Opposition Leader Sajith Premadasa today accused the Government of merely presenting arguments without offering practical solutions to the hardships faced by the people, particularly small and medium-scale entrepreneurs.

Addressing Parliament, Premadasa said over 1.1 million Micro, Small and Medium Enterprises (MSMEs), which contribute 52% to the country’s GDP and provide livelihoods to around 4.5 million people, are facing a severe crisis. He noted that more than 260,000 businesses collapsed during the 2022 economic downturn, with another 150,000 shutting down in the past two years. Despite this, he said the Government has failed to implement a proper debt restructuring mechanism for these entrepreneurs.

He charged that while the Parate Law was temporarily suspended for political gain on two occasions, no meaningful relief was provided to struggling business owners, while debt restructuring was instead used to protect wealthy individuals, placing a heavier burden on ordinary citizens.

Premadasa called on the Government to present a clear National Export Policy and Export Strategy, stating that Sri Lanka’s export sector continues to face serious barriers. He stressed that MSMEs, which were promised strong support during election campaigns, have now been neglected, and their expectations betrayed.

He further criticised the Government’s poverty alleviation approach, stating that the Aswesuma programme cannot eradicate poverty, which he claimed now affects nearly 50% of the population. Instead, he said the administration relies on politically-driven “Praja Shakthi” committees dominated by JVP members, which focus on consumption rather than sustainable production and export-driven growth.

Premadasa also highlighted alleged large-scale fraud involving a foreign employment agency registered under the Sri Lanka Bureau of Foreign Employment. He said the Mahara ‘Rainbow’ agency had collected between Rs. 850,000 and Rs. 1.85 million from around 500 individuals promising jobs in Romania, allegedly defrauding nearly Rs. 74 million. He claimed that despite CID action, the Bureau’s legal division has failed to take decisive steps, adding that the SJB has provided free legal assistance to victims.

The Opposition Leader reaffirmed support for developing traditional industries and connecting rural production to international markets, while warning that the current Government is pursuing a new neoliberal path that places an unfair burden on the working class.

He also questioned whether Sri Lanka’s export earnings and foreign direct investment would be sufficient to meet debt repayments due in 2028, warning against repeating the conditions that led to the 2022 crisis, and described the current IMF agreement as flawed. (Newswire)

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A comprehensive package of financial facilities was introduced today to revitalize micro, small, and medium-scale enterprises (MSMEs) in Sri Lanka.

The package, which includes both investment and working capital facilities, was launched under the patronage of President Ranil Wickremesinghe at the Presidential Secretariat. 

According to the President’s Media Division (PMD), the following are the key factors of the newly introduced package of financial facilities for MSMEs.

• Fifteen Participatory Financial Institutions, including Licensed Commercial Banks and Licensed Specialized Banks, are offering these loans at subsidized interest rates. This initiative is designed to support MSMEs that have maintained operations despite the ongoing crisis.
• The loans are provided under two main categories: support for MSMEs and assistance for MSMEs with non-performing loans. The Ministry of Industries will issue recommendation letters to eligible MSMEs that require financial support and have the potential to upgrade their businesses to the next level.
• Under the Micro, Small, and Medium Enterprises Strengthening Investment Loan scheme, loans are available at a concessional interest rate of 7% for a period of 10 years, with a maximum limit of Rs. 15 million. A total of Rs. 13 billion has been allocated for this scheme.
• For MSMEs under the non-performing loans category, a working capital loan of up to Rs. 5 million is provided for a period of 5 years at an interest rate of 8%. The total allocated amount for this initiative is Rs. 5 billion.
• The participating financial institutions include the Bank of Ceylon, People’s Bank, Regional Development Bank, State Mortgage and Investment Bank, Hatton National Bank, Seylan Bank, Sampath Bank, Commercial Bank, DFCC Bank, National Development Bank, Nations Trust Bank, Sanasa Development Bank Limited, Union Bank, Pan Asia Bank, and Cargills Bank.

Speaking at the event to introduce the package, President Ranil Wickremesinghe emphasized that strengthening MSMEs is crucial for the country’s progress. He highlighted that small and medium-scale entrepreneurs were the most affected by the recent economic collapse in Sri Lanka, and the government is prioritizing their recovery. The President also announced the establishment of a National Development Bank to provide necessary capital to MSMEs.

Additionally, President Wickremesinghe mentioned efforts to attract foreign investments to support large-scale entrepreneurs and outlined the government’s programs aimed at uplifting the common people of the country.

This new credit scheme aims to enhance the resilience of MSMEs as they recover from the economic crisis and navigate risks stemming from changes in the business environment, including climate change. Special attention is given to sectors such as agriculture, tourism, manufacturing, technical and export-oriented industries, and women-led MSMEs (excluding trading, leasing, and business rental) that require working capital financing.

The scheme also supports the government’s objective of securing foreign exchange and transforming the economy from an import-dependent model to an export-driven one. (Newswire)

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Opposition MP Dr. Harsha de Silva has called for a two-year suspension of Parate execution for non-willful defaulters and the introduction of insolvency legislation to support Sri Lanka’s Micro, Small, and Medium Enterprises (MSME) sector.

He made the suggestion while shedding light on the dire state of Sri Lanka’s Micro, Small, and Medium Enterprises sector in Parliament yesterday (07). 

Speaking in Parliament, MP Harsha de Silva emphasized the urgent need for comprehensive measures to address the mounting challenges faced by these enterprises, which are crucial to the country’s economy and employment landscape. 

To provide immediate relief to the struggling sector, MP Harsha de Silva called for a two-year suspension of Parate execution for non-willful defaulters and the introduction of insolvency legislation to support MSMEs.

MP Harsha de Silva further highlighted the significant suffering experienced by the MSME sector, with businesses closing down, jobs lost, entrepreneurs facing bankruptcy, and even tragic cases of suicide. Painting a grim picture, he emphasized that approximately 80% of Sri Lankan enterprises fall under the MSME category, contributing 52% to the country’s GDP and accounting for 45% of employment opportunities.

The MP pinpointed a series of events that have inflicted severe blows on the MSME sector since October 2018, including the constitutional coup, the Easter attacks in 2019, the COVID-19 pandemic, and the subsequent economic crisis triggered by Sri Lanka’s declaration of bankruptcy in April 2022. These calamities have resulted in a cascading effect on banks, government institutions, and the general population as a whole.

While the government has proposed some solutions, MP Harsha de Silva argued that the deteriorating economic conditions have exacerbated the situation, leading to further neglect of the struggling MSMEs. Recognizing the immense impact of these issues, he expressed his willingness to support the government in any endeavour aimed at revitalizing the MSME sector.

To tackle the challenges faced by the MSME sector, MP Harsha de Silva presented four key points during his speech:

Firstly, he highlighted the need to alleviate financial constraints faced by MSMEs. He pointed out that the lack of financing options has forced many MSMEs to seek collateral loans from banks, but the economic meltdown has made it difficult for them to repay these loans. As a result, banks have seized their assets under the Parate execution act. From 2023 Jan to April alone over 400 assets have been seized. MP Harsha proposed an “investor-equity eco-system model” as an alternative to collateral loans or venture capital, which would generate localized economic growth and provide investment opportunities for MSMEs.

Secondly, the MP emphasized the pressing need to address the escalating cost of production. He highlighted how inflation and increased interest rates have placed significant burdens on MSMEs, making it challenging for them to sustain their operations. The rising import costs have further contributed to the increase in production expenses thus, reducing their competitiveness. Additionally, bureaucratic hurdles and high-cost utilities have added to the difficulties faced by MSMEs. In light of this, MP Harsha urged for comprehensive trade policy reforms, streamlined trade facilitation, and increased regional collaboration to enhance the competitiveness of MSMEs.

Thirdly, MP Harsha de Silva identified problems with government policy as a significant hindrance to the growth of MSMEs. He pointed out that the absence of a clear and universally accepted definition for MSMEs limits their recognition and support. He also criticized the high tax rates of 30 per cent imposed on even micro and small businesses, urging for amendments to tax policies. 

Furthermore, he advocated for establishing an “SME Authority” that would centralize the functions of various institutions, simplifying the authorization processes for MSMEs. This authority would coordinate regional programs, leverage resources from government institutes, and engage private agencies and organizations to facilitate efficient service provision. By implementing these proactive measures, Sri Lanka can extend crucial support to struggling MSMEs, paving the way for their revival and fostering sustainable growth.

Lastly, MP Harsha de Silva emphasized the significance of integrating MSMEs into global value chains. He noted that Sri Lanka’s limited consumer market necessitates focusing on producing key components for global value chains. MP Harsha proposed substantial trade reforms and enhanced business models to enable MSMEs to participate effectively in global value chains. He also suggested reducing the minimum investment requirement for obtaining BOI (Board of Investment) approval to facilitate funding for MSMEs, as it currently stands at $500,000. 

In his concluding remarks, MP Harsha de Silva recommended the formation of a bipartisan parliamentary committee to engage with the MSME sector, discuss proposed solutions, and find ways to address the challenges faced by these enterprises. He emphasized the importance of giving special attention to SMEs when connecting to global value chains, citing a paper by Dani Rodrik and Kaushik Basu.

With the MSME sector being the backbone of Sri Lanka’s economy, MP Harsha de Silva’s speech serves as a wake-up call for immediate action to support and revive these enterprises, which are currently struggling under the weight of economic hardships. (NewsWire)

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