Th e g o v e r n m e n t ’ s s u d d e n c a l l f o r exporters to repatriate funds e v o k ed mi x e d sentiments over the weekend, but the nation’s second largest export sector, the tea industry, welcomed the move stating the move would establish a level playing field. However, while remaining positive over the decision that came out as a shock for many exporters across diverse sectors, the tea industry frowned upon the government’s method of implementation, slapping the community with a rather unrealistic ultimatum.
“In principle we support. The funds have to be repatriated as it is a fact that over the years we have been lenient in credit extension. The government realising this and coming to terms is good, but the implementation process should have been discussed rather than haphazardly demanding the funds to be repatriated by May 1. That is what is worrying us,” Tea Exporters’ Association (TEA) Chairman Rohan Fernando said.
The implementation of a proper policy over the repatriation of funds was proposed as the tea industry felt there were certain players, following the rule that came in 1993 that allowed exporters to keep their money overseas without restrictions, who were depressing the market by extending an unhealthy credit period.
“Exporters have tight cash flows and want every dollar and at the same time are faced with credit issues from the buyers. We wanted proper controls so no one goes around the system and undercuts the market,” he justified. However, Fernando cautioned a sudden move, as one exercised by the Treasury, could create turmoil in the system.
The real issue faced by exporters with the new notification is the 90-day period given for the payments to be repatriated. The TEA chairman called the timeframe unrealistic, given the fact that at most instances— especially for tea— the products are usually shelved after a month from being exported. Asserting 90 days is “cutting too fine”, 120 days would have been manageable, he said. “The current period given is not workable. These matters have to be discussed and implemented on a case-by-case basis. A blanket approach cannot be exercised,” expressed Fernando. The TEA would be writing to the Central Bank as to how the directive could be implemented without collateral damage and would also meet the Plantation Industries Minister today to discuss ways on minimising any negative implications.
“We don’t want anyone to under-invoice and circumvent these systems. We want a liberal economic policy, in that certain fiscal policies must be implemented and we appreciate that.” Meanwhile, a senior export sector representative speaking to Mirror Business on the condition of anonymity said the situation had been blown out of proportion by certain quarters.
While the government is indeed desperate for foreign exchange, a good proportion of exporters are noted to be keeping their money out of the country largely due to the rupee depreciating. The purposeful delay is to earn more rupees. Acknowledging that continuing to bring in ad hoc policies would result in dampened investor confidence, he said that it was expected of the government to justify their move and share the exact situation in this regard.
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