The proposed Free Trade Agreement (FTA) between Sri Lanka and China has become a point for discussion in various circles among the industrial sector today. The main reason is that the Government has recently disclosed their requirement of reducing the Sri Lanka negative list to 10 % and to phase out the import CESS to zero within 5 years after implementation of the proposed FTA.
At a recent meeting held among several Chambers and Trade Associations related to Commerce and Industry, it was highlighted that the Government has earlier requested recommendations of the Chambers to reduce the said negative list to 30% which had initially been at 40.21% of the total tariff lines. They said that the Chambers, during their meetings have come to a consensus finally, to accommodate and meet the 30% level accordingly.
However, the latest scenario is to reduce the Sri Lankan Negative list to 10% and to remove the CESS which has been imposed to safeguard the Sri Lankan industries within 5 years upon implementing the proposed FTA.
This is a situation which needs serious attention of the industrial sector. Sri Lanka being a developing country should safeguard its industries against free entry of foreign goods. At a time where the world’s most developed country is considering to impose tariff/tax for imports from China, it is imprudent for our country to relax safeguards for our industries.
WTO recognizes the need for adopting safeguarding measures for protection of domestic industries as para tariffs imposed to achieve this objective. Phasing out the para tariffs, such as CESS, will be a death knell, leading to the closure of our local industries.
Large economies enjoy the benefits of economies of scale whilst local industries are burdened with high energy, high labor, inflated raw material costs, facing an un-levelled playing field, causing non-competitiveness.
Sri Lankan industrial sector is dominated by SMEs which accounts for 90% of the total industrial establishments. During the nearly three decades of terrorism, this sector has been the back-bone of the nation and sustained the economy, despite all the adversities, surmounting all local and global challenges.
These SMEs are dependent on Large industries for backward/forward integration for supply sourcing of raw materials, marketing and other services. Removal of tariff protection, will adversely affect these SMEs, both directly and indirectly which will lead to their non-competitiveness and closing down, creating unemployment and adversely affecting the economy.
The majority of the local industrialists have funded their investments, in their respective industries, with borrowed funds, from banks and financial institutions, using their personal assets as security. Further, their indebtedness on loans and overdrafts run into Millions, depending on the size of the company. If they are not safeguarded sufficiently, it will lead to disastrous economic situations.
Sri Lanka is lacking in strong economic fundamentals to develop and safeguard the local industries; such areas are high bank interest rates, non- competitive parity rate for our rupee, effective labour laws focused on improving productivity, problems relating to conflicting investment policies, etc.
It was the consensus amongst all present, that they were not in agreement to this FTA at all. No local industrialist seems to be in need of an FTA between Sri Lanka and China other than a very few in certain selected industries. It was the view of the business community, that opening and relaxing para tariffs to the 30% level of the tariff lines, for the negative list, is deemed an acceptable para tariff limit. In this instance, it is also pertinent to mention that Sri Lanka has to safeguard it’s local industries. Removing para tariffs in place, will be disastrous for most local industries and will lead to their closure, resulting in the bankrupcy of thousands of local entrepreneurs, besides the loss of jobs, for millions of Sri Lankans.
It was also the view of those present at the meeting that the criteria for entering into such FTAs, should be the sustenance, growth and development of the Sri Lankan economy. However, if needed, the environment for implemention of same, should be through a policy and strategy framework, which will give sufficient time to enable our industries to face the challenges arising. At least there should be a scheme to compensate such industries, who are forced to close-down, to diversify and sustain, or at least to pay off the debts and secure their invested capital.
The importance of safeguarding local industries can be very evidently seen today; even in USA which is considered to be the largest economy in the world. Therefore, WTO or any other international body could not challenge a small country like Sri Lanka, for the interest taken for safeguarding its local industries.
The business community of Sri Lanka, has rejected these proposals completely and requests the government to extend BOI facilities, for investments in manufacturing facilities in Sri Lanka, that are of strategic importance and add-value, contributing to economic development and prosperity of the nation and it’s people.
Therefore, they earnestly request the government not to reduce the negative list to 10% from the present level which has already been agreed as 30% and not to phase out CESS within a period of 5 years, which is the only measure available to safeguard the local industries.
L to R - Mr. Abeyratne Muthugala – SG CNCI, Mr. Raja Hewabowala – Deputy Chairman CNCI, Mr. Patrick Alwis – MD Ceylinco Insurance, Ms. Gayani Punchihewa – Sales Head ITN, Mr. Tissa Seneviratne – CNCI Chairman, Mr. Chinthaka S Lokuhetti – Secretary Min,of Industry, Mr. Himal Muthukudaarachchi – DG CEA, Mr. C Amarasinghe – DGM Bank of Ceylon, Mr. Shalila Munasinghe – Chairman Litro Gas, Mr. Pradeep Kahawalage - Achiever Judging Chairman.
The Ceylon National Chamber of Industries – CNCI has done its official launch and the media briefing of the “CNCI Achiever Awards 2017” for Industrial Excellence at Salon Anthurium of Hotel Galadri on February 16. It is a unique event where the CNCI, the premier Industrial Chamber in the country recognizes the Sri Lankan Industrialists for their achievements both in the manufacturing and service sectors. The Chief Guest of the occasion was Mr. Chinthaka S Lokuhetti, Secretary, Ministry of Industry and Commerce.
The Achiever Awards have been designed by the CNCI to promote industrial growth in the country by recognizing and rewarding those industrialists who have excelled in their businesses in the areas of quality standards, productivity, corporate plan, research & development, employee benefits, labour relations etc while assuring concerns over the social and environmental obligations and to encourage these industries to reach further heights in their spheres of operations.
This is a valuable opportunity to all industrial entrepreneurs of Extra Large, Large, Medium, Small & Micro categories, in provincial and National levels to participate. Addressing the gathering at the launching ceremony, Mr. Tissa Seneviratne, Chairman CNCI said that they are certainly proud to mention that the CNCI Achiever Awards Competition has been able to produce a number of industrialists to the country who have become highly reputed and leading businessmen in Sri Lanka today. Also there are some companies who initially contested under the categories of “Small” and “Medium” are now in the categories of “Large” and “Extra Large”. These are, of course, the success stories behind the Achiever Awards Event organized by the CNCI.
Mr. Raja Hewabowala, Achiever Awards Steering Committee Chairman and the CNCI’s Deputy Chairman introduced “Achiever Awards 2017” to the media. He added that being the Managing Director of Nippon Paints Lanka (Pvt) Limited his company has experienced the value of participating at this competition and they had bagged the Crystal Award in few years back after winning the Gold Award for three consecutive years. He said that they are the Number one paint manufacturer in the country today. He further mentioned that updating the processes according to the Achiever Awards selection criteria mattered immensely to reach the company’s growth and its operational success.
Applications for the CNCI Achiever Awards are subjected to a stringent evaluation procedure; initially by an external Audit Firm, then an internal panel of judges consisting hartered Accountants and Engineers and finally the external panel of judges headed by Professor Ananda Jayawardena, Vice Chancellor of University of Moratuwa. The presentation of awards will take place on 17th August 2017 at Hotel Galadari, Colombo.
Achiever Awards applications are available at the CNCI Chamber Secretariat, Galle Face Court 2, Colombo 3 and all Regional Chambers or they can be downloaded from their website www.cnci.lk. Applications will close on 19th May 2017.
The photograph depicts the moment of unveiling the Gold Trophy of “Achiever Awards 2017” by the Chief Guest, Mr. Chinthaka S Lokuhetti, Secretary, Ministry of Industry and Commerce.
We are pleased to inform you that Mr. Tissa Seneviratne – Chairman/Managing Director, Intima Britech (Pvt) Ltd was elected Chairman of the Ceylon National Chamber of Industries at the Annual General Meeting held on 23rd October 2015 at Hotel Taj Samudra, Colombo, while Mr. Raja Hewabowala, Managing Director, Nippon Paint Lanka (Pvt) Ltd - was elected Deputy Chairman.
Mr. Seneviratne is an Engineer by profession. He was graduated in Industrial Studies, followed by a Master of Science Post Graduate Degree at the Open University of Sri Lanka. He has obtained his Masters of Business Administration (MBA) from the University of Sabaragamuwa. A Fellow of the Institution of Incorporated Engineers Sri Lanka and a Member of the Institute of Engineering Technology (UK). He is also holding the position of Management Representative of the OPA.