Uproar over duty concessions to ‘few’ importers

A major uproar has broken out over a decision by the government to provide duty free concessions to a select band of importers of essential foods and commodities. The Ministry of Trade, Marketing Development and Consumer Affairs publicised this week that the government will be calling for bids from importers for the importation of 12 essential commodities which includes sugar, potatoes, onions, lentils, and chilli and will subsequently choose the 10 lowest bids. However, traders and importers associations who were informed through writing by the Ministry are complaining that the minister's (Bandula Gunawardene’s) move is unfair and will only benefit a select few importers and disenfranchise the consumers.

President of the Moor Street Traders' Association K. Sundaram Palaniyandi told The Sunday Times FT that his association which has approximately 250 members as well as the Pettah Traders Association strongly objects to the minister’s plan. Palaniyandi said his association is made up of small, medium and large business owners. "In my association, 23 people are importing essential goods.

The 10 chosen importers will be mostly importing from India, Canada and Australia." He said that the minister will be selecting 10 importers for a period of three months (starting February 2607) at the end of which the tender process will again be conducted. However, Palaniyandi said this process will not be successful. "It won't work because the Sri Lankan people won't be getting proper benefits." Palaniyanpi feels that the 10 importers are only interested in making money and warns that they might collude with each other to fix the prices. "They are going to offer a much higher price. The 10 will get together with each other and no one will be able to object to the system."

Palaniyandi further pointed out that when the government usually calls for bids, a period of one month is given for tenders to be submitted. However, the bid process came to an end two days after the minister’s announcement. "I have written a letter to the Minister and we will be waiting for a reply," he said. "We want to take some action. We are going to organize a meeting and take a decision on what we can do."

Spokesman for the Sri Lanka Muslim Congress (SLMC) and district organizer for merchants, S. Rajabdeen told The Sunday Times FT that previously, 10 specified commodities were being imported for the government sector. According to Rajabdeen, it was under former Minister Jeyaraj Fernandopulle -- prior to the cabinet reshuffle - that the changes to the old system were proposed. "People who were regular suppliers to the government were asked to make a price structure," Rajabdeen said, adding that it is not possible to come up with a static price. "These are world market prices and they fluctuate." He added that the regular suppliers were told to 'hold on' while new players close to the government have been introduced into the fray.

Rajabdeen fears the new system will create a monopoly since there will be two levels of prices in the market. He added that Minister Gunawardena wants to bring down the cost of living but this will not achieve it. Instead, it will create a mafia who will control people by threats. Moreover, Rajabdeen says that if the system is implemented, 2500 people will go jobless from wharf clerks to factory workers. The tender process was open for two days because the ministry felt "it is a selective tender and they have given short notice and closed it up. They said if someone wants to protest, they can but this is final.” Rajabdeen urged that food prices must be brought down 'to the lowest of the lowest'. He added that since the commodities trade is dominated by the minority community, many feel they are being eliminated from the trading which will prove devastating to the economy.

Secretary to the Ministry of Trade, Marketing Development and Consumer Affairs, Dr. RMK Ratnayake told The Sunday Times FT that there is provision in the Consumer Protection Act where one can decide on a maximum retail price. "What we are basically asking from traders is the CIF value of imports of 10 essential commodities. It's like a tender. There is a vast different between the CIF price and selling price between the retail and wholesale level and we cannot do anything about retail."

Ratnayake added that traders will bring the commodities in at a lower price, pay the basic taxes and then decide the selling price at the wholesale level. "The gap between the CIF level and the selling price can only be explained by taxes and the profit margin. If it is under, they should pay taxes which is not happening." Ratnayake said the Ministry is simply getting prices from those people who are importing commodities to give the lowest possible price. "It is through a tender, not by personal selection. What is wrong with that? If other traders want to import red lentils, they also should follow the same price. It's an open tender and the lowest man will get it. We cannot help anyone else getting richer or poorer." Ratnayake emphasized that their interest is in the consumer, not the trading institutions.

He added that rumours have been circulating that the tender process has been closed and denied that 10 importers have already been selected. "The call for tenders will be closed on Monday, 12 February at 3 PM." According to the Secretary, the tenders will then be opened in front of the media at 3.30 the same day.