Sri Lanka's Construction Sector Faces Challenges from High Import Taxes
Sri Lanka: Sri Lanka's construction industry is facing difficulties due to high import taxes on tiles and sanitary ware, leading to increased costs for developers and consumers. Local manufacturers supply only 45% of the tile market, making the sector heavily dependent on imports. Import taxes have reached 130-135% due to currency fluctuations and tile sizes, causing significant price hikes. A 2x2-foot tile now costs 1,750 Sri Lankan rupees (USD 5), up from 650 Sri Lankan rupees (USD 1.85), while the price of a complete bathroom set has more than doubled. While the government argues that these measures protect local manufacturers, industry stakeholders highlight concerns about reduced competition and limited supply, especially for high-end projects like hotels.
The sanitary ware sector imports approximately 20,000 units monthly, sustaining over 2,000 distributors and nearly 100,000 direct and indirect jobs. Importers argue that the sector provides a net revenue of 1.35 USD for every 1 USD spent on imports, countering claims of foreign exchange losses. The Tile and Sanitary-ware Importers Association has proposed reducing tariffs on tiles and sanitary ware to 118-120% and 113% of the CIF value, respectively, to ease consumer costs while maintaining government revenue. Industry representatives also suggest a five-year policy to attract foreign investment in real estate. There are calls for a balanced approach that ensures fair market conditions while supporting domestic industries.
Source: Daily Mirror