The Hon. Kathiravelu Shanmugam Kugathasan

¶ 01 Hon. Deputy Speaker, I wish to contribute to the debate on the Regulations under the Imports and Exports (Control) Act.

¶ 02 By Gazette Extraordinary No. 2437/04 of 19.05.2025, the Government exempted edible iodized and non-iodized salt from the import-licensing requirement, for consignments shipped on or before 10.06.2025, to mitigate national shortages for household and industrial use. This temporary measure, pursuant to Cabinet decision, also requires edible iodized salt importers to register with the Health Ministry to ensure food safety oversight.

¶ 03 Though many assume an island like ours must have ample salt, the shortage arose not from lack of resources but from inadequate planning and preparedness. Local production was disrupted by weather variability and climate-related factors; the lack of contingency strategy caused setbacks, as experts like Prof. Priyanga Gunasinghe have pointed out. Government allowed import of 2,500 metric tonnes, but not all have arrived yet. Concerns exist over the price gap between local and imported salt; importers have been advised to reduce prices to ensure a fair retail price and protect consumers—commendable measures.

¶ 04 However, short-term exemptions only lasted to 10.06.2025. If domestic output does not improve or controls are re-imposed prematurely, market uncertainty and price volatility could recur. Sudden inflows of cheaper imported salt could also weaken recovering producers without adequate support.

¶ 05 Relaxing licence requirements must not open doors to non-compliant or substandard salt; otherwise health risks and loss of consumer trust can result. While registration with the Health Ministry is required, administrative delays could hinder timely clearances.

¶ 06 To prevent recurrence and strengthen resilience, I propose: - A comprehensive national strategy for salt production and storage. - Investment in harvesting infrastructure in Jaffna, Trincomalee, Puttalam and Hambantota. - Climate-adaptive production methods. - Strong inter-ministerial coordination for import approvals and quality control. - Price oversight and support so local producers remain competitive.

¶ 07 More broadly, the Act is a key tool to regulate trade, stabilize the economy and protect national interest during uncertainty. Regulations must be assessed for broader economic, social and strategic effects: preserving reserves, supporting domestic industry, managing imports, and facilitating exports with fewer barriers and better incentives. This dual approach—facilitating exports, managing imports—is timely for recovery.

¶ 08 Areas needing attention: - Clarity and transparency: stakeholders, including SMEs, must receive clear, predictable policies to avoid supply-chain disruption. - Support for domestic industries: where imports are controlled, ensure local capacity can meet demand without compromising quality or price. - Balance and equity: avoid disproportionate impact on small businesses or sectors reliant on imported inputs. - Monitoring and review: institute timely, regular reviews to adjust regulations as needed.

¶ 09 On exports and the economy: per comparative advantage, nations prosper by specializing in sectors where they are most efficient. Many countries that moved into industrial exports progressed faster than those relying primarily on agricultural exports due to higher demand elasticity for industrial goods. Sri Lanka is transitioning from an agriculture-led exporter to an industry-led one. In 1988, agriculture was about 48 percent of total exports; today about 20 percent. Industry rose from about 46 percent to about 80 percent—positive, but further improvement is needed.

¶ 10 Key exports include textiles and garments, tea, rubber-based products, gems and jewellery, fragrances and seafood. Major imports include petroleum, light rubber-knit apparel inputs, special-purpose vessels, machinery and equipment, chemicals, food to supplement domestic output, and basic metals.

¶ 11 Export destinations (approximate shares): USA ~24.7 percent; UK ~7.7 percent; India ~7.4 percent; Germany ~5.2 percent; Italy ~4.9 percent; Netherlands ~3.2 percent. Import origins: China ~24 percent; India ~21 percent; UAE ~7.5 percent; Singapore ~6.9 percent; Malaysia ~3.9 percent.

¶ 12 In 2024, exports were USD 12.8 billion; imports USD 18.8 billion; trade deficit USD 6 billion. In 2025, exports are expected to rise to USD 18.2 billion. Without addressing regional trade imbalances, Sri Lanka risks continued pressure on the current account and reserves.

¶ 13 Strengthening northern and eastern provincial contributions is essential. Improve export infrastructure: upgrade Trincomalee Port; create regional logistics hubs in Jaffna, Vavuniya and Batticaloa; establish agro-processing and fisheries zones; train on market access, export standards and digital marketing; connect producers to consumers via digital trade platforms. Diversify exports with value-added products (processed seafood, fruits) and promote IT, BPO and eco-tourism from the North and East. Encourage import substitution, provide tax incentives for industries in underdeveloped areas, integrate the North and East into national trade policy, strengthen foreign exchange management, promote remittances and non-debt FX inflows, and diversify reserves (e.g., increase SDRs and gold).

¶ 14 I urge the Minister of Finance, Planning and Economic Development to take bold steps to implement these. Let us collectively build a prosperous, innovative and globally competitive Sri Lanka.