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[December 2008]
Sri Lankan Ceramic Industry Requests Financial Relief Measures
According to the Daily News in Colombo, Sri Lankan ceramic industrialists have called for loan restructures, concessions and rupee depreciation. Several economists have suggested that the rupee should be allowed to depreciate to save exports including the ceramic sector, said Chairman and Managing Director of Dankotuwa Porcelain, Sunil Wijesinha.
Speaking at an event on the impact of current exchange rates energy, prices and GSP plus on the ceramic industry (held in Colombo), he said a forced depreciation later would be “too late”.
“It is not only the ceramic sector who claim that the rupee is over valued, most economists including the Chairman National Policy Studies, Dr Saman Kelegama have suggested an immediate adjustment so that the rupee reflects it real value,” he added.
“Being an exporter, it is easier for us to negotiate prices with our international buyers based on world market movements of energy and commodities than trying to make them understand the distortions in the local market. We recommend a transparent pricing formula that moves in accordance with market prices.”
He also expressed surprise at the recent price revision of diesel where he claimed no concessions were given to the industrial sector. “If a litre of diesel was reduced by Rs. 15, it would save us Rs. 2 million every month from our production cost, which would balance our profits and losses,” he said.
“We are thankful for the extension of GSP+ and hope that it would finally be for a longer period. If not, European importers would have to pay 8 per cent more duty and Sri Lanka will lose our competitiveness,” he said. Another suggestion strengthening the ceramic sector was to allow BoI companies to sell more of their products in Sri Lanka. “Currently this is 20 per cent and we appeal that this be increased,” he said.
Chairman and Managing Director of Midaya Ceramics Co Ltd, Dayasiri Warnakulasuriya, said they are paying an unrealistic price for energy and, due to this, they are facing a crisis which has resulted in them holding on to their investments.
“Central Bank could play a major role to save the ceramic sector by negotiating with the banks to restructure their term loans,” said General Manager of Lanka Wall Tiles Ltd, Niranjan Jayawickrama. “We are only asking the banks to differ the loans by another two years, as it would not be a problem for the banks.”
Managing Director of Samson Rajarata Tiles Ltd, Bandula Perera, said India and several other countries were providing concessions to their exporters and Sri Lanka too should follow suit.
Managing Director of Noritake Lanka Porcelain, K Nakanishi, added that if no action were taken by the Sri Lankan government, the ceramic industry would disappear soon.
ENDS