ISSN: 1391 - 0531
Sunday, March 11, 2007
Vol. 41 - No 41
Financial Times  

More confusion on ‘grand’ plan

Gunawardene not following through pledge to reduce COL

By Natasha Gunaratne

Several weeks after the Minister of Trade, Marketing Developing, Cooperatives and Consumer Affairs, Bandula Gunawardene promised to bring down prices of essential food commodities ahead of the Sinhala and Hindu New Year through a unique scheme, the plan has run into several snags and most government officials, the private sector and the public have no clue as to what is going on.

Importers who were expecting to receive duty concessions for the import of essential foods and commodities by 1 March 2007 are still waiting for word from the minister.

At a press conference a few weeks ago, the minister announced that in an effort to bring down the price of essential goods and provide some relief to consumers from the rising cost of living, the Ministry would give duty concessions for the import of goods such as sugar, dried chillies, dried sprats, big onions, red onions and potatoes.

However, a senior Treasury official, referring to the proposed plan of action as 'duty reduction for immediate price reduction' told The Sunday Times FT that 'so far, no decision has been made.' The official added that in the next coming weeks, it is essential to make a decision although he cannot be certain of the timeframe. "A decision will be made soon whether or not to go ahead with it," he said. He explained that this is not something new and has been done before, recalling that during the Christmas season in 2006, the government made the decision to cut duties on certain goods from 1 December 2006 which relieved consumers at that time.

Those duty concessions lapsed as of 15 February 2007 creating widespread protests among importers – anticipating a continuation of these concessions -- who said the Treasury had not informed them in advance. They complained that large quantities of imports of potatoes, onions and perishable goods, which they had ordered based on the Ministry's assertions that duty concessions would be given, were rotting in the Colombo harbour.

Additional Secretary at the Ministry of Trade, Marketing Developing, Cooperatives and Consumer Affairs S. Edirisuriya said the Trade Minister's announced initiatives will no longer be implemented but instead, a new plan has been created by a Committee on Reducing Cost of Living. The Committee, including Minister Gunawardene and other high ranking government officials, met with President Mahinda Rajapaksa on Thursday where it was decided that the cost of 10 essential items including lentils, potatoes, red onions, big onions, dry chillies, gram, green gram, canned fish and sprats would be reduced to coincide with the New Year festivities in April.

However, Media Secretary for the Essential Food Commodities Importers and Traders Association Hemaka Fernando told The Sunday Times FT that the Committee's plan is the same as what was unveiled by Gunawardene. "There is no benefit for anybody to derive by misleading the public and giving contradictory views, promising one thing and acting upon another," Fernando said. "It is not going to help in any way the economy of a country which is already taking a downturn. We must do something constructive."

Fernando said the minister has repeatedly spoke on the national electronic media, assuring the public that the cost of living will go down and essential food prices will come down but he has so far been unable to execute duty waiver for a single product from the list of the 10 essential commodities. Fernando said that media reports which state the duty waiver will take place next month is far too late.

Fernando explained that if prices are to go down to coincide with the Sinhala and Tamil New Year, the duty waiver should 'commence at least from the second week of March onwards.' The bulk of sales should be finished by April 5. "If the duty waiver is given next month, it has to be given on April 1," Fernando said. He questioned as to whether traders should place orders trusting the word of the minister again.

"There can be a chaotic situation where food commodities are heavily undersupplied," Fernando warned. "The prime criteria to determine the price factor in the wholesale market and inner market concerning any country is the demand and supply. If there is a huge crisis of undersupplying when demand is at a peak, no one can stop the prices from climbing."

He is suggested that if the 'so called duty waiver is going to come into effect' to support the common public and housewives, such duty waiver should take into effect by next week. "If that is not done, this will be a stalemate." Fernando said he was pessimistic as to whether this can be accomplished given the fact that no cabinet paper has been presented and the Treasury remains firm regarding the re-introduction of the import duty levies.

President of the Moors Street Traders' Association K. Sundaram Palaniyanpi said the Ministry still hasn’t decided on anything.
The Association which has close to 250 members is still awaiting a resolution. He said there have been some meetings with the ministry where there was an exchange of ideas but so far, nothing concrete has come out of it. Similarly, spokesman for the Sri Lanka Muslim Congress (SLMC) and district organizer for merchants, Shafiq Rajabdeen also said there were no new developments. "There was a meeting where the minister and members of associations were present." He added that there is 'no indication to say as to what they will do.' Chairman of the Consumer Protection Authority, Sarath Wijesinghe not available for comment.


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