Amidst the difficulties faced by exporters, several companies from different industries have begun to migrate to other countries for better business opportunities, while a few of the remaining players are contemplating whether to leave the country or not.
Speaking to The Sunday Morning Business regarding this issue, Free Trade Zone Manufacturers’ Association (FTZMA) General Secretary Dhammika Fernando stated that exporters were afraid of the recent measures that have been introduced, such as the foreign exchange conversion requirement, and the Social Security Levy of 2.5%.
Elaborating, he stated that these measures impact the operation of the company, as there was a chance of them losing around 30% due to the 2.5% levy. Hence, as most companies do not generate such huge margins and have to also try and remain competitive in the world market, the question of whether to remain in Sri Lanka or go abroad is one that is on many exporters’ minds, it is learnt.
“This boils down to one question: Is running operations in Sri Lanka viable anymore? No entrepreneur would like their business running at a loss. At least foreign investors have come to earn a buck, so they will leave. However, we were recently stated that some of our members are seriously looking into shifting operations elsewhere,” Fernando said.
Furthermore, he added that if the Government wanted to attract new investments and retain local exporters, they needed to look at a constructive way to resolve the problem.
We also spoke to a senior Sri Lanka Association for Software and Services Companies (SLASSCOM) official, who wished to remain anonymous, and they revealed that individuals and companies have started to shift their focus to cater to international markets, as some see local markets as “not viable” to operate in any further.
“There are better opportunities out there than in Sri Lanka. In information technology, any person can work from anywhere across the world, which is why people could cater to the company or country that has the best to offer. Regardless, the opportunities available are limitless,” the official noted.
Speaking further, the official mentioned that Sri Lanka has a problem in finding the right talent due to the brain drain that is present in the sector.
Similarly, speaking to us, Joint Apparel Association Forum Sri Lanka (JAAFSL) Secretary General Tuli Cooray stated that as far as he was aware, none of the apparel sector exporters had left the country, but it was being discussed.
“We are a resilient industry; we are trying to figure out how we can survive. Having said that, if continuous restrictions are being imposed, then the options are available for anybody to look into. It has to be kept in mind. But we do believe that representation made to the Government will be addressed in the future,” Cooray mentioned.
Meanwhile, responding to a query sent by us in this regard, Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal stated that he was not aware of even a single exporter who was leaving Sri Lanka.
“Almost all exporters who met with us from several sectors have assured us that they are satisfied with our regulations,” Cabraal responded.
However, the names of the companies that have chosen to shut down and leave Sri Lanka were not shared due to confidentiality.
The decision of exporters planning to leave hinges on several factors such as the 2.5% turnover tax, rupee depreciation, dollar conversion, and other economic challenges present in the country.