The government is to introduce a quota system for importers and for the issue of direct user licences for essential commodity import for the disbursement of foreign exchange subject to the overall direction of the Controller of Imports and Exports. This remedy for the present dollar scarcity is now under consideration as there was bunching [...]

Business Times

Essential commodity importers to undergo a quota system

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The government is to introduce a quota system for importers and for the issue of direct user licences for essential commodity import for the disbursement of foreign exchange subject to the overall direction of the Controller of Imports and Exports.

This remedy for the present dollar scarcity is now under consideration as there was bunching of letters of credit for essential commodities in banks and it has to be realised as and when the clearing of shipments of such goods happens, Trade Ministry sources said.

An emergency trade and commerce strategy will be implemented to balance liberalisation and price control, with adjustments from time to time, and close monitoring, Minister of Trade Bandula Gunawardena told the Business Times.

As an initial step, measures will be taken to strengthen the Consumer Affairs Authority (CAA) when enforcing price control on essential commodities considering the concerns of importers and traders for the benefit of consumers, he said, adding that the Cabinet has approved 75 new amendments to the Consumer Affairs Authority Act and it will be enacted in Parliament soon.

He expressed the belief that it is possible to provide essential food items such as dhal, sugar and rice at a reasonable price through a formal system such as cooperatives.

Prices of several essential commodities including sugar, dhal, big onions and canned fish have been increased by Rs. 50-60, a spokesman of the Pettah Wholesale Traders Association told the Business Times.

This was mainly due to an increase in the cost of importing such items, dollar shortage in banks and rupee depreciation, he pointed out.

The CAA‘s enforcement of price control mechanism was not effective as traders jack up prices ignoring their gazette notifications, Ranjith Vithanage, President of the National Movement of Consumer Rights Protection said.

He noted that the importers are selling essential food items keeping a profit margin, to wholesale dealers and they in turn sell it to retail traders at a high price. Finally consumers had to buy essential commodities from them spending more than the control price.

CAA officers conduct raids to crack down retail traders who are selling food items violating the price control rule but they have no mechanism to take legal action against importers or big time wholesale dealers, he added.

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