Relaxing of exporter earnings repatriation
• Exporter earnings repatriation rule relaxed from today.
• In a move to loosen up the foreign exchange controls slapped on the Lankan exporters, the government has decided to extend the 90 days earnings repatriation rule up to 150 days, taking effect from today – August 01, according to a government official.
• Further the period could also be extended on a case-by-case basis if the situation warrant a longer period based on practical reasons.
• According to Indira Malwatte, the Chairperson of the Export Development Board (EDB) the revision of the rule was in response to continuous calls by the exporter community to revisit the draconian styled control.
• “In response to the continuous clamouring by the exporters, from August 01 onwards, the earnings repatriation days was extended to 150 days,” said Malwatte speaking at the 97th Annual General meeting of the Colombo Rubber Traders’ Association.
• Exports in Sri Lanka is reported by the Central Bank of Sri Lanka.
• Exports in Vietnam is reported by the General Statistics Office of Vietnam.
On April 1, 2016 the Finance Minister Ravi Karunanayake issued a gazette notification requiring the exporters to bring back all their earnings no later than 90 days from the date of exportation of goods.
But the rule met with widespread displeasure and opposition not only from the exporter community but also from the wider society as it was considered a slap on the social market economy the Prime Minister had been advocating for.
The rule was brought in to bring back the dollars believed to have been kept in off-shore banks by the exporters as the government was desperate for foreign inflows to strengthen the dwindling foreign reserves and cushion the fragile Rupee.
According to data at least 30% of exporter earnings are held in off-shore banks while only the rest is repatriated.
The Premier Ranil Wickremesinghe wants to abolish the existing Exchange Control Act and to open the capital account which facilitates free movement of foreign capital.
Whilst some may disagree to the relaxation of Exporter Earnings Repatriation, for Sri Lanka to expand the export product basket and to encourage more players in to the “export realm”, critical changes have to be imposed right now.
Sri Lanka is far behind in the comparison to Vietnam and other Asian counterparts, and only game-changing policies could lift the export revenue to government expected numbers.
Exports in Vietnam decreased to 14700 USD Million in July from 14720 USD Million in June of 2016. Exports in Vietnam averaged 4988.40 USD Million from 1990 until 2016, reaching an all time high of 15117 USD Million in March of 2016 and a record low of 537 USD Million in February of 1997.
Exports in Sri Lanka increased to 945.40 USD Million in March from 887.70 USD Million in February of 2016. Exports in Sri Lanka averaged 696.33 USD Million from 2003 until 2016, reaching an all time high of 1070.10 USD Million in March of 2014 and a record low of 304.80 USD Million in April of 2003.
The above example highlights the difference clearly, and this is a sad situation as Vietnam was a late entry in to the global market.
In this backdrop, OSL supports the decision taken by the government to enhance the export trade volume and the effort taken to encourage exporters to diversify and add value to their traditional product offering which is fast losing its attractiveness in the global market place.
In fact, OSL wants more overseas investors to make Sri Lanka their “new manufacturing location” with the support extended through the “industrial cities” programme under the USD 44 billion Western Region Megapolis Masterplan (WRMM) aimed at making Sri Lanka a powerful trading hub by 2030.
Furthermore, the ETCA arrangement with India provides the “added incentive” for setting up manufacturing facilities in the industrial cities, as the tax consessions will undoubtedly offer the marginal pricing advantage to tap the massive Indian Market.
To learn more about the country overview and other investor-friendly changes taking place in the island, get in touch with the biz-friendly OSL Team now.
|Article Code :||VBS/AT/01082016/Z-4|