The Hon. (Dr.) Harsha de Silva

¶ 01 Thank you, Hon. Deputy Chairperson.

¶ 02 A short while ago in the canteen, we heard the Deputy Minister say the previous administration did not diversify our export basket or expand export markets. But both that Hon. Member and the Minister who brought today’s proposal opposed operationalizing this year the Singapore Free Trade Agreement at the Committee on Public Finance. As Chair, I said, “No, I cannot accept that; the country is being led the wrong way.” They said, “This is our Government’s policy.” I asked them to speak to the President and return in two weeks. Two weeks later, they came back saying, “Fine, since it had already begun, we will proceed.” So who actually blocked international economic engagement? Was it us or you? Who opposed the Singapore FTA? Who opposed CEPA with India? ETCA? MCC? Do not mislead people here.

¶ 03 The Deputy Minister also said they tried to reduce the tax on eggs but could not; and that taxes on food categories would be removed—yet now only liquid milk and yoghurt VAT has been reduced. Do not mislead the public.

¶ 04 They also claim to have reduced VAT on unsold postage stamps, and removed imputed VAT on free meals for employees—fine. But while removing VAT on free employee meals, you impose VAT broadly on the factory itself. What is the Government doing today? It is like saddling an ox on a man who fell from a tree. The fall is the 44% U.S. tariff. Instead of relief, you add the burden by withdrawing SVAT.

¶ 05 An Hon. Member said deemed exporters purchasing locally would not be charged VAT because of refunds. That refund logic led to the suspended VAT scheme introduced around 2005 with vouchers in lieu of cash, initially for BOI exporters. Later, the Rajapaksa Government wrongly expanded it to others—apartments, construction, etc.—and then rebranded “suspended” as “simplified,” but it was the same SVAT. The IMF asked to remove SVAT to raise revenue. But can you actually net even 0.1% of GDP more from this? No—because whatever you collect must be returned as refunds. Your new “electronic system” is not the issue; cashflow is. Under your proposal, exporters will pay cash and then wait: 45 days if “low risk,” six months if “high risk.” That ties up working capital when cost of capital is high. SMEs often sell domestically and export a smaller share; they will be hit hardest. The Government says they could not negotiate with the IMF. Yesterday evening we met IMF officials formally. I told them there was no need to abolish SVAT in this manner. They did not say “No.” With proper data and tough negotiation, this could have been resolved. The Government failed.

¶ 06 Now, with a 44% U.S. tariff, global demand impact, and reduced export potential, factories will shut and jobs will be lost. I just received a news alert that the President is convening an All‑Party Conference. We are ready to engage. But we cannot simply reduce U.S. tariffs; we are a WTO member and have no U.S. FTA, because you never allowed such deals, peddling myths about “American imperialism,” “Indian expansionism,” and Marines landing.

¶ 07 We must break our walls and build bridges. Tariffs are walls. Trump’s team claims Sri Lanka’s “88‑foot wall,” much of it formal tariffs and para‑tariffs—PAL, CESS, SSCL—topped with VAT. Vietnam showed the U.S. their weighted average tariff was only 5.9%, yet the U.S. counts para‑tariffs. We need unilateral reforms—change our mindset and integrate with the world. Read “The Blueprint 3.0 – Towards a High‑Performance Social Market Economy – Samagi Jana Sandhanaya.”

¶ 08 Some think GSP is from the U.S.—wrong; U.S. GSP lapsed in 2020. GSP Plus is EU. In 2017, after it was lost under the Rajapaksas, we led the effort to regain it, defeating a parliamentary motion against it. GSP+ is not easy—we undertook commitments. The EU evaluation team arrives end of this month. A key element relates to ICCPR and human rights. The PTA has long been under scrutiny; the Government promised reform. Yet a Muslim youth was detained under PTA over a sticker, and only released after pressure when the EU visit loomed. In Geneva on 3 March 2025, our Ambassador said the OMP has “enhanced financial independence.” Budget figures show OMP allocation of Rs. 126 million in 2024 and Rs. 126 million again, against a 2025 estimate of Rs. 139 million. For the Office for Reparations, Rs. 2.59 billion in 2024 (including arrears), but Rs. 2.35 billion in 2025. You say one thing abroad and another here. Translators will not save you.

¶ 09 Ultimately, instead of helping exporters bringing dollars at a critical moment, the Government is pushing them down. Thank you.