Vestiges of the 1970s?
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Sounds familiar? The list of items banned from being imported is like going back to the 1970s when people were starved of foreign goods like wheat flour, shirts, dresses, etc, during a period when people queued for food which was in short supply.While for the adults it was serious stuff with rice also being rationed and long and snaking bread queues, for youngsters it was fun going on bicycles to fetch these goods – bicycles being a popular mode of transport.
The irony is that even then the cost of imports (then limited) in value was more than the value of exports, so it was a foreign exchange problem. The same situation prevails today, after so many decades.
Trawling through the Internet for information on the 1970-1977 era of shortages under the Sirimavo Bandaranaike government, I came across an article titled ‘Sri Lanka, Short of Food, Faces an Economic Crisis’ by Bernard Weinraub in the New York Times dated May 13, 1974.
Here is one reference which is still relevant today in our import/export dilemma: “It’s a spectacular non-achievement,” an economist was quoted as saying in that article. “They’re importing 50 per cent more than they’re exporting. They’re broke, and because they’re forced to spend so much money on food, they have very little left for petroleum, fertilizer and manufactured products to keep the economy going.”
Coming back to the present, however, Sri Lanka’s production has improved radically and there are many items which we earlier imported which are now available locally of equal if not higher quality like shirts for instance.
As I reflected on these developments, I could see Kussi Amma Sera, Mabel Rasthiyadu and Serapina at the gate (wearing face masks) in what appeared to be an agitated conversation.
“Na… na… parippu anayanaya kiranna avasara thiyenawa (No … no… imports of dhal are allowed),” argued Kussi Amma Sera, responding to claims by Serapina that this item was on the banned list of imports. “Mama hithanne oya varadi kiyala (I think you are wrong),” asserted Serapina. Joining the conversation, Mabel Rasthiyadu said, “Parippu thibune-nethath apita puluwan wenna ona weda kara ganna (Even if there is no dhal, we should be able to manage).”
Kussi Amma Sera, having calmed down, said: “Meka arbudayak. Apita puluwan wenna ona muna denna (This is a crisis. We have to face it).”
Once again I reflected on the May 1974 article in the New York Times and its current validity. Today too, imports cost double that of export values in foreign exchange and with export production near zero owing to the COVID-19 pandemic, the government was compelled to restrict imports as foreign cash-flows were low.
Sipping my tea, I watched as the trio then moved onto another topic: “How each of their villages is coping”.
For the record, the import items that have been banned for three months include rice, corn flour and rice flour, flour, ground-nuts, soya-bean oil and palm oil, coconut, sugar confectioneries, bread, water containing added sugar or flavours, beer, spirits and liqueurs with less than 80 per cent volume strength of ethyl alcohol, marble, granite, Portland cement, paints and varnishes, hair preparations, preparations for oral or dental hygiene, tubes, pipes and hoses, fittings made from plastics, floor coverings made from plastics, baths, shower-baths, sinks, wash-basins and urinals made from plastic, tableware, kitchenware and other household articles made of plastics, articles of apparel made of leather, various types of men’s, women’s and children’s garments including shirts and dresses, t-shirts, singlets and other vests, baby garments and clothing accessories and bed linen, table linen, toilet linen and kitchen linen.
While I was contemplating on these issues, the phone rang. It was Pedris Appo, short for Appuhamy who is a retired agriculture expert and does some farming. I relished a conversation with Pedris Appo as he also grew up in the 1970s and is well aware of the shortages during that period.
“Hi Appo, how are you? I was thinking of you as today’s topic is about a clampdown on imports …. bringing back memories of the 1970s period of shortages for those who lived during that period,” I said.
“Ah yes … the terrible 1970s,” said Appo, adding however that the situation is different today. “How?” I asked. “Well Sri Lanka today has food security (unlike in 1970). We are self-sufficient in rice, produce part of our sugar requirements, have a strong dairy product and have enough fruits and vegetables to feed the population,” he replied.
At that point, I recalled some importers saying that while the ban on some imports was understandable in the present crisis, the problem was that it was imposed without giving the import trade enough time to organize and prepare itself. For example, several import orders had to be quickly cancelled before they were to be shipped.
Back to the conversation with Pedris Appo, he reiterated that the 1970s era and today’s ban on some imported items are different. “Any essential item for example, I am told, can be now imported on special permission. We are facing a crisis of a shortage of foreign exchange because there is no production for export (or negligible amounts) which isn’t enough to pay for exports,” he said. On that point we ended our conversation.
As stated earlier, the negative part of the decision-making process was the short notice to the import trade which is facing huge losses and furthermore that the authorities dealing with imports are not geared to service many applications under the category of ‘special’ imports.
Several small and medium scale importers are likely to close shop, unable to pay the salaries of workers and also service their loans since there is no business and no income.
According to government projected estimates, the foreign exchange saving due to the import ban is US$ 1.4 billion per month. On the flip side, the government is losing tax revenue on motor vehicles for example at Rs. 4 billion a month. It’s a double-edged sword: On one side, the government saves foreign exchange through the ban on some imports, while on the other hand, there is a huge loss in tax revenue.
Kussi Amma Sera then walked into the office room with another cup of tea just as I was finishing this column. “Labana sathiye andiri nithiya ivath karai-da (Will the curfew be lifted next week),” she asked. “Mama hithanava … mama hithanava (I think so … I think so),” I said.
Another week of curfew in Colombo will add to the losses of Sri Lankan companies. On the other hand, however, opening out the capital without full control of the pandemic is also a problem.