ISSN: 1391 - 0531
Sunday, February 18, 2007
Vol. 41 - No 38
Financial Times  

Mixed reviews over food commodities imports

Despite assurances by Bandula Gunawardena, Minister of Trade, Marketing Development and Consumer Affairs of fair play in bidding process over the import of essential commodities, there was mixed reaction from the trade.

Small importers accused the big importers of siding with the authorities and benefiting from the deal.

After a press conference earlier this week held at the Co-operative Wholesale Establishment (CWE) on the import of five to six essential food commodities and chaired by Gunawardena, the general consensus amongst the large importers was to give their wholehearted support to the program. "What was done was the perfect thing by the Minister," said A.C. Mohamed, owner of Pulses Food Processing (Pvt) Ltd. "It was equally shared by all importers and licences were issued. It's a fair thing." Mohamed added that the earlier plan to select only 10 importers was inequitable but that it has now become 'a fair issue and there is no objection.'

But smaller importers and traders are still crying foul.

Gunawardena declared that nothing like this has ever been done in Sri Lanka until now, adding that this is a vast collective effort to help the citizens of this country.

The commodities include sugar, dried chillies, dried sprats, big onions, small onions (red onions) and potatoes. The deadline for the submission of the tenders was closed on Monday. The minister also said the plan is designed to coincide with the Sinhala and Hindu New Year and to provide some financial relief to Sri Lankans who celebrate this traditional festival.

President of the Essential Food Commodities Importers and Traders' Association, H. Fernando told The Sunday Times FT that when talks were first underway, there were grey areas, doubts, and insecurities in the minds of the traders involved in the import ad distribution of these commodities.

He added that there had been much speculation and priority given to the topic in various media outlets which enabled the authorities, including the minister to clearly understand the gravity of the situation.

"The association was pleased that remedial action was taken in dialogue with the traders and the entirety of its membership who are involved in the import of these food commodities had taken part," Fernando said. "Subsequent to the tenders, there has been careful evaluation of the tenders and the minister and secretary had lengthy discussions with traders who have tendered to analyse and evaluate the technical and practical constraints emanating from this new modus operandi."

Fernando added that all the shortages have been ironed out and the traders are now 'totally happy and feel confident that this was handled with total transparency.'

He also said that the public can be ensured of 'good reduction in the cost factor and a qualify food product to be delivered to them.' Fernando explained this is possible due to the fact that the Ministry will take performance bonds by way of bank guarantees from each tenderer, ensuring that any importer trying to supply inferior food commodities will have to face dire consequences.

"The association now awaits the final awarding of the quotas to their respective members," Fernando said. "We are hopeful that the public will be assured that the wholesale market in Pettah and the central hubs island wide (wholesale markets in Dambulla and other areas) which are selling parallel to Pettah market prices in the wholesale price market will benefit the traders by at least 30%.” Fernando made clear that market competitiveness is maintained because the tender is not awarded to only a few select importers and that the government is giving its support by the duty waiver.

According to Fernando, these two factors will ensure that the competitive edge will be greater. Presently, the price comparison between wholesale and the retail boutiques is about 25 – 30%.

The price reductions which are expected to happen in due course in the wholesale market will be 'beneficial to the retail housewife who is the inducer.' He said they are firm believers that the government wants to help its citizens when the opportunity arises and feels it is important to appreciate the actions of the government with regard to this issue.

Small importers and traders still feel the Ministry's plan is unfair and unjust. "Why can't they give all importers duty free concessions?" one importer asked, upset that duty free waivers will not be given to everyone.

"I don't think their plan is going to work," he said, adding that the Ministry claims to want to help the poor Sri Lankans during the New Year but is unsure if this will actually happen.

He explained that quality of the imported commodities will be in doubt.

Traders claim that these duty free concessions will only serve to benefit the large importers.

They added that the Ministry has said it will only give concessions to the 'good people but what the Ministry means is the large importers.' They expressed concern that the poor in Sri Lanka will be given 'bad quality products' and will not be able to do anything about it. They added that they do not comprehend why the Ministry is going ahead with this. (NG)

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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.