Local paint makers to manufacture abroad

Sri Lanka’s paint industry is considering moving its production units overseas since the cost of production here is extremely high and still rising.“It is fast becoming cheaper to manufacture outside the country and import to Sri Lanka,” President of the Paint Manufacturers Association Mizver Makeen told a recent press briefing where he spoke of the trouble ridden paint industry in Sri Lanka.

Makeen of Macksons Paints Lanka Ltd said the paint industry is the only construction related industry that was singled out in last year’s budget. He went on to say that the local paint industry is the only industry that can fulfil the local requirement 100% but that the recent imposition of taxes has impacted the industry negatively. The association has appealed to the President to withdraw the additional five percent tax levied on paints by the November 2006 budget, under Gazette notification No 1471/23 of 16 November 2007. This additional tax places a heavy burden on the industry already struggling with the many statutory taxes and import duties that are placed on raw materials needed for paint manufacture, he said, adding that almost 90% of the required raw materials are imported and already taxed. Import duties on some raw materials were increased from six percent to 15% and from 10% to 15% on others.

Secretary of the Association Ruwan Weerasinghe of Lankem Ceylon Ltd said; “The industry has contracted 20%-30% in the last year and bottom lines will drop by as much as 40%.”

He went on to say that factories that had two to three shifts a day have reduced it to one shift. Explaining the reason for this, he said that the additional costs have to passed onto the consumer, increasing the price of paint. With the cost of living being high in the country today people cut out non essentials like colour washing the houses. Usually this is the peak season for the industry, he said, but not this year.

Added to this is the threat faced from foreign competitors who can import paints into the country after paying a statutory duty of only seven and a half percent. This has resulted in a situation where ironically, imports are cheaper than the locally manufactured product, he said. The Association went on to suggest a cess of Rs 150 per kilogram for paints and putties imported into the country.