ECONOMYNEXT – Sri Lankan aluminium industry which is already protected with import duty, should be further controlled with quality regulations, an industry official said while a government minister called for affordable housing.
Pramuk Dediwela Managing Director of Alumex Plc, Sri Lanka’s largest producer of extruded aluminium products, said different products and applications required different aluminium products but stakeholders were not testing.
"We need different alloys for lorry bodies, bus bodies, ladders etcetera," he said at a 3-day Construction Sri Lanka 2018 exhibition which opened in Colombo Friday.
"There are different alloys for the aircraft industry.
"We don’t test these things, but we get whatever the available material and finally, in certain instances we fail,"
Dediwela said that aluminium alloys with 60-80 percent aluminium are available in the market, but extrusions for windows and doors require the 6063 or 6060 alloys composed of 99 percent of the metal.
Even tenders called for aluminium works do not specify the correct alloy.
"We find few tenders specify the correct alloy. When it comes to the final product we don’t see any independent test reports to verify product standards and specifications" he said.
"Once you install your window, you will not know what you have got."
"Therefore, it is high time we regulate this industry with proper standards and specifications," Dediwela said.
Almost all of the apartments being constructed are using aluminium fittings to resist weather and stresses of height.
Dediwela wants an accredited lab set up to test aluminium.
The country already has the Sri Lanka Standards Institute to set standards.
Alumex controls over 50 percent of the aluminium production capacity in Sri Lanka, and enjoys a 46 percent market share.
A related party, Swisstek Aluminium Ltd has a 30 percent market share.
Dediwela said that not only aluminium, but other construction raw materials are also plagued with substandard products.
"Therefore, regulation is a must to get the correct product," Dediwala said.
"Otherwise this will be a junk yard very soon."
Analysts say calls for further controls in protected industries must be viewed with caution as it is import protections that is the main driver of low quality imports.
Consumers are forced to buy lower quality goods, because import duties make standard quality goods too expensive. To keep prices down importers also forced to bring down lower quality products.
Meanwhile domestic factories, also sell so-called ‘factory seconds’ after calling for quality. Analysts say these are arguments that were originally fine-tuned by Mercantilists in the West.
In Sri Lanka nearly all key construction materials are protected, pushing up the price of steel, aluminum, tiles and sanitaryware making it more difficult for young families to build a house. There is also a cess on cement.
Housing & Construction Minister Sajith Premadasa this Friday complained of the cost of housing coming up in Sri Lanka.
"The people need to be provided affordable housing by reducing the cost of high quality buildings."
He said that this is crucial as the country is urbanising rapidly.
Premadasa said that the construction industry has experienced little innovation, and even a small improvement could give benefits to the people.
Analysts say that protectionism hinders competition and therefore the protected industries, who get artificially high prices by eliminating competition with taxes, have little incentive to innovate and please consumers to increase sales. (COLOMBO, 24 August, 2018