Sri Lanka retail sector on the verge of collapse
The retail industry which constitutes 23% of the country’s GDP has been hit hard by the ongoing forex crisis and urged the Government to resolve it fast before putting thousands of jobs at stake.
In a statement, Sri Lanka Retailers’ Association (SLRA) said the wider ecosystem of employees, suppliers, farmers and consumers of Sri Lanka impacted by the ongoing crisis and is pushing businesses to the brink of collapse.
The retail industry has been under tremendous pressure to deliver during the past one-and-a-half years, mainly owing to closures and disruptions due to the pandemic. The situation has been exacerbated since mid-2021 up to now due to increasing pressure on imports, which has been a core requirement for many retail businesses.
The retail industry in Sri Lanka plays a vital role in the country’s economy and it is pertinent to note that the national retail sales in Sri Lanka are approximately $ 13 billion. As a growing industry over the past years, it accounts for about 23% of the country’s GDP.
This industry also represents 14% of the labour market, with more than 1,100,000 people being employed within this sector in Sri Lanka. Additionally, the overall retail industry contributes significantly to the economic value chain of the country in many ways.
The Sri Lanka Retailers’ Association (SLRA), the apex body of organised retail in Sri Lanka, has raised growing concern about current standing of the local retail sector.
If the retail sector collapses completely, it will greatly affect its larger eco system that depends on retail, penetrating deep into the length and breadth of the country. The financial and social repercussions will be unprecedented and the loss of employment alone, will be disastrous.
The local retail sector accounts for over 30% of the national GDP and 14% of direct employment in the work force. Over 10% percent of households in Sri Lanka depend on employment in the retail sector.
A large section of the employment in this sector includes sales, cashiers, and lower mid-segment jobs, which are vital to keeping the country’s economy afloat, and providing deeper penetration of income streams across the country as well.
.Mr. Murali Prakash, President of the SLRA, commented on the current situation. “It is important that everyone come together with authorities, policymakers and stakeholders and work towards replenishing the local retail sector, as it is the backbone of our economy.
The SLRA cannot stress enough the importance of making the retail sector a priority, as without it, the economy would further dwindle, as other sectors that depend on retail will also collapse.”
The Social Security levy charged on basic essential items have further increased the burden on consumers. SLRA recommends to exclude the levy on basic essentials to provide relief to the consumers.
The SLRA urges the government and authorities to set up a system to facilitate the continuation of the retail sector business through a planned set of actions.
A 100% fail proof framework based on monthly availability that could be considered to rejuvenate the retail sector would ensure imports and provide a means of managing the current uncertainty in the country.
The SLRA also advocates transparency on how retailers should operate amidst the current crisis. It is imperative that frequent discussions by key authorities are taken place on a timely basis, as it is the only means of ensuring the survival of the local retail sector.