24 March 2017 12:03 am
A group of local industrialists have expressed strong concerns over the proposed China-Sri Lanka free trade agreement (FTA) pointing out that it could have serious and detrimental effects on the country’s domestic industries, if implemented.
The Association of Laminated Flexible Packaging Manufacturers, a body of local entrepreneurs representing the packaging industry, said in a media statement that if implemented, the proposed agreement will have an adverse impact on the domestic industrialists leading to the collapse of a large number of industries.
This will result in loss of jobs and livelihoods and inevitable economic chaos, the statement said. The association pointed out that most industrialists were unaware of this grave danger and urged all domestic industrialists to unite and safeguard their industries and businesses.The proposed FTA between Sri Lanka and China became a serious concern for the local industrialists when the government recently disclosed the requirement to reduce the Sri Lanka negative list to 10 percent as opposed to the 30 percent initially agreed upon. Furthermore, the government’s requirement to phase out the import cess—a tax imposed to safeguard the local industries—within five years of implementing the FTA, has added to the worries. As local industrialists point out, the potential free entry of Chinese goods like a tsunami will force domestic industries to closure.
“Local industrialists have been a solid force in stabilizing the country’s economy throughout the toughest of times. The sweat and tears they shed over the last few decades built successful local industries and created thousands of employment opportunities within Sri Lanka’s economy.
We strongly oppose the signing of the FTA with a 10 percent negative list as indicated by the recent agreement with China but urge to cover the original 30 percent negative list as agreed earlier,” Association of Laminated Flexible Packaging Manufacturers President Anton Hemantha was quoted as saying in the statement.
Unlike the large economies that enjoy benefits of economies of scale, the local industrialists already struggle with multiple challenges such as high energy, labour and raw material costs. On top of that Sri Lanka doesn’t have proper regulation, such as an anti-dumping law to safeguard the local industries.
The majority of the local industrialists have invested all their assets in their respective industries for borrowings. Their bank loans and overdrafts run into millions and as such, their collapse could lead to disastrous economic situations.