New taxes:

Severe blow to ceramics industry

The survival of the ceramics industry hangs in the balance with huge tax burdens heaped on it amidst intensifying world recession, said immediate Past President, Sri Lanka Ceramics Council (SLCC), Sunil Wijesinha.

“Around 10 medium and four major factories have closed down during the past five years due to high utility costs and taxes. Survival of the rest of the factories depends on an immediate withdrawal of the new taxes” he said.

The excise duty of Rs. 8 per kilogram of LP Gas imposed last December had been increased to Rs. 27.50 last month which is an additional cost of over Rs. 30 million per month to a company on the use of LP Gas

President, SLCC, Dayasiri Warnakulasooriya said the additional tax on LPG is detrimental to the industry which is already facing enormous challenges due to the global financial crisis.

The ceramics industry is highly energy intensive and the cost constitute around 50 per cent of the total cost of production.

The high cost of production has been a disadvantage for export competitiveness.

“LPG prices in Sri Lanka is high despite a sharp decline in the world market. The benefit of the drop in world market prices has not been given to the ceramics industry”, he said.

Managing Director, Lanka Walltiles Ltd., Mahendra Jayasekera said the company has to spend around Rs. 15 million additionally on import of LPG. “Factories will have to cut production to survive and as a result, many will lose employment and government lose revenue”, he said.

Sri Lankan ceramics products are known world over for quality and design and have been ahead of other competitors such as China, Thailand, Malaysia, Indonesia and Bangladesh.

Sri Lanka’s ceramics export earning amounting to over US$ 42 million per year is declining with an eroding market share. Global competition intensifies with the entrance of low cost manufacturers to the international market.

A member of the SLCC said ceramics exporters have not yet been given BOI approval to increase the local market share. The domestic market share will increase due to the drop in export orders”. (LF)