Business
Import controls in Sri Lanka: Political preference and incentive distortions
New IPS Publication
Sri Lanka implemented strict import controls to address the economic crisis and foreign exchange constraints.The policy goal behind import controls remains unclear, with conflicting statements suggesting a potential shift towards protectionism and import substitution.
In analysing the impact of these restrictions, a new IPS study highlights the need for a strategic approach to trade policy that considers long-term growth prospects, export sector development, and the well-being of the population.
Battling an unprecedented economic crisis that overlapped the COVID-19 pandemic, Sri Lanka resorted to strict import controls since early 2020. These measures gradually encompassed 31% of total imports by September 2022, with the intention of reducing foreign exchange leakages on “non-essential” imports. However, the effectiveness and implications of these stringent regulations have raised questions. A new publication by the Institute of Policy Studies of Sri Lanka (IPS) delve into the effects of these controls on the country’s trade policy and economic landscape.
The study titled “Import Controls in Sri Lanka: Political Preference and Incentive Distortions” by IPS researchers, Dr Asanka Wijesinghe, Chathurrdhika Yogaraja, and Nilupulee Rathnayake examines the preferences of policymakers in implementing import controls and their potential impact on domestic production and electoral considerations.
Through a quantitative analysis using a unique dataset constructed by the authors, the study explores the distortions in the incentive structure that promote import substitution. It considers factors such as the impact of products on foreign reserve positions, their importance to domestic production, domestic substitutability, and interest group pressure. The study identifies eight waves of import controls during the study period spanning from April 2020 to September 2022. The findings reveal that by the end of 2022, import controls were primarily imposed on food imports, consumer items, and electronics. This structure of import controls creates an environment conducive to import substitution, reversing the gains from structural transformation. Moreover, the study highlights the potential ramifications for the country’s nutritional security as the continuous imposition of import controls on food products may have severe consequences.
The study recommends a gradual phase-out of import controls, starting with intermediate and essential nutritious food items. It emphasises the importance of removing import controls on consumer goods, including food, to encourage resource allocation towards export-oriented industries and alleviate domestic price inflation. The removal of import controls on consumer goods will also mitigate the burden on low-income urban and suburban households, safeguarding their nutritional security.
The research underscores the need for the government of Sri Lanka to prioritise the removal of import restrictions on consumer goods and focus on expanding the growth of the export sector. By doing so, the country can address the balance of payment crisis, foster innovation, and enable participation in global value chains.
To purchase a copy of ‘Import Controls in Sri Lanka: Political Preference and Incentive Distortions’, contact: Amesh Thennakoon, Publications Officer, IPS on 0773 737717 or amesh@ips.lk.
For more information on IPS publications, visit: https://www.ips.lk/publications.
The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) proudly facilitated the first-ever Sri Lankan delegation’s participation at Drupa 2024, the world’s largest trade fair for the printing industry and technology. Held after an eight-year hiatus, Drupa 2024 was a landmark event, marking significant advancements and opportunities in the global printing industry.
AHK Sri Lanka played a pivotal role in organising and supporting the delegation, which comprised 17 members from the Sri Lanka Association for Printers (SLAP), representing eight companies from the commercial, newspaper, stationery printing, and packaging industries. This pioneering effort by AHK Sri Lanka not only showcased the diverse capabilities of Sri Lanka’s printing sector but also facilitated vital bilateral discussions with key stakeholders from the German printing industry.
Business
Unveiling Ayugiri: Browns Hotels & Resorts sets the stage for a new era in luxury Ayurveda Wellness
In a captivating reimagining of luxury wellness tourism, Browns Hotels & Resorts proudly unveiled the exquisite Ayugiri Ayurveda Wellness Resort Sigiriya. This momentous occasion, celebrated amidst a vibrant and serene grand opening on the 6th of June, heralds a new chapter in the Ayurveda wellness tourism landscape in Sri Lanka. Nestled amidst 54 acres of unspoiled natural splendour, Ayugiri features 22 exclusive suites and stands out as the only luxury Ayurveda wellness resort in the country offering plunge pools in every room, rendering it truly one-of-a-kind.
The grand opening of Ayugiri Ayurveda Wellness Resort was an enchanting event, where guests were captivated by the melodies of flutists and violinists resonating through Sigiriya’s lush landscapes. As traditional drummers and dancers infused the air with vibrant energy, Browns Hotels & Resorts’ CEO, Eksath Wijeratne, Kotaro Katsuki, Acting Ambassador for the Embassy of Japan and General Manager, Buwaneka Bandara, unveiled the resort’s new logo, marking a significant moment witnessed by distinguished guests from the French Embassy, Ayurveda and wellness enthusiasts along with officials from the Sigiriya area, LOLC Holdings and Browns Group.
“Our strategic expansion into wellness tourism with Ayugiri Ayurveda Wellness Resort Sigiriya symbolises a significant milestone for Browns Hotels & Resorts. Wellness tourism has consistently outperformed the overall tourism industry for over a decade, reflecting a growing global interest in travel that goes beyond leisure to offer rejuvenation and holistic well-being. By integrating the timeless wisdom of Ayurveda with modern luxury, we aim to set a new standard in luxury wellness tourism in Sri Lanka. Whether your goal is prevention, healing, or a deeper connection to inner harmony, Ayugiri offers a sanctuary for holistic well-being” stated Eksath Wijeratne.
Ayugiri encapsulates the essence of life, inspired by the lotus flower held by the graceful queens of the infamous Sigiriya frescoes. Just as the lotus emerges from the murky depths, untainted and serene,
Ayugiri invites guests on a journey of purity and rejuvenation, harmonised with a balance of mind, body and spirit, the essence of nature, echoes of culture and the wisdom of ancient Ayurvedic healing.
HNB General Insurance, one of Sri Lanka’s leading general insurance providers, has been honored as the Best General Bancassurance Provider in Sri Lanka 2024 by the prestigious Global Banking and Finance Review – UK.
The esteemed accolade underscores HNB General Insurance’s unwavering commitment to excellence and its outstanding performance in the field of bancassurance. Through dedication and hard work, the HNB General Insurance team has continuously endeavored to deliver innovative insurance solutions, cultivate strong relationships with banking partners, and provide unparalleled service to customers nationwide. This recognition is a testament to the team’s dedication and relentless pursuit of excellence in the bancassurance business.
“We are honored to receive this prestigious award, which reflects our team’s tireless efforts and dedication to delivering value-added insurance solutions and exceptional service through our bancassurance partnerships,” said Sithumina Jayasundara, CEO of HNB General Insurance. “This recognition reaffirms our position as a trusted insurance provider in Sri Lanka and motivates us to continue striving for excellence in serving our customers and communities.”
US sports envoys to Lanka to champion youth development
Rahuman questions sudden cancellation of leave of CEB employees
