Sri Lanka's new house costs down by a third if protectionist taxes removed
Mar 28, 2019 09:05 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka's housing prices could be cut by a third if protectionist tariffs on construction raw material are removed, a housing developer said.
"I could cut my prices by almost a third if the government gives the right incentives," Iconic Developments Managing Director Rohan Parikh said.
Speaking at the completion of the first phase of the firm's latest condominium project Iconic Galaxy, Parikh said that people would like to buy housing in Colombo, but they are too expensive.
"Construction material here is expensive," he said.
"There are high customs duties and who's paying that price? The homeowner. It's completely crazy," he said.
Parikh said developers usually keep only a margin due to competition, and therefore any gains from tariffs would pass on to customers.
In Sri Lanka, tiles, sanitaryware, steel, and aluminimum are protected for the benefit of a handful of businessmen. Cement prices, however, are under price control.
John Keells Holdings Property Development Sector Head Nayana Mawilmada said steel imported for construction nearly doubles in price between the time they are imported and the time they reach the project site due to tariffs.
Ceramic tariffs are over 100 percent.
It is mostly middle-income owners who are priced out of housing in Colombo, Mawilmada said.
The government in 2018 had promised to remove para-tariffs within three years and some taxes have been lowered.
However, the 2019 budget added another three to five years to the liberalisation timeline.
State Finance Minister Eran Wickramaratne said this was to enable domestic businesses to transition smoother under a trade adjustment package. (Colombo/Mar28/2019-SB)