By:Staff WriterColombo (LNW): In a move of discarding protectionist policy, the government is set to further ease import restrictions imposed as a remedy to crippling shortage of foreign exchange.
Import restrictions limit local production. They also effect exports, as most of the raw materials required for local production are, in fact, imported.
Since April 2020, import restrictions have been imposed in an arbitrary manner without considering the needs of many domestic industries.
These arbitrary import restriction regulations make it extremely difficult for companies to continue production processes
The last two years have been tough on the economy. It has been even tougher on imports. Many items have been banned.
At that time, supermarkets were running at low key for weeks. Sugar, rice, and flour were rationed while butter, milk powder, and even water was off the shelves.
Shortages were an unfortunate reality, but this wasn’t merely because of supply chain twists. It was also a sign of an indebted, cash-strapped government struggling to pay for imports.
Many of these imports are items which are essential for consumption or for the production process. Much of Sri Lanka’s imports are intermediate and capital goods. This means that such imports are essential to complete the production process.
A vast majority of Sri Lanka’s imports are intermediary goods, ranging from fuel to textiles.
State Finance Minister Ranjith Siyambalapitiya said that measures will be taken to relax the import restrictions imposed on many other goods.
Following a progress review meeting on Sri Lanka Customs revenue targets for the year held yesterday, he pointed out that the move will also help the Department to achieve the expected income.
The revenue target set for Sri Lanka Customs for the first quarter of the year is Rs. 270 billion, however Siyambalapitiya noted that the revenue collection during the timeline was 12% lower than the anticipated income.
He claimed the main cause for the loss of revenue was the import restrictions imposed by the Government.
“A total of 485 items were subjected to the relevant import restrictions in 2021, while another 750 items were restricted in 2022,” Siyambalapitiya said, adding that the Customs Department was unable to meet the anticipated income goals as a result of the Rupee’s appreciation in March.
Against this backdrop, the State Minister said the relevant import restrictions will be relaxed in the near future with much consideration.
“The decision to relax import restrictions will be considered based on the recommendations provided by the Economic Research Department of the Central Bank of Sri Lanka,” he added.