At a crucial point where Sri Lankan Exporters have committed to support the economy, the recent statement by the Central Bank of Sri Lanka alleging exporters of not remitting full export proceeds to the country has raised concern. The statement by the CBSL clearly accused exporters for not remitting export proceeds earned overseas, denying the country the much-needed foreign currency, during this unprecedented economic meltdown.
The National Chamber of Exporters of Sri Lanka, the voice of the exporter, stated that under the Repatriation of Export Proceeds into Sri Lanka Rules No.05 of 2021, published by a gazette notice, the CBSL enforced exporters to remit foreign exchange earnings and convert to Sri Lankan rupees, except for allowed payments. In this regard, the figures provided by CBSL ought to be thoroughly investigated and action taken as per prevailing laws and regulations.
It is the task by CBSL to monitor repatriation and conversion of export proceeds to the country with the support of a robust system and to penalize those who do not conform to such formalities.
Adding on, the NCE mentioned that exporters have registered export invoices with CBSL through CUSDEC. As per ruling by CBSL, they have to remit the full export proceedings to Sri Lanka within 180 days, resulting in a penalty if the stipulated days have been exceeded. However, if such delays were due to genuine reasons of not accepting goods on time, CBSL has recalled the penalties imposed. Yet, the CBSL should have a mechanism to check the time difference between filing the custom declaration and remittance of export proceeds, making a note that exporters are permitted to 180 days’ credit. In a practical world, export proceedings of the previous month will be affected anytime between 1 to 25 weeks.
In this case, the Chamber requests CBSL to provide source verification of figures provided, noting that when Sri Lanka Customs reflects export figures each month, it should be matched against the approved credit period for repatriation of export proceeds.
Majority of Sri Lankan exporters are considered to be ethical traders who put the country first. Despite many drawbacks and challenges created by stakeholders on poor governance, fraudulent practices, depletion and lethargic responses, the Sri Lankan Exporters have sustained the export industry and as of today and has become the sole foreign exchange earner to the country generating a significant portion.
Adding further, the NCE stated that CBSL being the apex body of managing the fiscal condition of the country, ought to play a massive role in stabilizing the country’s economy. Simply by highlighting long years of malpractice by exporters of not remitting forex earnings, is only showcasing the ineffective governance of this highest state authority.
“We are surprised to hear that even a year ago as stated by CBSL, Sri Lanka customs has reported $ 985 million worth exports during the eight months from January to August 2021. During July/August that year, exporters repatriated an average of $ 640 million a month,” a senior official of the NCE stated.
According to the Chamber, they have discussed this matter with their members and have emphasized the importance of following the rules of CBSL related to Forex remittance specially during this crisis. The Sri Lankan exporters are duty bound to do so.
The NCE further added that however, most of the export sectors such as apparel, requires export proceedings to import raw materials to do so. Moreover, exporters have to pay logistics, packaging and also fuel in US Dollars. In some cases, imports of raw materials account for 60-65% of export revenue.
The Chamber is of the view that system change should begin from exporters and the Government to introduce an incentive scheme for repatriation of export proceeds through accurate invoicing. Heavy penalties for non-compliance will certainly bring the expected change in a country’s forex inflows.
There has to be a system to funnel export remittances to CBSL through the banking system where CBSL makes allocations for imports.
The NCE is committed to support the authorities to engender change in rebuilding our economy through exports.
Source: Daily FT