The Hon. J.C. Alawathuwala

¶ 01 Madam Presiding Member, on this day when we are debating the Expenditure Heads of two very important ministries, I have only a short time to speak. When we speak of the Ministry of Industries, we cannot forget the micro, small and medium scale industrialists (MSMEs). Their present condition has become dire. You know the reasons: the COVID-19 pandemic and the bankruptcy of the country inflicted severe damage on the sector. The necessary measures to minimize that damage were not taken under the Ranil Wickremesinghe Government or even now. Your government has been in power for a year, but it is evident the situation has not been restored. Numerous problems have arisen.

¶ 02 This sector contributes about 52 percent to Sri Lanka’s GDP. When problems are not resolved, production declines, which directly affects GDP. There has also been a significant loss of employment, particularly with the bankruptcy. For example, the construction sector is yet to be restored.

¶ 03 Many MSME entrepreneurs have bank loans mortgaged even with their personal houses. A temporary relief was granted by suspending parate enforcement, but the current situation is unfortunate. Entrepreneurs who tried to create jobs are losing their personal assets to banks, not because of their fault but due to national bankruptcy. We must find solutions.

¶ 04 Before the election, you spoke of a production economy. To rebuild it, we must protect the MSME entrepreneur. However, the steps you have taken are not sufficient. We also observed that while most sectors collapsed during COVID and bankruptcy, banks recorded higher profits. We do not say banks should not profit; but has sufficient relief been provided to businesses? International experience, for instance in Japan after World War II, shows how banks enabled recovery with low-interest credit. Have our banks provided such opportunities? Today, small and medium entrepreneurs are leaving the country. New business formation is stifled due to high interest.

¶ 05 I must also note what MSME chambers have said: the Budget proposes to reduce the VAT registration threshold from Rs. 60 million to Rs. 36 million. This will strongly impact many MSMEs. Adding 18 percent VAT will further push them into difficulty and increase prices of produced goods. None of the promises made before elections are being delivered.

¶ 06 The MSME chamber and Mr. Prasanna Madurasinghe have submitted letters listing 10 key issues and unfortunate realities MSMEs face. I table those for the House and draw the Minister’s attention to them. If we do not remedy this, there is no point speaking of a production economy—our remaining limited group of committed producers will also vanish.

¶ 07 On the Ministry of Rural Development: when discussing poverty and social protection, we have often provided immediate assistance like food during bankruptcy, which was essential. But do we have time-bound pathways to lift people out of poverty? The Minister said this morning we must also strengthen people psychologically.

¶ 08 I recall President Ranasinghe Premadasa’s Janasaviya programme. Though not islandwide, it operated in the poorest DS divisions and emphasized savings and completion within two years, aiming to graduate beneficiaries to self-reliance. Later, in 1994, it was replaced by Samurdhi, which over time became a programme binding people to it, with various entitlements to 6684020308 families. Also, documents have been placed in the Library.

¶ 09 Another neglected issue is the middle class, especially public servants. A university professor told me that after paying a housing loan and vehicle lease, only Rs. 55,000 remains from his salary, with two children to support. Many public servants who were once comfortable are now effectively poor. We must address this too.

¶ 10 Thank you for the time, Madam Presiding Member.