Sri Lanka should provide trade protectionism to domestic players but not for longer periods as the country has been doing in the past, State Minister of Foreign Affairs Tharaka Balasuriya said.

Speaking to the media yesterday (13), he said that giving trade protectionism to domestic players in the market is “not bad” but added that the problem comes when protectionism is allowed for a longer period.

“By doing so, only Sri Lanka businesses reap the benefits,” he said, adding that the dominance of the domestic players in the tile industry in Sri Lanka is a prime example of such benefits.

“We import those tiles from China at a much cheaper price but impose a heavy tax to protect the local manufactures, then the local consumers will have to pay a heavy price to protect them (local manufactures),” he said.

Sri Lanka has made use of Tariffs and Para-Tariffs which are characterised by high rates and significant dispersion and have contributed to a dramatic growth in total nominal protection in the last decade.

Sri Lanka is committed to easing non-tariff import taxes, including import CESS, Port and Airport Levy (PAL) in the next 3 to 5 years as part of the Budget 2024.

According to independent think tank, the Advocata Institute, no export promotion can be done through import substitution as import substitution is killing Sri Lanka’s export potential. When the exporters have to pay more than 40% higher for construction materials, it is impossible for even our best performing exports to be competitive in global markets. 

Therefore, State Minister Balasuriya said that giving trade protectionism to domestic players for a much shorter period such as 5 to 10 years is acceptable in the current context.

Moreover, he added that Sri Lanka needs to open up the economy to a certain extent while adding that Sri Lanka should go for Free Trade Agreements (FTAs) to get into the global supply chain networks.