Sri Lanka unleashes enforcers to police price controls; Dial 1977

ECONOMYNEXT – Sri Lanka has unleashed 200 enforcers to police price controls and citizens can inform on shop keepers selling above controlled prices by dialling 1977, a state-run newspaper said.

Sri Lanka had price controls, shortages black markets and rationing, before 1977, when an administration led by the country’s United National Party opened the economy.
The current price controls are coming under an administration led by the UNP. It is not clear to many observers what has happened to the party, which had a reputation for economic management until 2015.

The price controls are coming from an agency coming under Minister Rishard Bathiudeen, who also held the portfolio under the ousted Rajapaksa administration. But the moves appear to be backed at the highest levels of the current administration. Minister Bathiudeen ahd sad he planned to recruit 200 graduates to police price controls.

Sri Lanka state run Sunday Observer quoted Consumer Affairs Director General A K D D D Arandara as saying that 200 officers had been deployed to raid "business establishments and traders who sell goods above the controlled prices."

Demonizing of retailers and small shop owners (so-called errant traders) and whole sale importers – who are the only solace for consumers who are burdened with import duties imposed to give domestic producers with political clout – was a common occurrence in the pre-1977 era.

The newspaper said complaints against trade stalls or traders that sell goods above the controlled price could be made over by dialling the telephone short-code 1977.

Sri Lanka gazetted a series of price controls on goods, which are ironically hit by import duties.  This include tinned fish, where a powerful lobby made up for four companies had pushed up import duties to get profits for their own companies which are uncompetitive.

The finance ministry has agreed to reduce a massive tax on imported sugar from 30 rupees to 25 cents a kilo according to reports.

Sri Lanka’s consumer prices are rising after the central bank printed tens of billions of rupees to pay a salary hike to state worker in 2015 and the rupee collapsed from 131 to 147 pushing the price of all goods, including medicines up.

Price also rose as the government hiked value added tax (VAT) after the rupee fell. The tax hike has since been suspended by court, but due to Sri Lanka’s bizarre vat law where individual customers are not issued vat invoices, there is no transparency.





The price controls were imposed on the claim of prices being hiked on goods not subject to VAT, which is also a problem relating to the flawed law where no vat invoice is given to individuals. (Colombo/July20/2016)

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