The Hon. (Dr.) Harsha de Silva

¶ 01 Hon. Presiding Member, I will address the Ministry of Industries and Entrepreneurship Development under Hon. Sunil Handunnetti and Hon. Chathuranga Abeysinghe—both friends to whom I wish success.

¶ 02 The Minister said we will build a production economy with fair distribution of benefits. That is in our Economic Blueprint too: how to build a high-value market economy. The question is: how? Since President Trump’s return, global dynamics have shifted; our strategies must adapt. You said we are pursuing an export-led economy with a target of USD 28 billion in industrial exports by 2030. What are the specific policy choices to get there?

¶ 03 I have the Economic Transformation Bill here. You previously challenged it in Court. Then-lawyer (now Deputy Minister) Sunil Watagala, and either Hon. Bharshana Nanayakkara or Hon. Suriya-Peruma (I am not certain which), filed cases. Your arguments were: (1) the Economic Commission would privilege export- and FDI-led growth while neglecting import substitution industries; and (2) foreign investors would receive at least equal or greater consideration than domestic investors. Do you still hold those positions? If unchanged, you cannot build the export-led model you espouse.

¶ 04 The President said in his Budget Speech that we should deepen economic links in Asia via RCEP and other agreements, and expand our FTA network. We export significantly to the US, but we do not know how President Trump will act; Sri Lanka is the 100th-ranked partner and we enjoy a trade surplus of about USD 2.5 billion—he could easily impose measures. The Foreign Minister said they plan to go to the US to discuss—good, if feasible. I know how hard it was to regain GSP+; we worked tirelessly in Brussels with the late Hon. Mangala Samaraweera, and Hon. Sunil Handunnetti also travelled then. Beyond the US, we must secure other markets and agreements, and maintain what we already have—perhaps via specialized trade agreements, as others have done. India negotiated Harley-Davidson and bourbon tariffs versus aircraft and oil purchases—large players can trade concessions; we cannot. We must be smart.

¶ 05 RCEP is the largest trade agreement—covering about 30% of global GDP. Joining requires a 180-degree policy shift from your earlier Supreme Court position.

¶ 06 On goods: we have long used high para-tariffs. The Singapore FTA faced opposition against removing para-tariffs, yet now we are phasing some out (e.g., 1/5 annually). Consider HS 6910.10 (ceramic sanitaryware). Our applied burden: 20% Customs Duty; 18% VAT; 10% PAL; Rs. 50/kg CESS; 2.5% SSCL—around 60% total. In RCEP schedules, Thailand drops from 30% to near zero by year two; China to 0% in year two; Malaysia from 25% to 0% by year 15; Philippines to 0% in year two; Vietnam from 35% to 17.5% in 20 years; Indonesia from 20% to 0% in year two; Myanmar adjusts sharply; while we sit at 60% and sometimes increase. This conflicts with an export-led, RCEP-oriented strategy. We cannot grow exports while refusing to liberalize imports strategically.

¶ 07 On services (Mode 4): professionals providing services across borders. When signing with Singapore, there was uproar against allowing foreign professionals. Yet RCEP partners liberalize many professional services—legal, accounting, architecture, engineering, telco and finance. On doctors: concerns arise about our doctors emigrating. In many FTAs, foreign doctors can enter subject to strict requirements—recognized degrees, AMC approval, IELTS, registration, supervised practice, etc. If we want the largest markets, we must embrace deeper, rules-based liberalization with market access, fair treatment, and mutual recognition. Otherwise, we cannot achieve the export goals.

¶ 08 Finally, on a domestic innovation: a leading Sri Lankan EV three-wheeler manufacturer (the team behind Vega) presented to us. They localize about 50%; import certain components from China; crucial IP, software, battery tech, powertrain, design, prototyping, autonomy, charging infrastructure, testing, and compliance are here. This is not mere CKD/SKD assembly; it is IP-heavy, engineer-intensive. Yet our tariff treatment adds about Rs. 800,000 on top—30% customs, and surcharges post ex-bond—making the EV three-wheeler about Rs. 4.4 million, pricing it out. Officials cannot create ad hoc waivers; we need a policy solution, aligned with IMF constraints.

¶ 09 My proposal: maintain taxes broadly, but grant a targeted subsidy/rebate tied to local innovation value-add so the retail price falls from Rs. 4.4 million to a viable level. Alternatively, apply customs only on the foreign value-added portion while exempting the domestic value-added portion—this helps somewhat. The Opposition will support such targeted innovation policies—not just for this firm but others—so we can move, across party lines, towards an export economy. Without a genuine policy shift, we cannot join RCEP or similar frameworks. Thank you.