The Hon. (Dr.) Harsha de Silva

¶ 01 Hon. Presiding Member, although two subjects are on the Order Paper, I will speak on one: regulations under the Imports and Exports (Control) Act, per Gazette Extraordinary No. 2465/07.

¶ 02 This measure waives VAT, Cess, PAL, and Customs Duty on donated imports—a mechanism first used after the 2004 tsunami and again during the 2017 floods—now applied to the “Dithva” cyclone. We should not sit idle waiting for donations. The World Bank estimates damage exceeding 4% of GDP—about USD 4 billion or Rs. 1,200 billion. The President mentioned a donors’ conference; we need clarity on when it will be convened.

¶ 03 We checked the “Rebuilding Sri Lanka” Fund the Government announced; it does not exist. To date, only about Rs. 7 billion has been received—far short of what is needed (at least Rs. 1,200 billion). Consider small and medium industries: a letter from the United Rice Producers Association to the President and Minister W. Samarasinghe notes seven medium rice mills destroyed; total damage to stocks, civil work, and machinery is around Rs. 1.6 billion. When importing replacement equipment, VAT, Cess, and SSCL are levied. At yesterday’s Ministerial Consultative Committee on Finance, both sides agreed to urge the Ministry: do not levy VAT, etc., not only on donations but also on privately imported replacement machinery and inputs for disaster recovery. Administrative mechanisms—via the Industry Ministry or decentralized expert panels—can verify claims, similar to insurance assessments. I believe all 225 MPs can support this relief.

¶ 04 Next, the absence of a formal “Rebuilding Sri Lanka” fund and of an Auditor-General is a problem. Large sums are moving between accounts—often to the General Treasury/Secretary’s fund—but without a dedicated, audited disaster fund, questions of transparency will arise later, especially if governments change. The Disaster Management Act provides for establishing a Disaster Fund; a decision six months ago called for it, requiring only Rs. 100 million seed money—this can be set up within half an hour.

¶ 05 On MSME debt: before the cyclone, stage 3 loans (non-performing) were about Rs. 900 billion; now likely over Rs. 1 trillion. For example, a Colombo distributor named Anura borrowed Rs. 165 million, has repaid about Rs. 300 million, yet still owes Rs. 570 million due to very high interest during the crisis period—some banks charged 30% despite Central Bank guidance around 9%. In towns like Gampola, many small shops and workshops are destroyed. We must address this debt overhang or the recovery will stall.

¶ 06 Do not rely on donations; beyond India’s USD 100 million, other countries have offered only small amounts, perhaps totaling around USD 30 million. The Government must prioritize spending, but fiscal space is limited. The “broken window” analogy applies: rebuilding raises GDP, but you only get restored assets. Instead, liberalize the economy to attract investment, especially private investment into infrastructure through PPPs and concessions—airports, for instance. In India, airports are built and operated by the private sector on government land, with no fiscal burden and about 40% of top line revenue to the government. We must disrupt traditional thinking and enable both domestic and foreign private investment in infrastructure. Thank you.