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Import restrictions make it to 2021

10 Jan 2021

The import restrictions on nonessential items that were expected to be lifted or see some relaxation in 2021, still remain the same, according to Ceylon Chamber of Commerce (CCC) Import Section Chairman Delano Dias. Speaking to The Sunday Morning Business, Dias expressed his dismay on the ongoing import restrictions that were introduced during the first lockdown in March 2020, which followed the initial outbreak of the Covid-19 pandemic. In September 2020, State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal told local media that import restrictions are a temporary measure to avoid a possible foreign exchange crisis in the country and that restrictions would be eased phase by phase when sufficient foreign exchange flows into the country. Cabraal added that the gradual easing of restrictions will be done in a manner that would not hurt local industries. Pre-Covid, several import categories recorded a growth during the first three quarters of 2020, compared to the same period last year, and this includes dairy products, vegetables, and sugar and confectionery products. These sectors’ import expenses grew by 12.5%, 26.4%, and 40.6%, respectively. The initial restriction on nonessential imports later expanded to all imports excluding fuel and pharmaceutical products, and subsequently, raw material required for export purposes and construction materials too were exempted. Nevertheless, certain food and beverage category products were allowed to be imported during that time.  Following this, on 15 April, the Government announced import restrictions on items such as rice, flour, sugar, liquor, and apparel products, extending restrictions to 15 July, which was once again extended until further notice. However, apparel imports are now permitted with a high cess per kilogramme. In November 2020, Minister of Trade Dr. Bandula Gunawardana told The Sunday Morning Business that the Budget 2021, which came out on 17 November 2020, will specify whether the import restrictions would continue into 2021. However, the Budget was more in favour of supporting domestic production than imports, and hence the restrictions have spilt over to 2021. More recently, Central Bank Governor Prof. W.D. Lakshman further emphasised to the media that Sri Lanka’s import controls on so-called “nonessential” goods are essential in order to stop foreign exchange “leakages”.  Despite this, Dias stated that local importers associations have been continuously lobbying for the removal of the current restrictions as it has paralysed certain sectors of the industry. "Even if we take food as an example, most of the restrictions still stand. Even though the Government says that it is eased, the Import Control Department wants several no objection letters brought in from several departments, which is almost impossible to do." He stated that he does not think the Government looked at the total impact import restrictions would have on the country, and that it has not been objectively looked at. He explained that they should lift it completely and provide the local importers some sort of licence or permit to import, so that the Government could have a better understanding on the country’s import expenditure.


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