Sri Lanka is set to lose the massive economic contribution from around 18 German companies and affiliated firms operating in the dollar starved island nation if the government continues with import restrictions without easing it for the survival of international joint ventures.
German companies operating in Sri Lanka have raised the red flag with some warning they will be compelled to withdraw from the country if the import ban continues, informed sources with links to foreign firms disclosed.
Sri Lanka has slapped an import ban on several items owing to the shortage of US dollars, but Germany has urged the Government to relax the ban since 2021.
The German Ambassador to Sri Lanka Holger Seubert told a group of journalists in Colombo recently that some German companies have raised concerns over the import ban.
He said that if the import ban continues for another 2 years then some companies may withdraw from the country.
Even in November 2021 The German Ambassador has urged Sri Lanka to end import controls which have blocked vehicles and other goods since2020, as money printed to keep rates low created dollar shortages and depleted foreign exchange reserves.
Though total imports went up as credit recovered and funds went into areas not controlled by interventionist bureaucrats, items that brought high levels of taxes such as cars remained barred.
Amid Sri Lanka’s import controls the usual trade surplus with Sri Lanka has widened even further, Germany’s Ambassador to Sri Lanka Holger Seubert said on November 24,2021. He said Germany generally stood for free and fair trade
Just recently leading Japanese companies Mitsubishi and Taisei announced they will be scaling back operations in Sri Lanka owing to the economic crisis. Germany has also suspended issuing loans to Sri Lanka after the island declared bankruptcy.
However, the German Ambassador said that they hope the situation will improve once Sri Lanka’s deal with the International Monetary Fund (IMF) gets approved. Seubert said that there are also concerns over the overall business environment for German investors.
Discussions in this regard have been held with the Sri Lankan authorities, including the Board of Investment (BOI).
Germany is Sri Lanka’s second largest investor from the European Union. Many of the German companies operating in Sri Lanka are global leaders in their field of specialization.
The investment areas include apparels, hosiery knitwear, surf sails, textiles, electronic products, light/heavy engineering, rubber based products such as tires and automobile spare parts, coir products, wooden/soft toys, chemicals and dyes, gems and jewellery, tourism and recreational projects.
Leading German companies operating in Sri Lanka include:Kramski Lanka (Pvt) Ltd (Kramski GMBH Germany) – Steel/High precision moulds,Aqua Dynamics (Pvt) Ltd – Windsurfing sailsBASF Finlay (Pvt) Ltd – Chemicals,Bodyline (Pvt) Ltd (Triumph International) – Foundations garments,Eskimo Fashion Knitwear (Lanka) Ltd – Knitwear and Globe Knitting (Pvt) Ltd – Knitwear
Among the other German companies are Boehm & Leckner Multi Moulds (Pvt) Ltd – Tools/ injection moulds,Dial Textile Industries Ltd (Adolf Ahlers AG) ,Lanka Hiqu Ltd – Magnetic heads,Prestige Automobile (Pvt) Ltd (BMW) – Automobiles),