ECONOMYNEXT – Sri Lanka’s government will reduce protectionist trade barriers to make the island a more competitive trading and logistics hub, deputy minister of foreign affairs Harsha de Silva said.
“Sri Lanka is one of the most protectionist countries on the planet,” he told the Chartered Institute of Logistics and Transport’s Annual General Meeting, quoting studies done by economists.
The country has a high number of complicated import duties including complex and hidden para-tariffs that inhibit trade such as the port and airport levy and various cesses.
“If para-tariffs and customs duty become prohibitive you lose out to competition,” de Silva said.
“You will see some of these barriers coming down. In the near future, some of these protectionist walls we have built will be removed.
“That’s because we believe that for Sri Lanka’s growth and development of its people, to make people better off, to ensure sustainable peace, Sri Lanka must trade and barriers to trade must be carefully removed in such a way that it is not detrimental to our people.”
The island had been a logistics hub as far back as the 12th century, when it was a transit point for trade between East and West across the Indian Ocean, de Silva noted.
Although the economy was liberalised in 1978, the policy towards free trade reversed from about the early 2000s.
“Sri Lanka progressively became a more and more closed, protectionist economy,” de Silva said.
If Sri Lanka aims to be a shipping and logistics hub, the business community needs to think whether the protectionist policy being followed is the right one.
“So make up your mind,” de Silva said. “If Sri Lanka is to be a logistics hub then we need policies that encourage that, incentivises businesses to put money in these kinds of businesses,” de Silva said.
(COLOMBO, March 29, 2016)