Exporters’ chamber urges Central Bank to recheck figures of forex remittances

Sri Lanka’s top export chamber has urged the Central Bank (CB) to present facts and figures to buttress the latter’s argument that exporters are not remitting export proceeds to Sri Lanka.

The National Chamber of Exporters (NCE) said that the CB should monitor repatriation and conversion of export proceeds to the country with the support of a robust system and to penalise those who do not conform to such formalities.

The NCE was responding to a recent CB statement alleging exporters of not remitting full export proceeds to the country which has raised concern. The statement accused exporters for not remitting export proceeds earned overseas, denying country the much needed foreign currency, during this unprecedented economic meltdown. In this regard, the figures provided by the CB ought to be thoroughly investigated and action taken as per prevailing laws and regulations.

The NCE mentioned that exporters have registered export invoices with the CB through the Customs CUSDEC.  As per ruling by the CB, exporters have to remit the full export proceedings to Sri Lanka within 180 days, resulting a penalty if the stipulated days have been exceeded.

However, if such delays were due to genuine reasons of not accepting goods on time, the CB has recalled the penalties imposed. Yet, the CB should have a mechanism to check the time difference between filing the custom declaration and remittance of export proceeds, making a note that exporters are permitted to 180 days’ credit. In a practical world, export proceedings of the previous month will be effected anytime between 01 to 25 weeks. 

The Chamber requested the CB to provide source verification of figures provided, noting that when Sri Lanka Customs reflects export figures each month, it should be matched against the approved credit period for repatriation of export proceeds.

The majority of Sri Lankan exporters are considered to be ethical traders who put country first. Despite many drawbacks and challenges created by stakeholders on poor governance, fraudulent practices, depletion and lethargic responses, exporters have sustained the export industry and as of today, and has become the sole foreign exchange earner to the country generating a significant portion.

The NCE said that simply highlighting long years of malpractice by exporters of not remitting forex earnings, is only showcasing the ineffective governance of this highest state authority. “We are surprised to hear that even a year ago as stated by the CB, Sri Lanka Customs has reported US$985 million worth exports during the 8 months from January to August 2021. During July/August that year, exporters have repatriated an average of $640 million a month,” it said.

The NCE further added that most of the export sectors such as apparel, requires export proceedings to import raw materials to do so.  Moreover, exporters have to pay logistics, packaging and also fuel in US dollars. In some cases, import of raw materials account for 60-65 per cent of export revenue. 

The chamber was also of the view that system change should begin from exporters and the government to introduce an incentive scheme for repatriation of export proceeds through accurate invoicing. Heavy penalties for non-compliance will certainly bring the expected change in country’s forex inflows.

There has to be system to funnel export remittances to the CB through the banking system where the CB makes allocations for imports.