108,100 MSMES Shut Down Due to 2022 Economic Crisis

108,100 MSMES Shut Down Due to 2022 Economic Crisis

By Paneetha Ameresekere Ceylon Today February 16, 2024 

The 2022 economic crisis saw the closure of 108,100 micro, small and medium enterprises (MSMEs) resulting in job losses amounting to a minimum of 119,100 to a maximum of 475,800, extrapolation of data provided by the Census and Statistics Department (CSD) showed. 

In a publication titled Impact of Economic Crisis on MSMEs 2022 released by CSD this week, segmentalising the MSMEs closed, said that 105,600 businesses in micro sector, 2,400 in small sector and about 100 in medium sector have been closed due to the economic crisis.

MSMEs play a pivotal role narrowing the socioeconomic divide within the counties. In Sri Lanka, the MSMEs contribute significantly, accounting for more than 50 per cent of the country’s GDP, the report said.

“However, the scarcity of foreign exchange (FX) and the increase in exchange rates are both having a negative impact on MSMEs in Sri Lanka,” the CSD report warned. These problems are making it difficult for MSMEs to import raw materials, equipment and software, which are slowing down their production and growth. The problems are also making it more expensive for MSMEs to do business, which are reducing their profits. These findings indicate that Government of Sri Lanka (GoSL) needs to take a comprehensive approach to addressing the scarcity of FX and the increase in exchange rates, it said. 

In summary, the prominent challenge encountered by enterprises across all scales is ‘increasing of interest rates’ where an overwhelming proportion of nine out of every 10 enterprises surveyed have undergone a substantial ordeal due to the exacerbated interest rate surge, CSD said. 

Overall, the most common areas of support expected by MSMEs are all related to financial assistance, to help them cope with the economic crisis, CSD said. Therefore, the Government needs to provide financial assistance, as well as other forms of support, to help MSMEs survive and thrive, the report further said. 

In summary, the prominent challenge encountered by enterprises across all scales is ‘increasing of interest rates’ where an overwhelming proportion of nine out of every 10 enterprises surveyed have undergone a substantial ordeal due to the exacerbated interest rate surge, CSD said. 

‘Decrease in repayment capacity due to reduction in income’ is notably afflicting 70 per cent of enterprises across all scales in light of the prevailing economic crisis. Subsequently, the third salient challenge manifests as the ‘restriction of credit facilities by banks and financial institutions’, impacting slightly over 50 per cent of enterprises surveyed. ‘Inability to find assets or guarantors for collateral’ is  the fourth major challenge which is approximately one out of every three enterprises in micro and small scale and one out of every five enterprises in medium scale enterprises faced, the report said.

“This report presents findings of the survey conducted to access the Impact of ‘Economic Crisis on MSMEs engaged in Non-Agricultural Sector of Sri Lanka’ upon the request of the Presidential Secretariat,” CSD said.

In extrapolating the job losses, they are based on the fact that the CSD defined as ‘main economic sector scale criteria (No. of Persons Engaged)’ as ‘Industry and Construction’: ‘Micro’ 1 – 4, ‘Small’ 5 – 24 and ‘Medium’ 25 – 199. ‘Trade’: ‘Micro’ 1 – 3, ‘Small’ 4 – 14 and ‘Medium’ 15 – 34 and ‘Services’ Micro 1 – 4, ‘Small’ 5 – 15 and Medium 6 – 74 respectively and averaging those employment numbers.

Afterwards, extrapolating those numbers to the numbers of micro, small and medium enterprises closed, CSD hasn’t segmentalised the number of ‘Industry and Construction’, ‘Trade’ and ‘Services’ categories closed due to the economic crisis, nor how many of such belonged to the ‘micro’, ‘small’ and ‘medium’ sectors either.⍐

AKD’s diplomatic odyssey: NPP’s foray into India and the road ahead

 AKD’s diplomatic odyssey: NPP’s foray into India and the road ahead

This move by India is not merely diplomatic; it symbolises a calculated strategy to position the
NPP as a significant regional player

By Shantha Jayarathne Daily FT Friday, 16 February 2024

The recent five-day sojourn of Anura Kumara Dissanayake, leader of the National People’s Power (NPP), and his delegation to India has become a focal point in Sri Lanka’s political discourse. In an unprecedented move, the Indian Government extended an official invitation to NPP leaders, signalling a departure from conventional diplomatic interactions. As the visit unfolded, it not only deepened bilateral ties but also shed light on the evolving political dynamics within Sri Lanka, presenting both challenges and opportunities for the NPP.

Unprecedented invitation and historical context

India’s decision to invite National People’s Power (NPP) Leader Anura Kumara Dissanayake has made headlines in both local and Indian papers. This move is remarkable for two primary reasons. Firstly, the NPP is not the country’s main opposition, securing only 3% of the vote in the 2020 General Elections. The fact that it received an official invitation from New Delhi indicates India’s nuanced perception of Sri Lanka’s politics, recognising alternative voices beyond mainstream parties. Secondly, it extended an invitation to a party that historically harboured anti-India sentiments, particularly during the 1980s.

Economic cooperation and regional security

High-level talks between the NPP delegation and Indian officials, including Minister of External Affairs Dr. Subrahmanyam Jaishankar, National Security Advisor Ajit Doval, and Foreign Secretary Vinay Mohan, delved into multifaceted aspects of Sri Lanka’s landscape. Economic cooperation took centre stage, with discussions addressing the island nation’s economic challenges and potential avenues for collaboration. Additionally, the conversation extended to regional security concerns, showcasing the shared commitment to addressing common threats in the Indian Ocean region.

Political landscape in flux

Anura Kumara Dissanayake’s burgeoning popularity, especially after the 2022 mass uprising, known as ‘Aragalaya,’ is a key focal point of the visit’s significance. Additionally, the recent opinion polls by many local and foreign research groups have indicated that Dissanayake is the favoured candidate for the upcoming Presidential Election, positioning the NPP as a formidable political force. The visit to India, against the backdrop of two national elections looming later this year, underscores the shifting political tides in Sri Lanka.

Evolving popularity and electoral dynamics

While critics often dismiss the JVP-NPP as an archaic and outdated party, recent developments suggest otherwise. The party is gaining ground rapidly, capitalising on its outsider status and presenting itself as an alternative to mainstream parties like the United National Party (UNP) Samagi Jana Balawegaya (SJB) and the Sri Lanka Podujana Peramuna (SLPP). With every street corner expressing support for the NPP, the visit to India reinforces its growing influence, particularly among the youth.

Strategic manoeuvre: India’s swift move

As political analyst Dr. Dayan Jayatilleka observes, India’s swift move in being the first country to recognise the NPP checks China’s influence. The NPP has established connections with the Communist Party of China, but Delhi’s strategic manoeuvre elevates the NPP’s global presence. This move by India is not merely diplomatic; it symbolises a calculated strategy to position the NPP as a significant regional player. 

Economic policy and ground realities

Contrary to popular perceptions, the NPP’s economic policy is evolving. While critics argue that the party lacks an understanding of ground realities and economic difficulties, the NPP’s commitment to revolutionary politics through elections suggests an adaptability to changing circumstances. The party’s identification of the economic rift between the rich and poor resonates with public sentiment, especially in the face of austerity measures implemented by the government along with the IMF prescription.

Exploration of innovation hubs

During his visit, Anura Kumara Dissanayake explored innovation hubs in Gujarat, India. This initiative underscores a commitment to fostering technological cooperation between Sri Lanka and India. The visit to hi-tech centres provided an opportunity for the NPP delegation to witness firsthand the strides made in information technology and research, potentially paving the way for collaborations in these fields.

Engagement with research centres and academic institutes

Anura Kumara Dissanayake’s strategic engagement with various research centres and academic institutions in India during his visit holds immense significance. The delegation’s discussions with think tanks and research organisations demonstrate a shared interest in knowledge exchange and collaborative research initiatives. This proactive approach not only enriches the political dialogue between Sri Lanka and India but also opens avenues for mutual cooperation in areas such as science, technology, and academia, fostering a more comprehensive partnership.

Strategic discussions in Kerala

In addition to the exploration of technological advancements in Gujarat, the NPP delegation’s visit to the South Indian state of Kerala marks a significant chapter in their diplomatic journey. Kerala, known for its unique socio-economic and political dynamics, provided an opportunity for Dissanayake and his comrades to engage in strategic discussions with senior state government leaders and political figures. This regional outreach showcases the NPP’s commitment to understanding diverse perspectives within India and fostering relationships beyond the national capital, reinforcing the importance of sub-national diplomacy in shaping bilateral ties.

Cultural and regional understanding

Beyond the political and economic dimensions, the delegation’s visit to Kerala allows for a deeper cultural and regional understanding. Kerala, with its rich history, diverse traditions, and unique governance models, offers insights that go beyond the political arena. Such engagements are crucial for fostering people-to-people connections, building a foundation for sustainable diplomatic relationships. Anura Kumara Dissanayake’s strategic approach to exploring various facets of India, from its technological hubs to culturally rich regions, adds a nuanced layer to the significance of his visit and highlights the NPP’s commitment to a comprehensive understanding of India’s multifaceted landscape.

Conclusion

India’s decision to engage with the NPP speaks volumes about the evolving political dynamics in Sri Lanka. The recognition of the party’s rising influence, especially in an election year, highlights India’s astute approach to regional geopolitics. As the NPP gains ground and reshapes its economic policies, the visit to India becomes a crucial chapter in the party’s trajectory, one that may have far-reaching implications not only for Sri Lanka’s political future but also for India’s regional interests. 

(The writer is a former Senior Consultant at Sri Lanka Institute of Development Administration (SLIDA) and can be reached through shantha323@gmail.com.)

JVP-led NPP will not undermine India’s national security

 NEWS

AKD: JVP-led NPP will not undermine India’s national 

security

2024/02/17  The Island

By Rathindra Kuruwita

A National People’s Power (NPP) administration will not do anything that will undermine Indian security, but it will maintain economic and political relations with China, the NPP delegation to India told Indian officials, JVP/NPP Leader Anura Kumara Dissanayake said in an interview with Sirasa TV, on Thursday (15).

In his first interview since his return to the country, Dissanayake said India had extended an invitation to the NPP in December.

“However, we had other commitments in December. One of them was visiting China at the invitation of the Chinese Communist Party. We told India that we maintained full transparency in our external relations.”

The NPP leader said that the incumbent government’s privatisation drive had attracted both Indian and Chinese investors, and that had led to friction between the two major powers.

“The government has decided to privatise Sri Lanka Telecom, and the two main contenders are Chinese and Indian interests. It’s the same with Lanka Hospitals. It is the government that wants Amul to buy NLDB.”

From the J.R. Jayewardene administration onwards, successive governments followed disastrous foreign policies that made Sri Lanka a battleground between major powers, Dissanayake said.

“JRJ beckoned Americans to Sri Lanka, and at that time, India was with Soviet Union (Russia). This angered India. Then, other governments tried to balance China and India by selling each country valuable national assets and giving each country contracts that didn’t adhere to the tender process,” the NPP leader said.

The NPP adheres to a non-aligned foreign policy, Engaging all stakeholders transparently is the key to avoiding misconceptions and triggering hostilities, he said.

States operate in an information-sparse environment, which often leads them to operate on assumptions. The NPP believes in transparency and engagement in foreign and domestic affairs because of that very reason, he said.

“We know that some individuals, who frequently attend Embassy functions, are spreading misinformation about us. On the other hand, we don’t really have the time to attend all these functions. However, in recent months, diplomatic missions have reached out to us because they think we will win elections, and we have used these opportunities to explain what our policies really are.”

The NPP leader said that their political opponents are very worried about their Indian visit because it dispels the narratives they have built about the party.

“One of the claims made was that the NPP has no international connections or standing. Anyone who can think logically can understand that states engage with political actors that have power. India, China, the US, and many others are now engaging with us because they think we will win elections. Some people believed Ranil knew foreign leaders personally and that they would bail the country out. How has that worked out? States act out of strategic considerations. We have said this from the beginning. However, some of our political leaders thought it was a good idea to put a lot of their eggs in the ‘NPP has no international standing’ basket. Now this has been proven obviously wrong, and they are panicking,” he said. (High Lights Author)

Dissanayake added that they are well aware that the two main parties and their affiliates will do everything in their power to thwart an NPP win.

“This is not like Ranil replacing Mahinda or Ranil replacing Gota. A lot of crooked elements are afraid of us coming into power. They will do anything to stop us, and already we are seeing strange political bedfellows emerging,” he said.