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Thursday May 23rd, 2024

Sri Lanka making national tariff policy for export orientation

ECONOMYNEXT – Sri Lanka is developing a national tariff policy which will be approved by the cabinet as part of creating an export-oriented economy, Treasury Secretary Mahinda Siriwardana has said.

Sri Lanka has high import duties, and so-called para-tariffs such as the port and airport levey, and ‘export development’ CESS which has pushed up cost of imported raw materials, making it impossible for any firm other than those in Board of Investment zones, which can import inputs tax free, to be export competitive.

“The tax structure to support exports and investment is also being facilitated, particularly with the phasing out of para-tariffs such as PAL and Cess which have in the past added to cost of raw materials and intermediate inputs which undermined Sri Lanka’s competitiveness,” Siriwardana was quoted as saying at presentation at the Finance Ministry on April 08.

“Para-tariffs also contributed to an overall macroeconomic framework that led to an anti-export bias in the economy since they channelled scarce resources into sectors where Sri Lanka has not been globally competitive.”

“The reforms to the tariff structure to support an export-oriented economy will be encapsulated in the National Tariff Policy which is being developed and is expected to be approved by cabinet in the near term.”

So-called para tariffs are to be phased out in stages.

Analysts say import duties ensure that there is no spontaneous export diversification in the country as in East Asia as domestic firms outside of BOI zones never has a hope of being export competitive.

Therefore, firms cannot build up links with foreign buyers or learn about catering to actual customer needs facing real competition.

As a result, domestic producers learn to lobby politicians for import protection in a bid to trap consumers within the country using the coercive power of the state to force them purchase their products.

Increasingly concerns have been raised about building material import taxes, which is driving up construction costs and making factory buildings, hotels and also office space too expensive, also hurting services exports.

It is not known whether excessive housing costs are contributing to a brain drain, but studies have already shown that a house is unaffordable for most wage earners in Sri Lanka due to building material taxes.

When late entrants to the East Asia export boom like Vietnam liberalized trade and gave up import substitution, there were no nationalist private enterprises to block trade liberalization, analysts who have studied the country say.

Most Vietnamese large domestic firms (except for privatized state enterprises like Vinamilk), were set up from the early 1990s, after substantial monetary stability was also provided through 1989 central bank reforms.

Farming liberalization and abandoning self-sufficiency has also ended childhood malnutrition and younger Vietnamese were on average 3.7 percent taller than generation that was boren in self-sufficiency and monetary instability data in 2019 showed.

In Sri Lanka import taxes and controls on maize has made poultry, milk, eggs in general more expensive.

Countries like Singapore also abandoned import substitution in a single day after separation from Malaysia, as monetary stability was also guaranteed with as currency board.

Analysts have warned that the so-called export development CESS which is applied to bulk exports of domestic raw material may have discouraged rubber production in the country during its application. (Colombo/Apr13/2024)

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  1. Mervin Perera says:

    Finally it appears saner counsel will prevail!

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  1. Mervin Perera says:

    Finally it appears saner counsel will prevail!

Sri Lanka has power breakdowns amidst extreme weather

ECONOMYNEXT – The state-owned power utility, the Ceylon Electricity Board has reported over 36,900 breakdowns resulting in power interruptions to more than 300,000 consumers in the last three days due to inclement weather in the island, the power minister said.

“Additional service staff has been assigned to attend the breakdowns and the CEB management & service staff are working 24 hours to restore power to the affected consumers,” Minister of Power and Energy, Kanchana Wijesekera said on social media platform X (twitter).

Wijesekera said consumers could report power interruptions through the CEB hotline 1987, via SMS to 1987 with BD and the electricity consumer number to follow, or use the CEB Care app, or through http://cebcare.ceb.lk.

The South-East monsoon has seen floods, landslides and strong winds do damage to the utility provider’s infrastructure in the last week. (Colombo/May23?2024)

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Sri Lanka President calls for unity, sacrificing for a better tomorrow on Vesak day

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has recalled a sermon from the Buddha about sacrificing for a better tomorrow, and called for unity to heal and rebuild the country, as Buddhists celebrate Vesak.

Buddhists celebrate Vesak as commemorating the birth, enlightenment and passing away of the Buddha.

“At this challenging moment, we as a nation should cultivate the same great zeal for enlightenment that Buddha exemplified, inspired by his sermon, “Maththasukha parichchaga- passé che vipulan sukhan” – to sacrifice today for a better tomorrow,” President Wickremesinghe said in his Vesak day message.

“We must remember the advice of Lord Buddha, “Sabbattha Sammanaso,” to treat everyone equally and ensure we put it into practice as a country. This is the greatest offering we can present to the Buddha on this Vesak day.

“Regardless of race, religion, caste, or political affiliation, we must all unite to heal and rebuild our country. ”

The full statement is reproduced below:

The Vesak festival is a profoundly sacred day for Buddhists worldwide, commemorating the Buddha’s birth, enlightenment, and passing. Buddhists in Sri Lanka, along with their brethren around the globe, celebrate Vesak with deep devotion. They spend this period engaging in religious observances and venerating the Buddha with fervent devotion.

At this challenging moment, we as a nation should cultivate the same great zeal for enlightenment that Buddha exemplified, inspired by his sermon, “Maththasukha parichchaga- passé che vipulan sukhan” – to sacrifice today for a better tomorrow.

We must remember the advice of Lord Buddha, “Sabbattha Sammanaso,” to treat everyone equally and ensure we put it into practice as a country. This is the greatest offering we can present to the Buddha on this Vesak day. Regardless of race, religion, caste, or political affiliation, we must all unite to heal and rebuild our country. The principles of Lichchavi Raja Dharmaya will guide us in this endeavour.

Let us keep in mind that the primary aim of the Vesak festival is to foster spiritual growth and character development in a world rapidly advancing physically. I wish everyone a blessed Vesak festival.

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Sri Lanka to host foreign artistes, Sigiriya fashion show to promote tourism

ECONOMYNEXT- Sri Lanka plans to bring down international artistes, and hold water festivals to boost tourists, Sri Lanka Tourism Promotion Bureau Chairman, Chalaka Gajabahu said.

“We will be hosting a few international artists in September to December,” Gajabahu told EconomyNext.

“We would also be having a fashion show in Sigiriya.”

Sri Lanka is targeting 2.3 million tourists in the year 2024 with expectations that it may go up to 2.5 million Gajabahu said.

Sri Lanka is also planning on having a water festival in coastal towns such as Trincomalee, Arugambay  and Kalpitiya in order to showcase Sri Lanka’s capacity for watersports, Gajabahu said. (Colombo/May22/2024)

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