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| Sunday, 28 April 2002 |
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'conduct more research before dollarising tea auction' The Exporters Committee of the National Chamber of Commerce Sri Lanka (NCCSL) has requested authorities to study and conduct research before a firm decision is taken to conduct the Colombo tea auction in US dollars. The members, reacting to media reports quoting the Minister of Plantation Industries Lakshman Kiriella, said it is better to carry out an in-depth study of the pros and cons of such a system as the present system of conducting the auction in Sri Lankan rupees is functioning smoothly. The Minister is supporting the original move made by plantation companies and certain sections of the trade. The members said it is still not clear what method will be used, ie; whether the auction will be conducted in dollars and the payments made in rupees or whether the auction and payments both will be in dollars. Since dollars are not legal tender in Sri Lanka, this could create problems. According to the media report, the dollar auction is working smoothly in Kenya. The Chamber members were of the view that though the system works well in Kenya, it may not be so in our country. On an earlier occasion when the move was mooted, the Central Bank said that using dollars was not possible as it will undermine the local currency. According to the media report, obtaining permission from the Central Bank is a mere formality but the Chamber says it is a complex process. They said that out of the nearly 150 players at the auction, only about 15 are major players while the rest are small buyers. If transactions are in dollars, it will marginalise the small buyers because they do not have access to dollars. The process will automatically shut out small buyers while allowing big players to dominate the market. They also raised concerns on how the exchange rate will be determined in the event of payments being made in dollars. Under the present system, on most occasions buyers do not settle payments until 150-180 days after the auction. Therefore, the new system, if adopted, will make the payment process more complicated, they warned. "The tea market is a buyers' market and not a sellers' market. Therefore, we are not in a position to determine the prices for tea. Instead we have to sell at the prices determined by buyers," they added. When asked whether they were informed of the decision, they said that they were surprised when they saw the newspaper reports. Although it had been in the air for sometime, they had not been aware of a firm decision. The members said that their views will be presented to the main committee of the NCCSL which will then make representations to the government. (SG) |
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