Business Times

Duty cuts for raw materials in confectionery products

By Bandula Sirimanna

The Government is to reduce Customs duty on certain raw materials used for the production of confectionery and bakery products heeding a request made by the Lanka Confectionery Manufacturers Association (LCMA), Finance Ministry sources said. The Treasury is considering including this cut in the 2012 budget, Ministry sources revealed.

This week LCMA representatives headed by Quintus Perera, Chairman of Uswatte Confectionery Works (Pvt) Ltd held talks with Treasury Secretary Dr. P.B. Jayasundera and Director General Trade, Tariff and Investment Policies Dr. Neville Gunawarden and discussed matters pertaining to taxation and raw material import policy applied to local manufacturers.

The Association’s request to grant a rebate on raw material imports met with a favourable response, Mr. Perera told the Business Times. He noted that local manufacturers are struggling to survive in the face of unfair competition posed by importers of sweets and snacks who are hoodwinking custom authorities through under invoicing and paying a lesser duty than local manufacturers who import raw material for their production process.

Local manufacturers have made heavy investment in machinery to produce these items whereas importers are directly importing the finished product for the local market, he said. One solution is the introduction of a Maximum Retail Price (MRP) system of taxation on the import of all confectionary products, Mr Perera said.

This will curb the dumping of cheap imported confectionery products which pose a major health risk among the people, mostly children who consume them, he said. However he noted that this was not made applicable to import duty as the MRP cannot be taken into account under the Inland Revenue Ordinance. He urged the government to introduce the MRP system of taxation to import duties in addition to applying it on cess as it will lead to a great reduction in under–invoicing of imported confectionery.

Most of the cheap imports come from China, Indonesia, India and Dubai in the form of candy, cup jellies, chewing gum, sweets and snacks and are sold at low market prices, Mr Perera noted.

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