Sounding a death knell to the export industry, Jinasena Group Chairman Deshamanya Dr. Nihal Jinasena warned that if assistance is not given soon, large numbers of well known companies will either go into bankruptcy or face serious financial difficulties.

Drawing from his extensive experience, Dr. Jinasena revealed, “The bottom has dropped from our order books. Earlier we used to reject 20%-30% of the orders because we simply did not have the capacity to meet the demand. Now we take anything we can get.”

Dr. Jinasena who heads the world leader in pneumatic tyres Loadstar (Pvt) Ltd said that Original Equipment Manufacturers who are their largest customers, have decided to close their factories, some for as long as one month in order to conserve cash. But, he warned that implementing classic fire fighting techniques such as cutting inventories was easier said than done and reducing work force was next to impossible given the labour laws in Sri Lanka.

“Prices were booming right up to two months before the crisis hit. So, expensive raw materials were stocked up by us with no warning that prices could tumble. The result is that our products will continue to be expensive at a time when price reductions are the order of the day,” he said.

To make matters worse, competitor countries such as India and China have responded to these problems by devaluing their currencies, but Dr. Jinasena points out that Sri Lankan depreciation is nowhere near the magnitude that is required. The exchange rate volatility is another added headache to the manufacturing industry. “This is an area that we do not want to work in. It requires us to acquire skills in this area where we have no expertise.”

Concentrating on the issue of inflation, Dr. Jinasena insisted, “The local rate of inflation has up to now, shown no sign of being controlled by the government. In fact, the government has no control over this important matter.”