The Hon. Sajith Premadasa - Leader of the Opposition

¶ 01 Under Standing Order 27(2), I raise this important question, Hon. Speaker.

¶ 02 With the stated intention of enhancing export competitiveness, the Government plans to fully phase out the CESS by 2029. However, this raises serious concerns regarding the potential impact on domestic industries, employment, Government tax revenue and the trade balance.

¶ 03 In particular, there must be clarity for the country on whether the 2026–2029 period is sufficient to bring domestic industries to a competitive level against countries such as China and India, and whether Sri Lanka risks being pushed from a “production economy” to an “import economy”. Therefore, for protection of domestic industry, promotion of exports and safeguarding consumer rights, I pose the following:

¶ 04 1. What economic assessment has the Ministry of Finance conducted to conclude that the period 2026–2029 is sufficient to make domestic industries competitive before fully removing CESS by 2029?

¶ 05 2. What specific revenue plan does the Ministry have to offset revenue losses to the Government from removing CESS? Or will the tax burden be placed on the public?

¶ 06 3. What financial support will the Government provide, during the protection window up to 2029, to modernize and make competitive the cement, tyre, tile, and apparel industries?

¶ 07 4. What measures will the Ministry take to prevent job losses from potential collapse of domestic industries in household garments, household goods, footwear, agricultural and other products in the face of cheaper imports?

¶ 08 5. Given limited export growth in the past decade, what economic evidence does the Government have that removing CESS alone will increase exports?

¶ 09 We accept the need to promote exports. We also must protect domestic industry. How will export promotion occur by removing CESS?

¶ 10 6. What impact assessment has the Government conducted on the risk that removing CESS and PAL will increase imports of finished goods and further widen the trade deficit?

¶ 11 The Government has already committed to the IMF to remove CESS and PAL fully between 2026 and 2029. What is the Economic Impact Assessment?

¶ 12 7. After decades of industries being under CESS protection without adequate modernization by successive governments, is forcing them now to compete directly with global giants a “reform” or an “end” to domestic industries?

¶ 13 Hon. Speaker, we need a coherent macroeconomic plan that simultaneously strengthens domestic industry, promotes exports and protects consumers. We look forward to the Government’s responses.