The Hon. (Dr.) Harsha de Silva

¶ 01 We understand the exporter ultimately gets a refund. The issue is not the exporter but the domestic producer supplying inputs. If the exporter imports inputs, there is no VAT; if the exporter buys domestic inputs, VAT is levied. Refund mechanics are a separate matter; SVAT streamlined that process. We can discuss at length because we all want to turn domestic producers into exporters.

¶ 02 Finally, have we declared a crisis? During the 2022–2024 crisis, we brought in a “forced conversion” regulation: after setting aside debt service and raw material needs, the residual export proceeds must be converted to LKR. That takes away economic freedom. Without economic freedom, investors get jittery; they want to decide based on their projections, not by orders from officials. Our “Blueprint” advocates economic democracy and freedom. Your rule says exporters “shall” convert within a month, not “may.” Such draconian, anti-freedom, anti-business rules should not be brought unless there is a declared crisis.

¶ 03 Yes, the market has calmed somewhat because exporters, fearing enforcement, converted and the rupee strengthened for a bit, but it has since moved back towards around Rs. 330. If you implement crisis-time regulations, say in Parliament that it is temporary—remove in three months, for example. Market confidence is key; draconian rules do not build it.

¶ 04 Thank you.