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Sunday September 24th, 2023

Sri Lanka to make state interventions on cement, steel, aluminum prices: Minister

ECONOMYNEXT- Sri Lanka will make state interventions in the pricing of cement, steel and aluminium products instead of waiting the market to bring down prices, as the rupee appreciated, State Minister of Finance Ranjith Siyambalapitiya has said.

The threat of new price controls come as Sri Lanka’s rupee started to appreciate after the central bank stopped anti-market suppression of interest rates through money printing by allowing market rates to move up from April 2022 and lifted another state control involving a surrender rule in March 2023.

Global commodity prices have also started to reduce after the US Fed hiked policy rates from March 2022 and started to withdraw excess printed money from circulation (reversing quantitative easing) allowing market rates to move up.

“World market prices of many items have fallen and the benefit of rupee appreciation has to be given to the construction sector,” Minister Siyambalapitiya was quoted as saying at a discussion at the Finance Ministry.

“Instead of allowing for the open market to bring down prices, interventions should be made.

“After observing prices, the exact percentage that prices should fall will be informed.”

Siyambalapitiya had said that while prices go up fast, they do not come down fast enough.

Construction steel prices in particular are artificially high in Sri Lanka due to existing state interventions involving protectionist import duties to give high profits to an oligopoly of producers, which has blocked market forces, critics say.

Imports of cement however is freer allowing prices to fall. Sri Lanka’s Consumer Affairs Authority has previously imposed price controls on cement, and triggered shortages sometimes bringing the construction industry to a halt.

But no price controls have been imposed on steel, which have protective tariffs.

Among the participants at the discussion was the Consumer Affairs Authority, the statement said.

The CAA has already disrupted the poultry sector and closed layer chicken farms with price controls.

Price and other controls lead to corruption, Singapore’s s former Finance Minister Goh Keng Swee told President J R Jayewardene.

in a report in 2980 he praised the removal of economic controls led “to an end to shortages, queues, black-markets with their corrosive effect on personal integrity.”

When Singapore was taken back from Japanese rule the controlled imposed during money printing remained. And Singaporeans referred to the British Military Administration that took over as the Black Market Administration. (Colombo/May31/2023)

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Sri Lanka India industrial zone around Trinco, maritime links mooted

ECONOMYNEXT – Sri Lanka’s Ports Minister Nimal Siripala de Silva had highlighted the desire of both the Governments to work closely to develop the industrial zone at Trincomalee, after accepting an invitation to participate in a maritime summit.

The Global Maritime India Summit (GMIS) will be held in India from October 17-19, 2023 at Mumbai where Sri Lanka has been invited at a partner country.

At a curtain raiser event on September 22, India’s High Commissioner in Colombo, Gopal Baglay had said both countries were working on enhancing sea connectivity according to a vision document launched during a recent visit of the President of Sri Lanka to India.

Minister de Silva will lead a delegation from Sri Lanka to the summit.

Secretary to the Ministry of Ports, Shipping and Waterways, Government of India, T K Ramachandran said the Global Maritime India Summit aims strengthen the Indian maritime economy by promoting global and regional partnerships and facilitating investments.

The event will give an opportunity to the Government of Sri Lanka to attracting greater investment from India in development of its maritime infrastructure, Ramachandran said.

It will also facilitate greater business to business interactions. (Colombo/Sept24/2023)

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Sri Lanka brings back import para tariff on milk

ECONOMYNEXT – Sri Lanka has brought back an import para tariff called the Ports and Airports Levy, to several grades of milk powder.

Milk powder has been removed from a list of PAL exemptions, making them liable for a 10 percent tax.

The PAL para tariffs are also a contentious issue in terms of export competitiveness, and the government has previously given undertakings that they will be eliminated.

Trade freedoms of the poor figure in an IMF/World bank reform program with the governments.

Milk is a protein rich food, in a country where children of poor families are facing stunting and malnutrition.

Economic nationalism is seen at high levels in food, with several businessmen are pushing for trade protection, amid an overall autarkist (self-sufficiency) ideology, going directly against policies followed in East Asia, which the same as hold up as examples.

Sri Lanka keeps dairy product prices up ostensibly to bring profits to a domestic dairy company and farmers.

Sri Lanka also keeps maize prices up, ostensibly to give profits to farmers and collectors. (Colombo/Sept22/2023)

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Sri Lanka govt warns liquor manufacturers: pay defaulted tax or lose licence

ECONOMYNEXT – Sri Lanka government which is struggling to raise the state revenue despite   higher taxes, has warned liquor manufacturers to pay defaulted taxes or lose their licence.

The government is now getting tough with past tax defaulters amid concerns over falling short of this year’s revenue target agreed with the International Monetary Fun (IMF).

“Liquor manufacturing firms owe us 660 crore rupees (6.6 billion rupees),” Siyambalapitiya told  reporters on Thursday (21).

“Most of this or around a third is the only excise tax amount to be paid. The rest is penalty. If a liquor manufacturer does not pay on time, we impose a penalty of 3 percent per month This means 36 percent (penalty) per annum,” he said.

“We have given them deadline to repay the basic excise taxes. If they don’t pay, we will cancel their licence.”

President Ranil Wickremesinghe’s government committed an ambitious revenue target among many other reforms to the International Monetary Fund (IMF) in return to a $3 billion loan package.

However, the revenue could face a short fall of 100 billion rupees, State Finance Minister Ranjith Siyambalapitiya has said.

A new Central Bank Act also has legally prevented the government of printing money at its discretion as  in the past.  (Colombo/September 24/2023)

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