Tile imports high despite Sri Lankan protective tariffs
COLOMBO (EconomyNext) – Despite high import tariffs meant to protect local manufacturers, imported tiles still account for a big share of the market, Sri Lanka’s dominant tile manufacturing group has said.
Royal Ceramics Lanka said high construction sector growth led to higher demand for tiles and improved profits in 2014, with its bottom line also propped up by lower electricity tariffs and liquid petroleum gas prices.
“The lowering of electricity tariffs and LPG gas prices resulted in a significant reduction in production expenditure,” said Nimal Perera, Managing Director of Royal Ceramics Lanka.
The company is now the island’s dominant tile manufacturer, having bought the rival Lanka Tile and Lanka Walltile firms in 2013, and is also the sole local producer of branded sanitaryware.
However, despite high import tariffs and Board of Investment (BOI) regulations on local content meant to protect the domestic tile industry, imports were still high, Perera told shareholders in the company’s annual report.
“Despite negative BOI concessions, the imported tiles sector continues to flourish, accounting for a significant 30 percent of market share,” he said, noting that this threatened local businesses.
“This poorly regulated sector requires that stringent measures be put into place,” he added.
“Countries like India, China and those in Europe, have very strict ‘anti dumping’ laws that safeguard their local tiling and sanitary ware industries. We strongly advocate that similar laws be put into place in Sri Lanka.”
Perera said the tile industry has good growth potential given the boom in the property and condominium markets and tourism, rising incomes and changing customer tastes.
“These factors combined, signal a henomenal potential for the growth of the tile and ceramics industry in Sri Lanka.”