Sri Lanka should be made a duty free shopping destination to attract more tourists: Pathirage

Sri Lanka should be transformed into a duty free shopping destination to attract more tourists, Softlogic Group Chairman Ashok Pathirage said in the annual report of fashion subsidiary Odel PLC.
“In order to achieve the aim of making Sri Lanka a premier tourist destination, incentives such as duty free prices need to be made a reality,” he said.

Duty free shopping zones outside airports are common in many Asian countries, including Japan, Malaysia and the Philippines, while many countries in the Western world have zones free of domestic taxes, or with duty refund schemes.

Pathirage was making the comment since 40 percent of Odel’s revenue is derived from tourists visiting the island.
“Odel, along with its sub brands Luv SL and Softlogic brands, make a valuable contribution to the nation by getting tourists to spend their foreign currency in Sri Lanka,” he said.
However, the Treasury is already not getting significant income from tourism due to informal accommodation, which avoids taxes, having a 50 percent market share in accommodation. And introducing duty free shopping may not be to the liking of the Treasury given the precarious situation the country’s economy is currently in.  
Pathirage added that the Sri Lankan consumers too are becoming more aware of and are increasingly purchasing branded goods.
However, prices of branded goods may become cheaper once the multitude of free trade and preferential trade agreements the government is currently negotiating become a reality, and hence competition could intensifies among potential brand franchises in the future.
Economists and multilateral agencies too have been advising the government to reduce import tariffs following the strengthening of income taxes, in order to promote Sri Lanka as a hub for South Asia, similar to the role played by Singapore in South East Asia.
Softlogic currently has franchise rights for 19 international fashion and beauty brands, and numerous other electronic and durable product brands. Further, in 2019, Odel will be opening a modern shopping mall that has an all-inclusive entertainment experience for a family, similar to malls in developed countries.
“We hope to work closely with the government and tourism authorities to leverage Odel as the must-visit shopping destination in Sri Lanka,” Pathirage said.
Numerous other foreign and local parties are currently engaged in mixed-development projects that combine shopping malls with entertainment, residential, hospitality and office spaces.