Sri Lanka’s elderly population that is getting squeezed from all fronts is likely to have some ray of hope as the elders can now purchase their supplementary foods or nutritional supplements required to meet their daily nutritional needs at a lesser price than what they were paying before.To this end, Sri Lanka Customs has taken steps to halve the import duty of supplementary foods to 15 percent by creation of the new H.S. Code No. 2106.90.43 under ‘nutraceutical preparations’.
Until November 23, 2014, supplementary foods were classified under ‘other foods’ and are subjected to 30 percent import duty but an importer will end up paying at least 64 percent in taxes of the CIF value for the product due to other levies such as NBT, VAT, PALand Cess.
The apex body for confectioners, the Lanka Confectionary Manufacturers Association (LCMA), has been vexing for two years for a duty reduction in this category as more of a corporate social responsibility initiative as the biggest beneficiaries of this outcome are the elders and the people in the late middle-income age group.
“It is now up to the new importers to apply to the Health Ministry Director General Health Services before they import any brand/product applicable to this category,” LCMA Secretary Adrian Fonseka said. In the same vein, the LCMA stressed the significance of the Customs officials accepting this new H.S. code in entirety and applying fully covering the products imported under ‘nutraceutical preparations’ as there were occasions in the past where the new tariffs went half implemented at the Customs.
“It is paramount important that Sri Lanka Customs should accept this, as otherwise the importing companies will not be able to pass the benefit to the deserving elderly population, which is about two million, in order to ensure the government’s intentions are met,” Fonseka remarked.In an earlier occasion, the Customs officials twisted certain import duty reductions proposed in the budget 2014 in their favour and failed to transfer the benefit of the tariff reduction to the confectionary industrialists even after this import tariff reduction was gazetted in relation to flavours.
Further, it is also a welcome surprise that the anti-import led government allowed a duty slash diverging from its import curtailing an import substitution policy.
Sri Lanka has a fast ageing population and according to the latest estimates, the elderly population - 60 years and above - is expected to reach four million by 2021 from the 2.8 million elders in 2011.In this backdrop, while the import tariff slashing is welcomed in the short to medium term, this will soon start to strain the country’s external account as there will be more imports of supplementary foods (though less value in nature).
Therefore, this offers a tremendous opportunity for the local confectioners or the pharmaceutical manufacturers to start investing in manufacturing these food items domestically.The LCMA was unable to quantify the annual supplementary food imports but said that a vast majority is being imported due to non-availability in the domestic market.However, unless a manufacturing culture is deeply implanted in the Lankan soil, the Sri Lankan economy is unlikely to progress firmly.