About 50% of factories had been closed and the others were operating at sub optimal levels, Dhammika Samarawickrama, head of the Micro Electric International (Pvt) Ltd said during a TV interview on Wednesday night.
“This is a big problem. A lot of factories have been closed, and the others are working only for about two weeks a month. This is because the demand has dropped and there is no point in running the factory throughout the month, he said.
Samarawickrama said that apart from the obvious economic problem, a large number of unemployed would have an unfathomable social cost.
“I don’t think we have ever had so many unemployed people. So many job losses and these people also have to make ends meet. The government really has to do something urgently,” he said.
The factories were closing down because of high bank interest rates and the skyrocketing cost of production, he said.
“Interest rates are too high. It’s impossible to take a new loan or even pay interest for existing loans. Attempts made by businessmen to get a debt moratorium too have been unsuccessful. On the other hand, the cost of production has doubled or tripled. The electricity bill has been increased by 100 percent. We hear that the tariff will be increased by 30 percent in January. Therefore the costs have gone up and businessmen have increased prices,” he said.
On the other hand, the purchasing power of the people has dropped and there is a marked drop in demand, Samarawickrama said. Samarawickrama said that no businessman wants to incur losses for any reason.
“However, people are not buying at the new prices. So obviously the economy will shrink. The government has to step in and ensure that there is some equilibrium,” he said.
