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Tile importers moot imports through alternative funding

17 Feb 2022

  • Industry points to lack of marketeers capitalising on tile shortage
  • Says permitting importation would tackle exorbitant black market prices
    By Shenal Fernando Tile importers called on the Government to allow tile imports through alternative funding mechanisms which will not aggravate the existing forex crisis of the country in order tackle the exorbitant price increase observed in the market due to the actions of certain black marketeers who are exploiting the current under-supply of tiles in the market to the detriment of the consumers. Speaking to The Morning Business yesterday (16), Technology and Services Industry Association (TSIA) President Kamil Hussain pointed out that the tiles shortage in the market due to the import restrictions has resulted in black marketeers capitalising on the opportunity and charging exorbitant amounts from consumers. “What’s happening right now is that black marketeers are buying from the showrooms of local manufacturers in bulk and are stockpiling and releasing it to the market in limited quantities, adversely affecting the end user. If you go to the showrooms of these local manufacturers they will be out of stocks. Yesterday (15) we did a small survey and we found out that these people are selling 2×2 tiles at over Rs. 2,000. This is basic economics; when the supply is less than the demand, you create a black market price. If you want to reduce the price, allow imports through an alternative funding mechanism which doesn’t negatively impact Sri Lanka’s US dollar crisis. I can vouch that the price of tiles will come down below Rs. 1,000.” Explaining further, he stated that even Finance Minister Basil Rajapaksa had recently stated that if someone can find an alternate funding method, they should be allowed to carry out their business. Therefore, he stated that if someone has US dollars or can acquire them from outside the country to pay the supplier, they should be allowed to import. If that kind of arrangement is allowed, there will be a flow of goods to the market and the consumer will not be penalised, noted Hussain. He further stated that tile importers can negotiate with their suppliers to obtain supplies on credit up to around one year, because as he pointed out, many established importers have strong relationships with their foreign suppliers who are willing to support their long-term business partners in Sri Lanka. Accordingly, he stated if the Government allows tiles to be imported under such a mechanism, the volumes brought into the country will not be considerable enough to impact the local manufacturers and the long-term credit lines will ensure that the US dollar crisis in the country isn’t aggravated. The TSIA President further stated: “The Government has not given any indication as to when the import restriction on tiles will be lifted, but there is a huge demand which the local manufacturers cannot cater to. While they promised that they would adequately cater to the local demand by January 2022, it is February now and they haven’t been able to achieve it and consequently, the construction industry is adversely affected.” Speaking to The Morning Business, Chamber of Construction Industry (CCI) Chairman Eng. Maj. Ranjith Gunatilleke pointed out that prior to the temporary suspension of tile imports, the public had access to a considerable selection of tiles at different price ranges and quality standards.  “Following the import restriction on tiles, that commodity has gone out of the market. Now people have no choice and they must go for the more expensive product,” stated Gunatilleke.      According to Hussain, based on their latest available statistics prior to the temporary import suspension in 2020, tile imports catered to 49% of the local demand and local manufacturers accounted for 51%. However, he did point out that the composition of the market might have changed as many people are completing their houses without tiles. The TSIA President further lamented that while the importation of tiles was temporarily suspended in early 2020, the debt moratorium scheme introduced by the Central Bank of Sri Lanka (CBSL) was never extended to tile importers. So the players in the tile importers’ industry were not given any relief by the Government despite the industry being dismantled by the Government with its import suspension policy. “We had 300 members in our association. At least half of them have applied for migration and some of them have already sold their business and migrated. That is why if you go around Nawala you will see most of the former tile shops available for rent. Some of them have committed to banks in order to invest in infrastructure needed for the tile industry. Now, in the absence of the tile industry, they cannot immediately divert to another business and they have gone bankrupt as a result.”


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