June 04, 2012 (LBO) – Sri Lanka’s finance ministry has called businesses to invest more in import substitution businesses, saying hundreds of millions of dollars are being spent to bring such goods from foreign countries. The finance ministry in its annual report said there was a “continued reliance” on importing food, pharmaceuticals, dairy products, textile, sugar and a range of construction material such as cement, steel, furniture and machinery.
“This requires investments in import replacement activities such as food crops, pharmaceuticals, dairy products, sugar, textile, plantation, apparels etc., to generate a strong economy,” the finance ministry’s annual report said.
In recent years Sri Lanka has fallen back to import substitution and becoming ‘self-sufficient’ as economic nationalism gripped the island.
High protectionist taxes are giving opportunities for some tax arbitraging producers running businesses which are not cost-efficient enough to compete internationally, to enrich themselves at the expense of stolen trade freedoms of the poorest sections of the population.
The finance ministry said in 2011, 346 million US dollars had been spent on importing dairy