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President re-alerted to SMI crisis

Sixty percent of the SMI sector which is facing collapse amid a plethora of unmitigated problems, provides employment to around 500,000 persons, besides servicing 75% of the local industrial goods market, Sri Lanka Chamber of Small and Medium Industries president Aloy Jayawardene points out in a letter to President Mahinda Rajapaksa. ‘We need a kick start if the economy is to develop. If this could be provided for us, we may be able to shoulder other matters that affect our production’, Jayawardene explains to the President, close on the heels of his disclosure to this newspaper last week that the SMI sector was urgently in need of a government-initiated ‘bail out package’.

The letter to the President came at the tail end of strenuous efforts by the Chamber to alert the authorities to the current plight of the SMIs, Jayawardene said. He said a letter to the President on the same subject in April 2009, proved to be of no avail.

Extracts of the letter:

‘Our plight is rather serious with at least 60% of the SMI sector on the verge of collapse, putting thousands out of jobs, which will be adding up to the burden of families associated with this sector.

‘You gave some relief with the interest rates reduced to 8%-12% (these rates are not being offered to the Manufacturing Industrial Sector). Today the SMI sector is not interested in the reduction of interest rates, but in a bailout package, as none of the SMIs can go to a bank for facilities, as they have hypothecated 100% of their assets to their respective banks, and none of the banks would extend credit without a collateral.

‘To give you some statistics of the size and diversity of the sector; small size group- enterprises employ between 5-29 people, medium 30-149 people and large 150 or more. Small and Medium Industries have made an important contribution to employment. In general, the SMIs are more labour intensive than their larger counterparts. Out of all industries, 75% of the market is for the Small and Medium Industries. Distribution of industries is mainly in the Western Province, North Western Province, Southern Province and others scattered in other Provinces. Average employment is around 500,000.

‘Taking into consideration the plight of the SMI sector, we request Your Excellency to suspend labour laws to allow lay offs and prevent them being challenged in court till the crisis is over. Our bank loans, interest on loans, taxes and other rates should be put on hold for the next two years. We are confident that you are aware that the SMIs are a vital cog in our country’s economy, which represents 70% of it. We need a kick start if the economy is to develop. If this could be provided for us, we may be able to shoulder other matters that affect our production

‘To explain further in this regard, we need to meet Your Excellency to enlighten you on the gravity of our situation. Hence, shall appreciate if you may please give us a date and time convenient to Your Excellency to meet a delegation from the Chamber.

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