Online edition of Sunday Observer

Highlights

* A new company to import drugs to get off the ground on September 1

* 35-40% of the CWE retail business will be divested to the private sector

* Competitors will be brought in to end monopolies

* Competition will be the method of control

* CAFTA Act legislation by mid-September

* New Companies Act to be brought before Parliament within the next two months

* Sri Lanka to sign FTAs with USA, EU, Mexico, South Africa, China, Vietnam and Dubai in the near future

A new company to import pharmaceuticals will get off the ground next month which could result in most medicine costs going down by 25-30 per cent.

The company to import pharmaceuticals has been formed with the approval of the Cabinet, said Minister of Commerce and Consumer Affairs Ravi Karunanayake. Since the Value Added Tax exempts pharmaceuticals, the State Pharmaceutical Corporation (SPC) has decided to reduce its prices by five per cent, but the Minister expects the private sector to respond with a bigger price reduction.

He said the five per cent reduction is not adequate and attributed it to the built-in inefficiencies of the SPC. "Further reductions can be made and I will ensure that such a reduction takes place, once more players enter the sector," he said.

Plans are under way to divest 35-40 per cent of the retail business of the Co-operative Wholesale Establishment (CWE) to bidders who are experienced in the business of supermarketing. "We decided to select people in supermarketing as economies of scale are essential and to ensure the best service to the consumer," he said.

"We will privatise the CWE management as well as the retail sector as our intention is not to run supermarkets though we have proved that we can perform equally or better than the others," said Karunanayake.

"We do not want a private monopoly either, but checks and balances should be there," he emphasised.

Competition is the method for control to ensure that all ends are met and a tab kept on prices. He said that if controls are brought in, the players in the market will come up with various charges, "but if you bring in competition, it will automatically control the situation".

"If the players in the market increase prices, we will bring in more competitors and give customers a choice.

It has always been proven that the more controls you bring in, the more price increases there will be, but if there is unfair play, we will intervene," he noted."Prima has been enjoying a monopoly, but it is breaking down and other competitors such as Gold Coin have come in. We are permitting others to come in as there is no more monopoly in the UNP. We do not believe that it is the correct word to use."

The act to incorporate the Consumer Affairs and Fair Trading Authority (CAFTA) will be tabled in Parliament within the next two to three weeks and legislation will be ready by mid-September.

CAFTA will bring legal standards on par with world standards to protect the consumer.

The consumer upto now was forced to take what was given and had no right to resist or take a legal standing.

"I believe that there should be a strong manufacturing base and an economy that moves on. In the meantime, there must be satisfied consumers to buy the products. Therefore, protecting them is essential," the Minister said.

The new Companies Act is being modified and will be brought before Parliament within the next two months, Minister Karunanayake added.

Speaking of his recent visit to Doha and Saudi Arabia, he said Crown Prince of Saudi Arabia Abdulla Bin Abdul Aziz is willing to come to Sri Lanka to help us during the present economic upturn and take part in the success.

He said: "We are looking at companies that are big enough not only to invest in Sri Lanka, but to reap the benefits of the Free Trade Agreements (FTA) signed with India and Pakistan to tap the vast potential in the region".

Therefore, we have to move to non-traditional markets and move away from aid and grants towards trade, said the minister. Ventures such as Marks and Spencer, Tesco of UK, Carrefour, Mohammed Musthafa Singapore, Tata India and GE USA have expressed interest in coming to Sri Lanka.

Sri Lanka will sign FTAs with USA, the European Union, Mexico, South Africa, China, Vietnam and Dubai in the near future to compete on equal terms and ensure friendly relations with these nations. It has to be a reciprocity in agreement. "We will be looking at countries which are beneficial to us and pursue matters with them.

The FTA gives a fillip to people that are trading between the two countries and with the World Trade Organisation coming into force, we can get specific advantages by signing FTAs," he said.