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Monday, 18 February 2019 01:49 - - {{hitsCtrl.values.hits}}
The commercial ceramic industry of Sri Lanka was one of the pioneering industries of Sri Lanka. It had its beginnings from colonial times when a Royal Commission recommended ceramics as a suitable industry for the country. The industry underwent a paradigm shift in the 1970s when Noritake of Japan decided to invest in Sri Lanka particularly at a time when overseas investments to Sri Lanka was not readily forthcoming owing to the perception that a socialist Government would not encourage investments.
The investment was made as a joint venture between the then Ceylon Ceramics Corporation and Noritake of Japan and spawned Noritake Lanka Porcelain Ltd. The success of the Noritake project at that time was perhaps very significant in building confidence among prospective Japanese and even global investors in Sri Lanka’s prospects in industrialising. This project gave a boost to many other ceramics projects such as Lanka Walltile, Lanka Tiles and Dankotuwa Porcelain PLC, etc. sponsored by the Government and Royal Ceramics which was a pure private sector initiative.
The Ceylon Glass Factory commenced by the Government was the pioneer in glass and later led to the Ceylon Glass Company Ltd. and which is Piramal Glass Ceylon PLC today. Many of them expanded and became listed on the Colombo Stock Exchange providing an opportunity for local investors to participate in the growing Ceramic and Glass Industry of Sri Lanka.
While all these projects were initially sponsored by the state and later privatised, Midaya Ceramics was a pioneer which commenced operations in the 1960s to produce ornamental ware. The most recent addition to the industry is Macktiles Ltd. which is a large-scale tile producer and a total private sector project.
Today the industry includes companies engaged in porcelain, tableware, earthenware floor and wall tiles, bath and sanitaryware, ornamental ware and utility ware, red clay roofing tiles and bricks, and glass containers. The industry has won many accolades for their export performance and boosted Sri Lanka’s image as a high-quality manufacturing centre compliant with safety, environment and social standards. The superior quality and intricate workmanship of the tableware industry made it possible for three of Sri Lankan designs to be selected as the preferred choice for the Oscar Awards banquet on three consecutive occasions.
The council acknowledges the support extended by the Government of Sri Lanka, the Ministry of Finance, the Ministry of Industries, EDB, BOI and GSMB for the betterment and development of the industry.
Having had a glorious past the industry is now facing difficulties and seeks the intervention of the Government to make available a level playing field and remedy some constraints and obstacles it is faced with. The industry believes that with the correct supporting policies it can bounce back to its former glory days.
The various concerns of the Ceramics and Glass industry is as follows:
1. Decrease in CESS on sanitary ware, tableware, bath ware, roofing, floor and wall tiles
The market is inundated with cheap imports of the above-mentioned products. As a result, companies who have invested on infrastructure are at the receiving end. Prior to 2009, the prices of imports were exorbitant (e.g.: TOTO, American Standard, etc.), this reduced the amount of imports into the country. However, post this, due to the increase in local producers, economies of scale was experienced within the industry. The council therefore urges the Government to
2. Increase in quality standards
Products of this industry are not subject to quality requirements of SLS. The market is full of low-quality imported products. Not only is there a quality issue, the customer is also being misled with cheap pricing, frequent replacement, etc. The council therefore requests the authorities to introduce and implement quality standards across the industry. The stipulated standards should also include meeting the requirements of various tests stipulated by the respective industries e.g.: contamination tests, chemical resistant tests, etc.
3. Import duty
Currently, the import duty on tiles is at Rs. 100 per sq. m. or 30% whichever is higher. Previously, it was Rs. 200 per sq. m. or 25% whichever is higher, which was eventually reduced by the Government during the 2016 budget.
4. Duty-free items
Most of our industries are BOI projects. Therefore, we recommend that imports of these products are added to the list of negative duty-free items and that products manufactured under BOI projects to be given first preference with the objective of developing these local companies and increasing scale. This will enable them to compete within the international market and thereby increase foreign reserves.
5. Export taxable income.
Currently, export taxable profit is liable at normal rates unless the company has exports of more or equal to 80%. Previously it was at a concessionary rate of 14%. The council requests the authorities to encourage exports by maintaining the export taxable income at 14%. The reason is that no company is able to export at 80% at the initial stages of incorporation. This will enable the local companies to compete better at international markets, bring in foreign currency into the country.
6. Administrative hassle in obtaining approvals for raw materials
The bureaucratic processes for obtaining approvals from authorities for mining of raw materials has become an issue for the industry. In order to avoid this, a clear and easy centralised approval process should be devised and implemented to avoid this hassle. It will also help avoid the scarcity of raw material within the industry and reduce the overall cost of production while enabling increase in scale.
7. Income tax concessions
Currently there aren’t income tax concessions granted for existing businesses for expansion and development of business operations unlike that granted within our neighbouring countries. Implementation of this will be key for the growth of the industry enabling the respective companies to compete within the region and bring in more investments.
8. Request for bringing furnace oil link with crude oil prices
The energy cost component is over 30-35% of the industry manufacturing cost. This is quite high and local manufacturers experience a daunting task of competing against global competitors who use natural gases as sources of oil. The council therefore recommends the following which will ensure no revenue loss to the Government in addition to providing a level playing field for the industry to compete in the intentional market:
9. Health hazards
10. Removing of Silt (Ron Maada)
Presently there is no cleaning mechanisms in tanks and reservoirs which is decreasing the water retaining capacity of the said tanks. We are able to assist in this process if we are allowed the removal of this, thus enhancing the water retaining capacity of tanks. This will result in the country not facing drought in addition to the industry benefiting from raw materials.
11. Wheeling of power generation
This will also help the manufacturer have visibility of power cost, which will invariably help reduce manufacturing cost. The corporates will also invest in power generation thus reducing the Government’s burden on same.
12. Transportation to the north
There are untapped deposits of clay and silica in the north of Sri Lanka. Due to unavailability of proper and economical modes of transport, the industry is not able to explore this opportunity. The council requests the authorities to develop Sri Lankan railroads so that not only this industry, but the country’s economy can benefit as a whole
13. Export of natural resources
Currently there are no restrictions to export the country’s natural resources without value addition, which includes waste glass and all minerals. The council recommends to bring in regulations to prevent export of any such material without value addition.
14. Dumping of cheap imports
There are various cheap imports of tiles, sanitary ware, glass and tableware from China, India, Indonesia and other Asian suppliers which still remain a significant threat to the local industry. In addition to this, the industry also experiences the cheap quality of raw material that is being dumped into the country. The council recommends anti-dumping legislation to avoid this and protect the local industry.
SLACC the richest forum of industry representatives
With the sole interest of strengthening the image of the world-renowned Sri Lankan ceramics, the Sri Lanka Ceramics Council (SLACC) incorporated under the Companies Act, No. 17 of 1982 on 19 November 2003 was officially launched on 11 February 2004 under the aegis of the Ceylon Chamber of Commerce. SLACC today, is undeniably the richest forum of industry representatives in the island.
The Council is the culmination of the Ceramic Industry Cluster which was formed in 2001 with the support of The Competitiveness Initiative (TCI) of the USAID. The Cluster was initiated to devise a unified, industry-wide strategy for competitiveness. It was a forum representative of the entire industry and was a special forum for examining and representing the interests and needs of the entire industry with its membership from across the industry value chain. The Ceramics Cluster was composed of representatives from manufacturers and suppliers from the industry, Government agencies, universities, and research and development organisations.
Key objectives of the Council are:
Critical ceramics, tiles and glass industry calls for proper support
