Business Times

Lankan exporters voice concern over new electricity tariffs, other issues

Despite a booming period in Sri Lanka’s economy after ending the three decades-long bitter war in the North and East, senior representatives of the country’s export sectors this week expressed concern over new electricity tariffs, high energy costs, loss of EU GSP+, suspension of the US GSP, appreciation of the rupee and lack of or high cost of raw materials.

They noted that the country’s export sector will soon find it difficult to compete in the export market, if the government fails to find some redress for them. At a special forum convened by National Chamber of Exporters (NCE) in Colombo on Tuesday export sector representatives of porcelain ware, rubber, coconut, ship repairs and boat manufacturing, apparel, seafood, confectionary, fruits and vegetables told journalists that their biggest obstacle at present was the new electricity tariffs, and high energy costs.
NCE President Sarath De Silva urged the government to provide some concessions at least for two years to meet half of the export revenue forecast for this year. He added that electricity tariffs, too many public holidays and an appreciating rupee were problems common to all exporting sectors. According to the Central Bank, export earnings are expected to grow by 13.3 % this year but Mr. De Silva said only half of this would be achieved this year.

NCE’s Founder President Patrick Amarasinghe stressed the need of reactivating the Council of Ministers for Export under the Export Development Board Act which helped to resolve issues facing exporters, through consultations and compromise and consensus. He added that Sri Lanka’s SME sector was not in a position to borrow money from banks under present interest rates for factory expansion to boost their exports as they are still repaying loans obtained at previous interest rates
Representatives of ceramic exporters voiced their concerns on new tariff that will increase the cost of electricity to their member companies by amount ranging from 20% to 42%. “The ceramic industry is highly energy intensive and energy costs generally constitute around 50 % of the total cost of production in most ceramic factories. The high cost of production at present in our country, has always been a disadvantage for Sri Lanka in comparison with our regional competitors,” they said.

NCE Vice President and Royal Fernwood Porcelain Chairman and Managing Director Jagath Peiris said the ceramic export sector has been affected by the loss of EU GSP+ and Sri Lankan products imposed with duty ranged from 8% to 14%. . The recent suspension of US GSP scheme along with an appreciating rupee is a further blow to the industry. Ultimately, this also comes at a time when the industrial Liquid Petroleum Gas (LPG) price, which is based on the Saudi Aramco Contract Price, is at an all time high in energy markets, he added.

Dankotuwa Porcelain Chairman Sunil Wijesinha pointed out that Sri Lanka was not price competitive at the moment because other suppliers of similar quality have become more competitive. “Foreign buyers of Sri Lankan ceramic products are willing to pay a premium for local ceramics but with new cost increases Sri Lanka is going to be expensive,” he said.

The ceramics, apparel, seafood, coconut and confectionery industries employ several thousand directly, and several thousand indirectly in the country. Officials of these industries are calling for support from the government to carefully consider the repercussions on the power cost revision, among other issues.

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