brand logo

U-turn on tile import ban after CSE drop 

07 Feb 2021

  • Tug o’ war between MR and GR? 

  Following a U-Turn made by the Government with regard to the stringent import ban imposed on ceramic imports into the country, share prices of ceramic at the Colombo Stock Exchange (CSE) closed trading on Wednesday (3) in green.  Ceramic stocks dropped by double digit percentages on Tuesday (2) following the Government’s decision to relax the import ban imposed on ceramic imports last year, however, the Government swiftly revised the decision on Wednesday.  On Tuesday (2) Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance, issuing a gazette notification “deleted” the ceramic items from “Schedule I” of the Imports and Exports (Control) Regulation No. 04 of 2020, published in the Gazette Extraordinary No. 21841/21 dated 16 July 2020, and included them in “Schedule II” of said Gazette. Schedule II stipulates that items can be imported only on a minimum 180-day credit facility provided by the foreign supplier, from the date of Bill of Lading or Airway Bill of said goods.  However, within a few hours after relaxing stringent import restrictions imposed on ceramic imports through the Extraordinary Gazette Notification, an instruction was issued by the Department of Import and Export Control Department for Sri Lanka Customs and all commercial banks to suspend the implementation of the said Extraordinary Gazette until further notice.  As the Extraordinary Gazette issued by Premier and Minister of Finance Rajapakse became void within 24 hours by an instructure issued by the controller general of Department of Import and Export control, sources stated that it could be an indication of a growing rift between Premier Rajapaksa and President Rajapaksa.  On the same day of the announcement of import ban relaxation, the share price of Lanka Tiles PLC dropped by 19.93% compared to Monday (1) and closed at Rs. 224. Meanwhile Lanka Walltiles PLC dropped by 19.87% on Tuesday (2) compared to the previous day and closed at Rs. 221.75. Royal Ceramics Lanka PLC share prices dropped by 16.51% compared to the previous day and closed at Rs. 319.75. It should be noted that Sri Lankan entrepreneur Dhammika Perera is the Chairman of all three aforementioned companies.  Nevertheless, after the announcement made by the Department of Import and Export control in the early hours of Wednesday (3), aforementioned shares recorded gain compared to the previous day. Lanka Walltiles share price grew by 6.88% and closed at Rs. 237 while Royal Ceramics grew by 4.85% to close at Rs. 335.25. Lanka Tiles’ share price grew by 4.02% and closed the day at Rs. 233 per share.  Lanka Walltiles is the market leader in wall tile manufacturing in Sri Lanka and has the capacity to produce 2.3 million square metres of tiles annually, and exports to a number of countries. In May 2020, Lanka Walltiles stated that it believes the restrictions imposed on imports, if persisted by the Government, will serve to minimise the impact of the Covid-19 pandemic on its business.  In a disclosure to the Colombo Stock Exchange (CSE) in May 2020, Lanka Walltiles PLC Managing Director J. A. P. M. Jayasekera said that the imports ban, which included tiles and related accessories, is expected to have a positive effect on the company’s operations in the medium term.  Speaking to The Morning Business, local ceramic manufacturer Mackson Tiles Lanka Managing Director Mohamed Mizver following the relaxation of the ban on Tuesday (2) welcomed the move, and added that local manufacturers can only cater to about 50-60% of the country’s ceramic requirements.  “The Government told us earlier that they want to enhance the local production of tiles. We have ordered new machinery to increase the production capacity. The problem in the tile industry is the production cannot be increased at a rapid phase because the machinery is a bit complicated and it has to come from Italy which will take at least about 5-6 months until we get the machinery installed and start the production. Ceramic prices in the local market will stabilise now,” added Mizver.  To avoid a possible foreign exchange crisis, in mid-March last year, at the beginning of the local spread of the virus, the Sri Lankan Government brought in import restrictions on non-essential items. However, on 1 April 2020, this was revised to include all import items except pharmaceuticals and fuel. Despite the restriction, necessary raw material required for export purposes were allowed to be brought into the country.


More News..