Paint manufacturers get relief following Rajapaksa intervention

The Paint Manufacturers Association of Sri Lanka (PMASL) last week commended President Mahinda Rajapaksa for imposing a cess of Rs 75 per kg on foreign paint imports, after they complained that local products were being hit by imports.
The association had appealed to the President, to consider withdrawal of the five percent tax levied on paints at the previous budget of November 2006.

It said in a statement that the import cess will protect local paint manufacturers from low priced inferior paint products that circumvent local statutory levies, which now flood the market and make the prices of local paint products uncompetitive. The government also stands to benefit from the cess, since a more competitive local industry would boost government coffers substantially.

“This is an excellent piece of legislation, and a very positive step towards protecting the Sri Lankan industry and jobs.

It reflects progressive thinking and shows strong decision- making on a critical issue, and confirms President Mahinda Rajapakse’s pledge under the Mahinda Chinthanaya, to nurture local industries,” said Mohammed Mizver, President of the Paint Manufacturers Association of Sri Lanka.

The local paint industry still struggles under the weight of the excise tax, which is over and above the 15% tax imposed on paint raw material imports, a situation that has resulted in the industry experiencing negative growth this year. “The construction industry and those who feed it, like the paint industry, are the backbone of a developing economy.

The fact that we have to pay excise duty on top of customs duties on paint raw materials places a heavy burden on us local paint manufacturers, since escalating overheads compel price increases.

Very often, spending money on painting is the last step in the construction process, at a time when there is very little money left over, so the end user too pays a heavy price,” Mizver explained.

Ruwan Weerasinghe, Association Secretary says excise duty is a real killer of the local industry and creates a market imbalance. “Excise is generally paid by companies that have paid their sales/ corporate taxes, so imposing excise duty favours those companies that don’t pay their taxes regularly. So our companies are, in effect, penalised for being up-front and open in their dealings.

We are glad that the government had earlier considered the plea of our small-scale paint manufacturers, and given them relief, but imposing an excise tax on larger manufacturers gives these small paint manufacturers no incentive to grow.”

The Association comprises eight of the industry’s key players -- CIC Paints, Macksons Paints Lanka, Causeway Paints, Masons Mixtures, Lankem Ceylon, Asian Paints Lanka, Paints and General Industries and Silicone Coatings.