Exorbitant auditors’ fees negate export rewards scheme
By Devan Daniel
Exporters are having to pay high fees to auditors when completing their paperwork for the Export Development Reward Scheme and are still facing difficulties with commercial banks charging high interest rates on loans despite several reductions in policy rates by the Central Bank during the past few months.
According to the government’s Export Development Reward Scheme (EDRS), introduced to help exporters counter the ill affects of the global financial crisis, if exporters can maintain more than 90 percent of their returns compared with the corresponding quarter of the previous year, a reward of 3 percent of the export value will be paid by the government.
A reward of 5 percent will be paid to those who equal quarterly export proceeds.
Auditors are required to issue a certificate authenticating export proceeds. This certificate must then be handed over to the Commerce Department along with Customs clearance certificates when applying for the reward.
Exporters said auditors had initially been reluctant to issue the certificates without conducting a proper audit which was time consuming and defeated the purpose of having the reward as a timely relief package of sorts. But this issue has now been settled.
However, exporters have to pay a high fee to have their export proceeds certified.
"We have to bear a high cost for auditors’ certifications of export proceeds and this tends to go against the very concept of a stimulus package," Chairman of the National Chamber of Exporters Rohan Fernando told the Island Financial Review.
Some audit firms are known to bill their clients as much as Rs. 100,000 for a certificate.
Fernando said getting Customs clearance certificates was not a difficult issue.
When the EDRS was first introduced, exporters were anxious it would be implemented smoothly but this was not the case when the Department of Commerce had to be called in to takeover the administration of the scheme from the Export Development Board, causing some discomfort to exporters during the transition.
Applications had to be handed over to the Department of Commerce within 45 days after each quarter.
"We hope the rewards will be in liquid form, because this is what we really need right now," Fernando said.
"Banks have still not revised their interest rates on lending despite the Central Bank cutting its policy rates and this is still a big issue for exporters," he said.
Exporters criticised that those who really needed the stimulus would not get it as meeting last year’s export targets would be extremely difficult under the current global environment but authorities defended this requirement on the grounds that firms should still attempt to improve their productivity in these difficult times.
Sri Lanka’s export earnings slumped by 16.2 percent during the first four months of the year compared with the previous year. The apparel sector however recorded a 2 percent growth.
According to the Department of Census and Statistics more than 60,000 apparel workers had lost their jobs during the first quarter. The Labour Department said about 70,000 jobs in all sectors had been lost since the global economic crisis began to impact Sri Lanka towards the end of last year. Some politicians and trade unionists said the number was about 100,000.