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Sri Lanka to ban FMCG sachet packs, mulls banning ‘quarter’ alcohol bottles: report

ECONOMYNEXT – Sri Lanka’s environment ministry will take a final decision on banning ‘quarter’ arrack bottles this week while a decision to ban small retail packets of fast moving consumer goods had already been taken, a report said.

A final decision on banning quarter bottles (160 – 185 milliliter range arrack bottles) would be after meeting manufactures this week, Environment Minister Mahinda Amaraweera was quoted as saying on Sri Lanka’s Daily Mirror newspaper.

The manufacturers had been asked to take the responsibility of buying back the bottles after being used, he said. If they refuse to do so, quarter bottles would be banned.

Quarter bottles are mostly consumed by construction workers and manual workers, who down a bottle in a few gulps during breaks or after work.

The bottles are then left behind here and there, critics say.

Due to high taxes on arrack, most workers now cannot afford a full bottle of arrack.

Opening bottles and selling small quantities are also banned at ‘off-license’ shops, where the majority of alcohol sales take place in Sri Lanka.

The ban if implemented would be a blow to arrack makers and state revenues, analysts say.

Quarter bottles also compete with strong beer.

Minister Amaraweera had said the decision to ban ‘sachet packets’ have already been taken as an environmental protection measures.

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The negative of banning small sachets on domestic consumption, retailing, FMCG manufacturing sectors are not known. Ironically the sachet and bottle ban comes as Sri Lanka is trying to ‘stimululate’ the economy by cutting taxes and printing money.

Sri Last administration also slapped an interventionist sugar taxes at a time when the economy was already hit by a currency crisis.

So-called ‘sachet packets’ came into wide use in the 1980s when Sri Lanka’s currency depreciated sharply, pushing up inflation as the central bank printed money largely to finance deficits, lowering living standards and purchasing power of consumers and also helping fuel widespread strikes and civil unrest.

In recent years however the currency had collapsed mostly due to open market operations and attempts to keep interest rates down with the central bank running counter cyclical policy to the Fed, when it raised rates or with domestic pro-cyclical policy when credit recovered.

Sri Lanka’s central bank one of a series created by Fed officials under a depression-era philosophy developed by its Latin America unit. (Colombo/Sep02/2020)