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“The removal of the Customs Duty would pave the way for industries to reduce their production cost. This will enhance the competitiveness among products”, said Chandra Embuldeniya, President of the National Chamber of Commerce. “The major difficulty we face as industrialists is the high price of imported raw materials such as chemicals. It increases the price of finished goods and we find it difficult to find a sizeable market to sell our goods,” he said. The government in late October removed the Customs duty on 993 raw materials imported to the country. The move followed a recommendation made by an Inter-Ministerial Committee appointed for the purpose. The proposal was contained in the government’s budget proposals for 2001. In March this year, Parliament was told, “Import duty on most of the raw material which goes into the production of finished goods is subject to zero duty. These include fibre, yarn, various inputs for pharmaceuticals, fertilizer, computers, garments, buses etc. The raw material generally processed or manufactured in Sri Lanka are subject to 5 per cent or 10 per cent duty. It is harmful to apply zero duty on all raw materials, as there are industries which engage in the processing and manufacturing of such products. Therefore, the Government will reduce duty on raw material on the basis that they are essentially primary processing material in nature and not produced in Sri Lanka. This process will be implemented by a joint inter-ministerial committee.” Embuldeniya added that the lack of incentives by the responsible parties, the lack of skilled human resources, and above all non-tariff barriers imposed by the developed countries were also major obstacles to a considerable industrial development in Sri Lanka. “We discussed these problems with the government extensively and they were fairly fruitful. The government has taken these matters into consideration and decided to lift the Customs Duty on certain items.” “But as a result of this reduction, people who are supplying raw materials locally would get affected”, he said drawing attention to the negative side of the recent move. The Inter-Ministerial Committee included representatives from the Ministries of Industrial Development, Internal and International Trade and Commerce and Finance and Planning. It also included representatives from the Export Development Board. Mr. Chandra Embuldeniya, President of the National Chamber of Commerce, Dr. Bandula Perera, Council Member, National Chamber of Exporters, Mr. Cubby Wijetunga, Chairman, Industrial Association of Sri Lanka (IASL), and Mr. Aloy Jayawardena, President, Sri Lanka Chamber of Small Industry represented the business community on this Committee. “We welcome the government’s decision to lift the tariff on these raw materials,” Dr. Bandula Perera, who is also Managing Director of the Ceylon Glass Company, said. He said that the government should have made this concession much earlier. “The Ceylon Glass Company, which faced three major problems during the past years such as getting quality raw material, high cost of imported raw material-soda and the high cost of sand. However, this decision will have a great impact on our company’s growth as the cost of imported raw material such as soda has come down,” he said. He also predicted a further growth in the glass industry and expected more investors to enter the business. However, he identified the prevailing power cuts as a major blow on all industries and that it has resulted in a decline in productivity. Patrick Amerasinghe, President, National Chamber of Exporters was less optimistic. “Some may benefit and some won’t in the long run,” he said. “The whole world is faced with a global recession and Sri Lanka is also facing an economic slowdown in a parallel process. Under these turbulent economic conditions it is a bit hard to believe that the given incentives alone would affect and expand the industrial markets in Sri Lanka,” he added. The duty concessions were made with a view to bringing the cost of production down said Mrs. Rose Cooray, Director General of Fiscal Policy of the Ministry of Finance and Planning. She said that the removal of duty on these raw materials would mean that the importers would also be saving the 40% surcharge on Customs Duty levied on all imports. This she said would significantly lower the cost of production. “Currently over 40% of H.S. Code Tariff lines have zero duty,” Cooray said.
Related Story : Customs duty on 993 key raw materials removed Related Links : Federation of Chamber of Commerce and Industry of Sri Lanka
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