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Friday, 9 April 2004  
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Foundation hails UPFA for assurance to boost agriculture, SMI sectors

by Gamini Rupananda, Colombo South Group correspondent

The Sri Lanka Foundation for Development of Small and Medium Industries Patron, Rohan B. Fernando yesterday said the majority of Sri Lankans hailed the assurance given by the United People's Freedom Alliance (UPFA), to strengthen the local agricultural and local Small and Medium Industrial Sectors, in their efforts to build a strong and stable economy in Sri Lanka.

"We as industrialists in the SMI Sector, salute the UPFA, for having placed their fullest confidence in the local agricultural and local industrial sectors, in preference to foreign investments and foreign aid. Our unstinted cooperation is constantly assured to any government, which recognises the strengths of the local SMI sector and agree to provide the maximum encouragement to it.

Top priority should be given to adopting a suitable import policy for the country, if the local SMI sector is to be developed. Instead of blindly following the guidelines set by the World Bank and other foreign lending institutions, which have been proved wrong in no uncertain terms, judging by the poor performance of the local economy in the past, a local industry-friendly import policy, is the need of the hour.

Our fervent call for such a policy during the past, fell on deaf ears. A local industry-friendly government, should firstly ensure that a check is being imposed on the free flow of low quality finished goods coming into the country.

However, this does not mean that we promote the idea of banning or imposing restrictions on the import of high quality goods after proper taxation.

Till such time a properly laid down Import Policy is adopted, we suggest that as an immediate and an interim measure, the newly formed government, restore the status quo which prevailed in 2001, when the People's Alliance government was in power.

At that time, a 40% import duty surcharge was in place. In addition, most of the essential consumer products, industrial raw materials which were not produced locally and production machinery, were allowed to be imported Duty Free. Although these measures would have resulted in a substantial revival of the local industrial sector, the then government did not see it happening.

The reintroduction of the 40% surcharge would not only be a strong revenue source for the government, but would also act as a deterrent to the free flow of imported goods at very low prices. This could be adopted by passing a Gazette notification and thus could be introduced forthwith. The second step on a priority basis, is to reduce the power costs of the local industry.

The government would need to allocate only a small percentage of the additional revenue it would collect, out of the surcharge on import duty, to finance such a reduction.

A reduction in power costs will result in a substantial drop in cost of production for locally manufactured products, thus making them more competitive in the World Market.

Making exportable products more competitive would boost export revenue, which in turn would strengthen the economy.

These two measures, which could be introduced immediately, would provide some breathing space to the local SMI sector, at a time it needs it most.

In the meantime, a well laid out Industrial Development Program and a National Industrial Policy have to be introduced as a long-term measure.

Whilst offering our congratulations to the newly elected government, we wish to reiterate the importance of getting into action soon, since the economy which suffered immensely, due to the non-existence of a stable government during the past few months, would suffer further unless immediate action is taken.

www.Pathmaconstruction.com

www.ceylincoproperties.com

www.eagle.com.lk

www.continentalresidencies.com

www.ppilk.com

www.singersl.com

www.crescat.com

www.peaceinsrilanka.org

www.helpheroes.lk


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