- The current currency crisis and import restrictions have pushed many businesses to the brink of collapse
- Situation going from bad to worse
- The current scenario could lead to store closures and, as a result, job losses
- Govt. called to put in place a system to facilitate business continuity
- Offers forex allocation based on availability for the month
The local retail industry said it was most affected by the implications stemming from the pandemic and is in a worse situation
now. Industry, which accounts for 23% of the country’s GDP, is the hardest hit by the current currency crisis.
“The situation has worsened since mid-2021, due to increasing pressure on imports, which is a basic requirement for many retail businesses,” the Sri Lanka Retailers’ Association (SLRA) said in a statement. this week.
The industry has been under enormous pressure to deliver over the past year and a half, mainly due to pandemic shutdowns and disruptions, he added. The current currency crisis and resulting import restrictions have pushed many of these companies to the brink of collapse.
An example is consumer durable goods, clothing and related industries, where there were regular shortages of products, due to the inability to raise enough foreign exchange through banks to finance imports. and meet local needs.
“The situation is going from bad to worse, with many large entities struggling to keep their branches and facilities open, due to a lack of merchandise to sell.
If this continues, it will likely lead to store closures, severely affecting the livelihoods of many people directly and indirectly dependent on these businesses,” the association said. He also warned that the continuation of the current scenario could eventually lead to significant job losses and impact the local economy and lead to wider social problems. As a highly contributing industry with more than 25% of GDP and a large number of jobs, SLRA stressed the need to grant privileged status to facilitate foreign exchange requirements through the banking sector. While national significance should be given given the scale of the industry, the association said the impact of the forex crisis has led to an escalation in gray market activity.
This escalation and the establishment of an unorganized commercial sector could not only have a severe impact on government coffers, but also create unmanned parallel imports, he warned.
In order to ease the pressures, the SLRA calls on the government and the authorities to effectively put in place a system facilitating the continuity of activity in the sector through a set of planned actions.
One option, he said, is allocating the forex to this sector based on what is available for a given month.
Domestic retail sales in Sri Lanka are approximately US$13 billion. The industry also accounts for 14% of the labor market, with over 1,100,000 people employed in this sector in Sri Lanka. Moreover, the entire retail industry contributes significantly to the country’s economic value chain in many ways.