In recent years, there has been remarkable progress in the creation and success of regional chambers of commerce and industry across Sri Lanka. These chambers represent a range of small and medium scale businesses from small shops, carpentry units, bakeries, beauty salons to fishing ventures, and many more sectors. If not for the tsunami of [...]

The Sundaytimes Sri Lanka

Hidden clout of small enterprises

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In recent years, there has been remarkable progress in the creation and success of regional chambers of commerce and industry across Sri Lanka.

These chambers represent a range of small and medium scale businesses from small shops, carpentry units, bakeries, beauty salons to fishing ventures, and many more sectors.

If not for the tsunami of December 2004, these small units would have hardly got the recognition that it deserves, far more than the larger companies and conglomerates in the country.

It was the then leadership of the Federation of Chambers of Commerce & Industry of Sri Lanka (FCCISL) that initiated a project with foreign funding to lift enterprises affected by the tsunami. That programme included the creation of many regional chambers of commerce which then joined up with other chambers spread across non-tsunami affected areas to bring issues to a common table.
Very soon, regional chambers, particularly the Hambantota Chamber of Commerce and Industry, began making powerful waves in the entire chamber movement in Sri Lanka and making their presence felt with different programmes.

Sri Lanka’s economy depends on small businesses which provide the bulk of the country’s employment and a large percentage of the tax revenue. The trickle-down effect of these small enterprises to benefit communities is also far greater than big industry. These businesses are the backbone of any economy, not only in Sri Lanka’s case, and must have their rightful place in terms of its total size and reach. They are also a huge vote base for any party.

However while small businesses form the bulk of the Sri Lankan economy and its benefits, their voice and power are still limited to the regions.

This is particularly so during pre-budget consultations with the Treasury where often it’s the bigger chambers based in Colombo that have access to Treasury officials including Treasury Secretary to make recommendations and follow-ups. Smaller chambers, apart from sending in their proposals during the call for public representations for inclusion in the budget, have little clout with the Treasury or the Finance Minister (President Mahinda Rajapaksa)

It is this context the effort by Asia Foundation in the past few years to facilitate a project where regional chambers of commerce and industry come together and present a comprehensive set of well-thought of, budget proposals which are taken seriously by the Treasury, should be encouraged and welcomed.

The chambers have prepared a list of concerns, issues and recommendations for implementation in the budget, an exercise which saw quite a few of these suggestions incorporated in the 2013 budget.

The chambers are raising some fundamental issues, much closer home and to the heart of small businesses, which need the attention of the government.

Here are some of the suggestions that deserve the attention of the government:

Tourism – though tourism is booming as a result of peace and stability, the sector is hit hard by lack of trained and qualified personnel.
Agriculture – severe shortage of warehousing facilities for paddy, vegetables and fruits during the harvesting season result in wide price fluctuation.

Transport – unregulated three-wheeler taxi market has made this sector extremely profitable and runs the risk of being overcrowded.
Finance – host of issues plague the financial support systems for SMEs – constraints in access to credit, low availability of information on financial schemes, demand for collaterals, high interest rate, etc.

Banking – over-lending by banks has resulted in inability to pay interest and installments and subsequent failure of so many businesses around the country.

Entrepreneurship – unfair trade practices stifle local entrepreneurship. This coupled with poor regulation makes survival of SMEs difficult.

Fair trade – setting up a Monopolies Commission with adequate investigative and enforcement powers to pursue and penalize complaints related to unfair competition and restrictive practices.

Customs – call for an independent panel to act as Ombudsmen for mitigating grievances in the Customs sector.

Labour – there is a lack of suitably trained employees and staff in the private sector. In spite of high salaries, there is an exodus of skilled labour force from the private to public sector for reasons of job stability.

Pensions – to strengthen welfare benefits in the private sector, there is a need to set up a Private Sector Pension Fund.

While lauding the Asia Foundation initiative, which one hopes would extend in the years to come notwithstanding funding for the project, another useful pre-budget exercise is for Treasury officials (and Treasury Secretary Dr. P.B. Jayasundera as practical as possible) to hold pre-budget consultations in each district instead of confining these meetings to Colombo. The essence, flavour and gamut of issues and concerns faced by small enterprises can only be felt in their backyard, not in the glass towers of Colombo. It is only then that government officials would empathise with these businesses and provide a helping hand.

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