Canned fish: Import duty reduction hits local industry | Page 2 | Sunday Observer

Canned fish: Import duty reduction hits local industry

The reduction of duty on imported canned fish has negatively impacted the local canned fish industry and is on the verge of collapse, representatives of the industry said.

However, a senior official at the Finance Ministry said, the decision to reduce import tax was to bring down the cost of living and to support a majority of people.

The official added, canned fish comes under special commodity levy item and the Cabinet Sub Committee on cost of living has taken a decision to reduce the import duty.

“The committee has taken a decision to reduce the duty on this item on behalf of the consumers as canned fish which is a commodity heavily consumed by the people. It is in the hands of the Cabinet Sub-Committee to take a decision to cancel the duty reduction as per the submissions made by the Local Canned Fish Manufacturers’ Association,” he said.

President, Local Canned Fish Manufacturers Association of Sri Lanka, Shiran Fernando said, “Local canned fish manufacturers are in trouble due to government action which resulted in a 50 percent reduction in import duty on canned fish. The industry which is capable of supplying the entire needs of the country, faces a huge challenge to compete with the imported canned fish products due to the tax reduction. We request the authorities to reconsider its decision and create a level playing field.”

“The industry is heading towards a closure as one of the manufacturing facilities has already been closed. The market is flooded by imports. For instance, Chinese government has given a 15 percent rebate to their exporters so that they are able to export their products and sell in Sri Lanka at a less cost,” he said.

Sri Lanka spends over US $ 64 million on imported canned fish although the country is surrounded by the ocean. The fishing industry is considered one of the sectors with high potential to drive the economy in the long run. The value addition component of the canned fish industry is 100 percent where as all the inputs are locally sourced including fish, cans and labels. The industry should be protected as it is a foreign exchange saving industry as well as a sector totally using local input.

“The government is not helping the local manufacturers, although it can provide more than 75 percent of the country’s consumption which is about 175,000 cans per day. The government could support the industry by directing the state institutions, including the three armed forces and hospitals to purchase locally produced canned fish for their consumption. These government institutions are currently buying imported canned fish and it result in loss of revenue to the local industry,” he said.

“We urge the government to support the local canned fish industry as more than 600,000 fishermen and their families which are over 1 million people will be affected badly. More than Rs. 600,000 million worth of fish has been used by the local canned fish manufacturers in the past and this has saved foreign exchange of the country,” he said.

“Local manufactures do a great service at a time when we have a huge debt burden. The country needs to focus more on locally produced goods rather than imports. In this regard, local canned fish is an important food item which the manufacturing needs encouragement,” Secretary, Local Canned Fish Manufacturers Association of Sri Lanka, Kamal Addaraachchi said.

The industry contributes towards the GDP growth. The policy framework is vital to help the sector in terms of duty and taxes. With right support in place, we will be able to make Sri Lanka self sufficient in canned fish within the next 6 to 8 months, he said.

He claimed, though, the government reduced duty on imported canned fish, the benefit was not passed on to the consumers and only the traders were benefited. “The investment partners in our industry also include foreigners and we need to restore their confidence at a time when the country has suffered a setback.

The only sector that we can see development is the fisheries industry and canned fish manufacturing should be given all the facilities to ensure job security of its 1,500 workforce.”