Federation of Chambers of
Commerce and Industry of Sri Lanka

FCCISL slams state tsunami- policy for small industries

The Federtation of Chambers of Commerce & industry (FCCISL) last week slammed the government and its post -tsunami agency, TAFREN for failure to providecare and support for Micro, Small and Medium enterprises (MSMEs).

In a statement to The Sudnay Times FT, after a chamber team visited the Indian st…

The Federtation of Chambers of Commerce & industry (FCCISL) last week slammed the government and its post -tsunami agency, TAFREN for failure to providecare and support for Micro, Small and Medium enterprises (MSMEs).

In a statement to The Sudnay Times FT, after a chamber team visited the Indian state of Gujarat to learn how industry in that state recovered from a devastating earthquake, the FCCISL sai the rehabilitation of MSMEs in tsunami affected areas has received only a lukewarm response so far with the government failing to come up with any concrete proposals for rebuilding the affected industries.

“Like the Gujarat state in India TAFREN- the government arm supposed to plan and implement rehabilitation of the enterprise secotr in tsunami affected areas has merely mentioned in their mission statement on Livelihood, that they will bring Tsunami affected communities out of dependency and poverty as rapidly as possible by providing support to revive; local economies and rebuild livelihoods. This at best remains unfulfilled.” The apex chamber body said.

All what the governemnet has done so far, it added was to introduce only loan schemes such as “Susahana” and NDTF (National Development Trust Fund) and the affected entrepreneurs are expected to avail of the loan facilities under these schemes, to restart their businesses. Although these loan schemes carry with them certain concessionary terms such as low interest rates, long grace periods, and extended payback periods, majority of affected entrepreneurs are hard put to access these credit lines due to the inability to provide the collateral that the lending institutions ask for.

The banks are not prepared to accept any land with in the 100 meter zone as collateral and nor could the prospective burrowers furnish personal guarantors as many known to them, are either dead or dislocated from affected areas, the statement said.

“The TAFREN proposes to launch what it calls a Rapid Income Recovery Framework to enable the government, development agencies and donor agencies to provide and channel livelihood support in an equitable and effective manner.

Anyway this has to date not materialized. Although the govt. has directly provided financial support for the rebuilding of houses, hospitals, and schools etc. which were devastated by the Tsunami, it is regrettable that no such assistance has been provided to the MSMEs.

In this connection the assistance rendered by the donor community, and the NGO sector in the rehabilitation of the MSMEs is far superior and more meaningful than the feeble attempts made by the government sponsored task forces on rehabilitation, who have been very myopic and still, not felt the pulse of the affected entrepreneurs although 7 months have elapsed after the calamity. The chamber team led by its Ex. Secretary-General Samantha Abeywickrema and comprising District Coordinators of the “Back to Business” project, visited the Entrepreneurship Development Institute of India (EDI) based in Ahmedabad, State of Gujarat in India to study the methods and systems followed in the effective rehabilitation of Earthquake affected Micro, Small and Medium enterprises (MSMEs) and Livelihoods from 20th to 25th of July 2005. Gujarat is supposed to be the only place in recent history which has recovered so fast after a calamity of this nature and has the unique distinction of resuscitating MSMEs and livelihoods in the shortest possible time due to the efficacy of the measures taken thereon.

The earthquake that struck Gujarat on 26 January 2001 was the worst natural disaster that state, has experienced in the last 50 years. This affected all segments of society, very much similar to the devastation caused by the Tsunami in Sri Lanka. The loss of lives caused by the earthquake was colossal. About 13800 people died, approximately 167,000 sustained injuries and 1.2 million houses were damaged. This had a very severe impact on livelihood, where more than 10,000 small and medium industrial units were damaged. Nearly 71,000 micro & cottage industries ceased operations after the calamity, due to disruptions in production and distribution lines.

In Sri Lanka, it is estimated that more than 50% of MSMEs in the coastal belt have been affected by the Tsunami.

Three major economic sub sectors that contributes to the economy of the Tsunami affected coastal regions are the Tourism, Fisheries and the MSMEs. According to official estimates the number of small businesses affected is around 5000, but this could only reflect the registered businesses and there are quite a large number of informal unregistered businesses operated at house-hold level, which have not come under damage assessments.

It is estimated that the number of micro & cottage enterprises affected are four or five times the number of small & medium enterprises FCCISL said. The guiding principle of the Gujarat state policy has been the involvement of people and representative institutions in the decision making process in order to reflect their priorities and aspirations in program deliverables.

The state had clearly identified the needs of the MSMEs after the assessment survey and did not hesitate to include the following package of assistance on a priority basis

  • Credit supply for the self employed and craftsmen on easy terms
  • Provision of work sheds Provision of toolkits for artisans & craftsmen
  • Creation of revolving funds for livelihood programs
  • Setting up of Handloom /Handicraft parks and rural industry centres
  • Assistance to small ,medium and large Industries Assistance to tourism units
  • Assistance to traders and shop owners
  • Assistance for farm inputs and implements
  • Assistance in Entrepreneurship Training for both new and existing industries