SL spending $ 100 million on polythene from Dubai despite clamps on non-essential imports

Top industry specialists charge:

By Hiran H.Senewiratne

Sri Lanka has spent more than US$ 100 million from January to November 2022 to import all varieties of polythene and polythene related raw material mainly from Dubai, despite there being a restriction on non-essential imports, top industry specialists said.

“Due to this there is an oversupply of polythene in Sri Lanka which has also resulted in the complete closing down of the Sri Lankan ‘polythene recycling business’, which accounts for nearly 30 per cent of the local requirement, members of the Sri Lanka Polythene Recycling Association told ‘The Island Financial Review’ recently.

“This segment also employs around 3,000 people from around 60 companies and their livelihoods are now at stake. But at this juncture when most of the industries are facing a crisis, only polythene imports have increased dramatically in the recent past, which is like a mafia, an Association member who preferred anonymity said.

“With the import restrictions taking effect, some local companies that operate in Dubai purchase this raw material through US $ telegraphic transfers and send it to Sri Lanka and once this material reaches the port, clearing agents under- invoice and pay less taxes to government coffers, Association sources said.

These sources added: “Due to local polythene recyclers opting out of the industry a major environmental hazard is looming as disposal of used polythene has become an issue. Recyclers collect and buy used polythene from homes, factories and collectors and due to cheap imports this business will come to a stand-still.

“With no recycling happening, used polythene will pile up and soon become a major environmental issue. Neither the environmental authorities nor the Central Bank are paying attention.

“When most non-essential imports are regulated we are surprised as to why polythene imports are not regulated as there is an oversupply in the market, which drains around US$ 100 million in foreign exchange per year.

“It is also very surprising that the import duty on polythene raw material (especially virgins) is around Rs. 10 per kilogram, when for some essential food items it is over Rs. 20- 30.

“The total responsibility for this has to be taken by the Central Environmental Authority (CEA) which has turned a blind eye towards regulating the imports and thereby saving around US$ 100 million for Sri Lanka.

“The CEA, way back in 2020, was in a major hurry to ban some polythene material used for the food industry. However, it’s highly questionable as to why that enthusiasm is not being shown by the CEA towards curtailing the free flow of polythene imports.

“What the government should do is have a temporary ban on polythene imports or impose a suitable tax structure because Sri Lanka has had an adequate supply of polythene for almost one year.

“The government can also look at imposing a higher tax for polythene imports, which will reduce the supply to a great extent.”