FM defies calls for anti-dumping laws before tariff reduction; but red clay industry given boost
Defying calls by the country’s ceramic producers to introduce anti-dumping laws before any downward revision of the import duties on ceramic products, the country’s defiant Finance Minister has proposed to remove the import tariff protection for domestic ceramic tile manufacturers.
The country’s apex representative body for the century old ceramic industry, Sri Lanka Ceramics and Glass Council has been lobbying successive governments to enforce antidumping laws not to just protect locally manufactured ceramic tiles but also all finished goods imports in to the country.
“Our position has been, any downward revision of import tariff should go hand-in-hand with implementation of anti-dumping legislation,” said the Council President and Managing Director, Lanka Tiles PLC, Mahendra Jayasekara.
The budget 2016 proposed to remove import tariff protection on domestic ceramic tile manufacturers, an effective monopoly controlled by the Royal Ceramics group. This will also remove the items such as tiles, ceramics and sanitary ware from the negative list enabling the Board of Investment (BOI) companies to import above items freely, as they enjoy tax breaks.
Lanka Tiles PLC is a unit of Royal Ceramics group since its acquisition by the latter in 2013.
“To address the short supply and high prices of building materials such as steel, tiles and sanitary ware, import related duties will be revised downwards. Further, I propose to remove tiles, ceramic, and sanitary ware, from the negative list of the BOI,” Ravi Karunanayake said presenting the budget.
Meanwhile, First Capital Equities has said in a note on the budget that the tile sector might suffer from increasing competition stemming from lower margins and new entrants to the industry.
“Despite the present protection, the tile industry faces intense competition from imports from China, India, Bangladesh and Indonesia,” Bartleet Religare Securities has said in its budget analysis.
However, the hitherto forgotten ‘red-clay tile’ industry got a boost from the Budget as it was proposed to give a 50 percent reduction on the tax payable on profits and income from locally manufactured red clay tiles, for a period of 3 years while listing the industry as a thrust industry. According to Jayasekara over 300 red-clay brick and tile manufacturing factories out of 500 such factories were closed down in the past as the industry did not receive any incentive from successive governments for the last two decades. Karunanayake further proposed to set up a red-clay factory in Oddusuddan enhancing livelihood development in the area as a Public Private Partnership (PPP) project. “This industry is limping because they find it extremely difficult to compete with low cost asbestos roofing sheets,” said Jayasekara addressing the 12th Annual General Meeting of the council held few days prior to the budget. In this backdrop, the budget proposal to encourage the red –industry is a step towards a Sri Lanka free from asbestos by 2018, as announced by the President earlier.
Meanwhile the draft anti-dumping and countervailing bill has been dusting at the Department of Commerce but Karunanayake said he would expedite the enactment.