Sri Lanka to Finance Minister faces cartel challenge in freedom drive
Nov 13, 2017 08:03 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Finance Minister Mangala Samaraweera said he was aware that opposition will come from cartels when giving economic freedoms to the people, but he wanted Sri Lanka's companies to compete as free enterprises which will allow them to excel.
In the last 10 years Sri Lanka saw the building up of a strong domestic business lobby which was making easy money by selling overpriced goods to a people cornered by import duties.
"I know there is a very strong cartel who want to go on with the system as it is," Minister Samaraweera told reporters.
"The whole theme of this budget I would say free enterprise, liberalization and globalization is what we are talking about
"In order to do so we had to liberalize this economy further. And do so radically, and compete with the world."
"We have taken off para tariffs from 1,200 items. It is an important step. We will do away with most para tariffs within the next three years."
Sri Lanka's export growth has flagged in recent years amid high import duties and protectionism. High import duties on one side push up cost of living and labour costs, making people migrate for better paying jobs abroad in addition to working in protected industries.
Higher costs of inputs at different stages of production also mean that final products cannot compete.
Minister Samaraweera said historically from King Parakramabahu's period and others Sri Lanka had prospered from globalization and trade with countries ranging from Rome, Alexandria and China.
"Sri Lanka always excelled when it dealt with the outside world and therefore we have to somehow re-awake the dormant spirit of enterprise in our people," Samaraweera said.
The budget plans to give a boost to a start-up eco-system, which can create new entrepreneurs. Tax credit are given to new investments and an anti-dumping law is being brought to probe charges of 'dumping'.
A 'safeguard law' to give local firms extra time to compete with foreign products even when there is no 'dumping' and victimised consumers choose different goods using their newly found freedoms.
One of the main freedoms given is breaking a long-held cartel in shipping agencies and logistics which had prevented the country from becoming a global shipping hub.
Though Sri Lanka built a better port when it started the first wave of liberalization in 1978, no global shipping or logistics firms like Maersk, or DHL, set up regional headquarters in Sri Lanka, making it a true global hub.
"We have decided to open up and liberalize the shipping and freight forwarding sector," Samaraweera said.
"Because gain If we are to become the hub of the Indian Ocean and we want to be, we have to be able to compete."
When international players move into a country, they also bring additional business, which can help existing players in the industry. Large names also serve as catalysts to bring in others.
Sri Lanka has also proposed opening up factor markets, reforming a shop and office act which was making difficult for women to work, and giving freedom for farmers to grow any crop they want, ending a serfdom style law that tied them only to paddy. (Colombo/Nov13/2017)