Commerce Ministry steps into tax crisis at lentils-processing factory
View(s):The Commerce Ministry has promised to step into a crisis situation at a top red-lentil processing factory in Sri Lanka where a recent tax revision has made the facility uneconomical.
“Since this February’s tariff revision, we have stopped importing whole lentils for processing here as the import duty costs are causing losses for us, with our buffer stocks starting to be at unhealthy levels,” Dr A.C. Saleem, Chairman of privately owned Pulses Splitting and Processing Industry Ltd (PS&PI) located at Gonalawa, Sapugaskanda, told Minister of Industry and Commerce Rishad Bathiudeen, who visited the factory last week.
Learning of the situation, the minister and his officials visited the factory and said they would take up the matter with the government at the highest level to seek relief for this company.
In comments that were quoted in a media release issued by the ministry, Dr. Saleem said they have almost lost their cost advantage due to recent tariff revision given to split red-lentils. “We import whole red lentils and this recent tariff advantage is not given to such imports. We import, process the whole red lentils to become split red lentils right here in Sri Lanka by our US$7.2 million sophisticated plant, which is the world’s largest red-lentil splitting facility with nine running production lines with its own powerful colour sorter.”
The company supplies quality red-lentils under two brands-“Leaf” and “trophy” and is only one of two agro-processing Board of Investment (BOI) ventures in Sri Lanka – the other venture in agro-commodities processing being Prima Ceylon Ltd.
Pulses Splitting and Processing Industry Ltd has more than 55 per cent of Sri Lanka’s annual domestic red-lentil market share by its processing of imported whole red lentils and processing them right here with a value addition of 15 per cent or more.
“We registered with the Ministry of Industry in 2007 for a manufacturing license. At the start the duty for our whole lentil imports and split red lentil importers stood equally at Rs 6 per kilo but this was not sustainable for us since we have processing costs. Once we made representations to the government, they realised that we are a national asset under BoI due to our more than 55 per cent supply strength our ability to prevent market price escalations and in 2008 we were afforded a new HS code with tariff protection of Rs 4 less in comparison to tariff of split red lentil importers (at any given time). This measure helped us to grow our industry, giving employment to more than 300 and we thank the government for the continuous relief and support to our industry. These reliefs ultimately help the Lankan consumer so that red lentils market is always stable with affordable prices.
We continued with the next six years of hard work and created the world’s largest red-lentil processing facility in Sri Lanka that you see today. Agro commodity processing students from Canada, US, and Australia are now regular visitors to our plant for their study field tour. The other countries are now learning from us about pulse processing! But on 6th February 2014 the revision on red-lentil import tariff closed our cost advantage and now we are unable to supply to the domestic market at the same affordable rate to Lankan consumer. We have now almost lost our cost advantage due to recent tariff revision given to split red-lentils. We import whole red lentils and this recent tariff advantage is not given to such imports. We import, process the whole red lentils to become split red lentils right here in Sri Lanka by our plant. We also contribute to exports by sending our excess production to Middle East,” said Dr. Saleem
Minister Bathiudeen said the February duty revisions were for the benefit of Lankan consumers in general but noted that he would intervene in this matter immediately.