The Ceylon National Chamber of Industries (CNCI), the only industrial chamber representing the industries in both service and manufacturing sectors, perceives an unhealthy future for Sri Lankan industries, as the proposed removal of import as well as export cess will have a terrible drawback on all the local industries.
The CNCI has a membership of over 300 manufacturing organisations, some of whom are market leaders in their respective sectors.
According to CNCI, almost all of the Sri Lankan industries find it difficult to compete with the products of countries doing mass scale production in the face of our high cost of production owing to lack of macroeconomic policies such as interest rates, rupee depreciation, low scale production, high cost of ethical labour, etc. In this sense, the only safety net that local industrialists have is the cover imposed by means of cess levy.
“Cess levy or similar tools are used by developing countries to nurture local industry to reach greater heights after serving the local market successfully. We can cite so many local industries that have reached greater heights especially due to the cess levy. When restrictions of imposing similar border levies are removed to facilitate specially the trade agreements, most of the countries start adopting various other non-tariff barriers and duty draw backs. In addition economically able countries adopt anti-dumping regulations, quality controls, labelling systems, hygienic needs, etc., some of which do not apply to locally manufactured products,” said CNCI.
“We do not have an industrial policy and standard systems that could boost our economy and imports on quality parameters which are essential to overcome dumping of inferior quality and substandard goods and unethical business practices.At a situation where these policies and sound monitoring systems are not in practice, if the cess is also removed Sri Lanka will soon become a dumping yard for poor quality, inferior productions,” it added.
On the other hand, removal of cess against imports will deprive the nation of valuable funding for local industries which has existed for more than three decades, it noted.
“The main purpose of imposing cess on imports is not merely to control imported products, but as one of the means of generating revenue to the State in order to develop the relevant sectors in a manner that they will be able to compete with the products penetrating into our market.Many developed countries including India had a closed door policy with strict restriction on imports and thereby giving breathing space to develop the local industry and encouraged them to export by giving various incentives such as export tax, investment rebates, etc.
“Export cess is also equally important to boost the utilising of local raw material to add value and create employment.We certainly need to discourage export of basic raw materials or raw material that has the potential of value addition. It is foolish to allow export of valuable raw material without any value addition and allow another country to get the advantage of having basic raw material at very low prices. We must be able to encourage local industries to add that value here. It has helped us to earn more foreign exchange, employment generation and many other benefits for the development of the country. In this way cess was playing a very voluble part to encourage this valuable economic process.
“Today the entire business community is very disturbed andrallying round the chambers expecting the chambers’ liaison with the authorities to get their respective industries protected mainly due to our scale of operation.As chambers we anticipate the Government to discuss in detail matters relatedto the industry and to look for proper policies that will bring prosperity tothe country in the long term.The CNCI, being the chamber for industries in the country, earnestly requests the Government not to remove the cess levy without proper evaluation of the total outcome that can lead to elimination of local industry in the near future.”