By:Staff Writer
August 14, Colombo (LNW): Sri Lanka’s small and medium enterprises (SMEs) need urgent structural support through coordinated policy action, according to opposition MP Dr. Harsha de Silva, who last week unveiled two proposals aimed at boosting exports and unlocking long-term credit.
Speaking at the launch of Ceylon United Business Alliance (CUBA) International—a platform to connect SMEs with global markets—Dr. de Silva urged a policy shift away from ad hoc measures toward systemic reforms that address the sector’s structural constraints.
His first proposal was the revival of an economic diplomacy initiative piloted in 2017 with the Harvard Kennedy School, which trained 49 Sri Lankan ambassadors, commercial officers, and mission staff to actively promote the country’s goods and services overseas. The program was prompted by a survey revealing that no Sri Lankan mission had made a single business presentation to a foreign corporate board in the preceding year.
“If our missions are not promoting us, the baton is dropped,” de Silva warned, calling for export promotion expertise to be embedded in foreign missions and linked with domestic agencies like the Central Bank, BOI, and Treasury. “We are working in silos, and it’s costing us competitiveness,” he said.
The second proposal targets the chronic lack of long-term finance for SMEs, a gap worsened since Sri Lanka’s graduation to middle-income status cut off concessional multilateral lending. Many development banks have since shifted to commercial operations, unable to sustain long-term credit offerings.
De Silva suggested tapping domestic provident funds—the Employees Provident Fund (EPF) and Employees Trust Fund (ETF)—which together hold over Rs. 5 trillion, most of it invested in government securities. He proposed allocating a small portion to create a dedicated SME credit facility, enabling banks to extend loans beyond the current two- to three-year limit.
“Development banking is not about one bank—it’s about the banking system having access to long-term capital,” he stressed.
SME leaders demand single-window, stronger market links
CUBA President Tania Abeysundara echoed the call for structural reform, warning that SMEs—responsible for over 50% of GDP and employing more than 4.5 million Sri Lankans—remain sidelined in policy planning despite being “the strength behind the country’s economic survival.”
She cited excessive bureaucracy, limited market access, and preferential treatment for foreign direct investors as persistent barriers. In 2022, amid Sri Lanka’s sovereign default, SMEs still generated $38 billion in economic output, she noted.
Abeysundara proposed a centralised “one-stop shop” for all SME-related approvals and services to replace the current fragmented system that forces businesses “from pillar to post.”
Her second recommendation was the creation of direct business-to-business (B2B) export linkages with foreign buyers, facilitated through diplomatic missions. CUBA International, she said, aims to partner with embassies and trade representatives to establish such platforms, while also pushing for SME-sensitive free trade agreements.
“FTAs are necessary, but they must reflect national priorities and protect local manufacturing,” she said, highlighting India’s approach as an example.
Abeysundara urged policymakers to embed SME-specific frameworks in national policy and budgets, with targeted support for women-led enterprises. “We do not seek fame—we seek progress and growth through our unwavering dedication to the economy,” she concluded.
