The SMEs noted that approximately 1400 small and medium-scale entrepreneurs are now grappling with issues stemming from the parate law.
A memorandum outlining the challenges encountered by SMEs was also submitted to the Minister of Justice, Wijeyadasa Rajapakshe, during the event.
