News
Local traders protest against Chinese retail shops; President intervenes
President Maithripala Sirisena has stopped a proposed protest organised by local industrialists and retail shop owners who are up in arms against foreign-owned retail shops and joint ventures, particularly Chinese ones, flooding the local market at their expense. The groups had made representation to the President that they were affected by the existing government policy regarding investments by foreigners without proper regulations and the absence of checks and balances.
Anuruddha Wijeratne, a department storesmanaging director, who took part in the meeting with the President said the President had assured them he would take effective action to resolve these issues through a healthy discussion soon.“There are retail shops coming in two ways; organised and individual retail shops. They are posing a threat to Small and Medium Business (SME) outlets. They come with massive purchasing power and with small market like ours, it would be difficult for us to compete with them in the long run,” he said.
Mr Wijeratne said the Government had given the green light for this kind of foreign investment as it was desperately looking for Foreign Direct Investment (FDI) without considering the implications to the national economy.
President Sirisena on Tuesday raised the issue at the Cabinet meeting saying that a group of local industrialists and retail shop owners had brought to his attention the recent sudden increase of Chinese run retail shops in Colombo and Kandy and they had warned they were posing a threat to the local market. The local businessmen were to meet at the Sugathadasa Stadium next week to protest against the setting up of Chinese-run retail shops.
The President that he had requested the local businessmen not to go ahead with the meeting while inviting them for a discussion to resolve their grievances.
Prime Minister Ranil Wickremesinghe intervened to inform the Cabinet that earlier the minimum investment for foreigners was one million US dollars and it has been increased up to five million dollars to safeguard the interests of local market.
Currently for projects approved under Section 16 of the BOI Law, the minimum investment requirement to qualify for the section 16 was US$ 250,000. This can be either 100% foreign investment or a joint venture investment with local collaboration.
“Foreigner have to remit a minimum of US$ 1 million if they are to undertake trading activity. The proposed foreign investment should be effected from funds remitted through a Securities Investment Account (SIA) as indicated in the Gazette Extraordinary No.1232/14 of 19th April 2002 published by the Controller of Exchange,” the Board of Investment (BOI) website notes in its guide on setting up businesses in Sri Lanka.
Kulatunga Rajapakse, Managing Director of a leading shoe manufacturing company, said the retail market should be in the hands of Sri Lankans as it was not something related to hi-tech manufacturing. “There are no legitimate reasons to allow foreigners to engage in the retail market”
Mr Rajapakse said he believed that though the Government claimed it had increased the minimum requirement to five million US dollars for foreign investors, the move was not effective. Local retail traders said that most of these foreign-owned or joint ventures were set up bypassing government regulations with minimum capital investment. Once such retail shops were set up, they brought items from China directly posing a threat to local importers and retail shop owners.