Sri Lanka to implement new tariff policy

By Nuzla Rizkiya

Sri Lanka is set to introduce a more stable and predictable tariff system from next year, following the Cabinet of Ministers’ approval of a new tariff policy this week.

The approval was granted after the Cabinet reviewed the adverse effects on the country’s investment competitiveness, due to frequent tariff revisions.

The government said that a clear, simple, coherent and predictable tariff system is vital to maintain a competitive environment for trade and investment within the country.

Accordingly, the new national tariff policy will be implemented in three phases from January 2025. 
A gazette notification in this regard, along with the details of the policy, will be released to the public soon.
The policy was formulated by a technical committee headed by the director general of trade and investment policy of the Treasury. 
The drafting process included consultations with the business community, industrial groups, trade experts and secretaries of the relevant ministries, according to the government.
President Ranil Wickremesinghe, in his capacity as the Finance, Economic Stabilisation and National Policies Minister, appointed the committee and presented the policy to the Cabinet.

In April, the government announced the development of the new tariff framework as part of its vision to create an export-oriented economy for the country.

While the tariff revisions can be a tool to protect the domestic industries and way to align to international dynamics of trade, frequent revisions can have significant impacts on export diversifications.

In Sri Lanka, the high import duties and additional charges such as the port and airport levy have significantly increased the price of imported raw materials for the local manufacturers. 

These policies tend to cripple the domestic production, hindering their ability to remain competitive in the export market.

Therefore, the analysts and industrialists have repeatedly called for revised trade reforms and the removal of excessive import protection rules, which they say have stifled the country’s growth in trade, compared to the other Asian countries.