Footwear manufacturers urge Govt. to give illegal imports the boot

By Charumini de Silva 

Local footwear manufacturers yesterday called on the Government to nab illegal imports insisting that it had created unfair competition and had a negative impact on them.

During the 12th edition of the ‘Ease of Doing Business’ forum organised by the Finance Ministry, D. Samson Industries Ltd. (DSI) complained to Finance Minister Ravi Karunanayake that the illegal import of footwear was damaging the local footwear manufacturing industry. He called for immediate action to assist Sri Lankan enterprises.

DSI Director Kaushalya Perera pointed out that as per the current tax structure, even if any importer brings down stock lots of footwear (at the lowest rate per pair for bulk purchases) at a freight on board (FOB) price of Rs.50, the local landed price would be Rs. 800 without any trade margins. 

Sri Lanka’s footwear market at present comprises over 62.5 million pairs of shoes, 30% of which are acquired through imports. 

Noting that during the last few years imports had increased significantly, Perera said that local industries could no longer compete with these prices.

“All the factories are working under a capacity of 60%-80%. Sri Lankan footwear manufactures are unable to compete with these prices. We are not able to sustain this industry,” she added.

It was pointed out that this unfair competition from counterfeit products, tax avoidance and illicit imports had adversely impacted the local footwear manufacturing industry.

“If imported from China through a formal channel, the minimum FOB would be at least Rs. 350 and the landing cost around Rs. 1,150-Rs. 1,350, all taxes inclusive. Since stock lots are always sold below the cost, it will have a negative impact on local producers,” she stressed.

Acknowledging that the Sri Lanka Footwear and Leather Products Manufacturers Association had brought up this issue at a recent meeting with the Customs Department, Minister Karunanayake asked if the matter was not addressed to date. Perera responded in the negative. 

Deputy Treasury Secretary S.R. Attygalle, also accepting that there were lapses in the system, said that under-invoicing and price manipulation did occur in the import market. 

Perera appealed to the authorities to consider the suggestion submitted by the association to effectively address the situation for the benefit of the industry.