Dec 10, Colombo: Sri Lanka's budget for next year plans to liberalize the trade removing tariffs immediately and modernizing archaic legislation to remove the barriers and boost competition among exporters.
Delivering speech in Parliament during the Third Reading of the Appropriation Bill (2018) which was passed by the House Saturday (09), with a two-thirds majority, Finance Minister Mangala Samaraweera said Sri Lanka has become one of the most protectionist economies in the region with an array of tariffs and para-tariffs.
He pointed out that in addition to driving up the cost of living and the cost of doing business, these tariffs have resulted in creating an anti-export bias and diverting economic resources to the non-tradable sector.
"It is no wonder then that our exports have collapsed in the last two decades," he said.
The Minister said the government under a systematic trade liberalization agenda, has announced the immediate removal of 1,200 para tariffs, which were identified as having limited domestic economic impact and negligible revenue impact and will completely remove all para-tariffs of items that do not have customs duty within the next three years.
"This is a major reform. It will help drive resources to the export sector and will bring relief to consumers as well," he said.
The Finance Minister said the with regard to tariff liberalization, the government has identified a core negative list of products, including sensitive agricultural and rural industry products, which will not be subject to the same liberalization program.
Acknowledging the possibility of fallouts from an unfettered liberalization, the Minister said "We are taking an informed, balanced approach to globalization."
"We are bringing in legislation to prevent unfair trading practices, and robust Anti-Dumping, Countervailing, and Safeguards laws are in the final stages of enactment."
"Together with strengthened Consumer Protection laws, Sri Lanka will have the legislative framework to address any fallout from trade liberalization efforts."
The Minister said Sri Lanka as a whole got stifled into a defensive mindset as companies got accustomed to open ended protection from competition and the 2018 budget is the first step to change that mindset.
"This Budget is the first step in a journey to reverse this mindset and to empower Sri Lankans to take control of their own destiny. The Budget focuses on liberalization to unlock the barriers to greater investment, trade, and start-up enterprises. It also allocates resources to provide training and skill development for youth to equip them with the capabilities to take advantage of such opportunities."
The Minister stressing that the government will not be a "Nanny State" said the government will support those who are vulnerable and the Budget has made substantial allocations to ensure appropriate safety nets and support for those adversely affected by market dislocations.
"However the government will not protect those who stifle competition at the expense of the greater good of society," Minister stressed.