‘Needed cohesive industrial policy’

Ramani Kangaraarachchi

Sri Lanka needs a cohesive industrial policy, which encourages and stimulate the domestic industry said Ceylon National Chamber of Industries (CNCI) Chairman Newton Wickramasuriya at the CNCI Achiever Awards ceremony at the BMICH on Friday.

He said that the Government must consult the relevant Chambers to formulate an appropriate policy as the CESS has been introduced arbitrarily. Although the duty on raw material is low, the effective rate becomes very high with the addition of several other tax components such as CESS, and other taxes. For instance, a raw material which attracts a tariff of 2.5 percent of CIF, the total comes to 38.240 percent of CIF at the port itself ,when all the taxes are charged including the VAT.

This makes products manufactured locally prohibitively expensive and compels the public to look for cheap and poor quality products, he said. Wickramasuriya proposed that the duty components of other intermediate materials should be reduced if the CESS is going to be a perment feature. He said that investment relief should be granted for new plant and equipment particularly to develop the industries in the North and the East.

He said that the tax holidays have not generated much benefits to the industrialists hence more emphasis should be made to upgrade the technology by introducing incentives for capital development so the productivity could be improved.

High tech heavy engineering industries should be encouraged to invest in the country and then only the feeder industries can be developed specially in the SME sector. The industries available in the country under BOI are low tech labour intensive and the country does not have many knowledge based industries. Basic industries such as the foundry and metal finishing industry are already dead, he said.

Wickramasuriya said that the CNCI does not support the Comprehensive Economic Partnership Agreement with India without sorting out the difficulties arisen with regard to the local industry.

He said that many entrepreneurs are investing in some industries which are already saturated, resulting in unnecessary price wars and finally financial losses. As such at a time when the capital available for investment in the country is not very high, wanton waste of this scarce resource should be avoided. A State institution like the Industrial Development Board should monitor the market and prepare a list of saturated areas, in advisory capacity to the potential investors, he said.

The Minister of Export Development and International Trade G.L. Peiris was the Chief Guest at this event.