Sri Lanka to bar foreigners from construction, IT deals to boost locals in Covid-19 crisis: Minister

ECONOMYNEXT – Sri Lanka plans to stop foreign firms from competing state construction projects and supplies to government agencies including information technology in a bid to save foreign exchange and give income to local businessmen and create jobs, Information Minister Bandula Gunewardene said.

“For the first time in the history of Sri Lanka, there will be procurement process with 100 percent local reliance and without importing,” Minister Gunewardene said.

“In the past, floodgates were opened (wathkada kaduwa wagay), the door was opened for imports. Even for furniture it was done.

“After the Covid-19 pandemic, many small businesses have fallen. Software is imported. Now software and hardware companies will supply.”

“A decision was taken to give all contracts to local companies if they can supply.”

He said it will apply to government departments, statutory bodies and provincial councils.

Gunewardene said existing import controls had helped create a trade surplus in Sri Lanka for the first time since 1977.

The cabinet of ministers approved a proposal by Finance Minister, Mahinda Rajapaksa, to limit contract for software, hardware, furniture supply, and construction would be given to companies with a domestic ownership of over 51 percent.

Office furniture and equipment should have a 51 percent domestic value addition.

All software should be procured from local firms, and if it is not possible, approval has to be received from the Information Communications Technology Agency and Treasury.

Hardware supplies, for which specifications have to be developed by the ICTA, will get a 30 percent preference if domestic value addition in 25 percent or more.

All contracts for housing, roads, irrigation, water supply and drainage should be given to local contractors. Foreign subcontracting should be less than 10 percent.

It is not clear whether the rules would apply to foreign-funded projects.

Some foreign-funded projects require competitive bidding among contractors of the funding country while others require open competitive tenders to keep the price low and stop rent seeking. (Colombo/July15/2020-sb)