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Import controls in Sri Lanka: Political preference and incentive distortions

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New IPS Publication

Sri Lanka implemented strict import controls to address the economic crisis and foreign exchange constraints.The policy goal behind import controls remains unclear, with conflicting statements suggesting a potential shift towards protectionism and import substitution.

In analysing the impact of these restrictions, a new IPS study highlights the need for a strategic approach to trade policy that considers long-term growth prospects, export sector development, and the well-being of the population.

Battling an unprecedented economic crisis that overlapped the COVID-19 pandemic, Sri Lanka resorted to strict import controls since early 2020. These measures gradually encompassed 31% of total imports by September 2022, with the intention of reducing foreign exchange leakages on “non-essential” imports. However, the effectiveness and implications of these stringent regulations have raised questions. A new publication by the Institute of Policy Studies of Sri Lanka (IPS) delve into the effects of these controls on the country’s trade policy and economic landscape.

The study titled “Import Controls in Sri Lanka: Political Preference and Incentive Distortions” by IPS researchers, Dr Asanka Wijesinghe, Chathurrdhika Yogaraja, and Nilupulee Rathnayake examines the preferences of policymakers in implementing import controls and their potential impact on domestic production and electoral considerations.

Through a quantitative analysis using a unique dataset constructed by the authors, the study explores the distortions in the incentive structure that promote import substitution. It considers factors such as the impact of products on foreign reserve positions, their importance to domestic production, domestic substitutability, and interest group pressure. The study identifies eight waves of import controls during the study period spanning from April 2020 to September 2022. The findings reveal that by the end of 2022, import controls were primarily imposed on food imports, consumer items, and electronics. This structure of import controls creates an environment conducive to import substitution, reversing the gains from structural transformation. Moreover, the study highlights the potential ramifications for the country’s nutritional security as the continuous imposition of import controls on food products may have severe consequences.

The study recommends a gradual phase-out of import controls, starting with intermediate and essential nutritious food items. It emphasises the importance of removing import controls on consumer goods, including food, to encourage resource allocation towards export-oriented industries and alleviate domestic price inflation. The removal of import controls on consumer goods will also mitigate the burden on low-income urban and suburban households, safeguarding their nutritional security.

The research underscores the need for the government of Sri Lanka to prioritise the removal of import restrictions on consumer goods and focus on expanding the growth of the export sector. By doing so, the country can address the balance of payment crisis, foster innovation, and enable participation in global value chains.

To purchase a copy of ‘Import Controls in Sri Lanka: Political Preference and Incentive Distortions’, contact: Amesh Thennakoon, Publications Officer, IPS on 0773 737717 or amesh@ips.lk.

For more information on IPS publications, visit: https://www.ips.lk/publications.



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APHNH aims to make Sri Lanka more competitive for healthcare investment

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Deputy Minister of Health and Mass Media, Dr. Hansaka Wijemuni addresses the audience

Sri Lanka private healthcare leaders recently pledged an action plan with timelines to address the practical priorities of Sri Lanka’s healthcare sector while making it more viable for local and foreign investments.

The Association of Private Hospitals and Nursing Homes (APHNH) has committed to converting recommendations from its first Healthcare Leadership Summit into a trackable outcome document with defined actions, responsibilities, and timelines, marking a shift from discussion to implementation in sector reform efforts.

The summit held on March 9 at Waters Edge, Colombo, brought together hospital leaders, policymakers, regulators, insurers, and international experts to address practical priorities for Sri Lanka’s healthcare sector.

A key outcome of the summit was APHNH’s plan to consolidate recommendations into a single, trackable charter that will outline specific actions, assign responsibilities, establish timelines, and provide periodic progress updates.

“Our objective is to bring the right decision-makers into one room and focus on what can be implemented, not only what can be discussed, ” said Raveen Wickremesinghe, President of APHNH. “We are committed to taking the inputs from today and converting them into a clear, trackable set of actions that strengthens quality, transparency and public confidence, while supporting national health priorities. “

The summit featured insights from Dr. Hafeez Rahman Padiyath, Dr. Hamdani Anver, and Chandana L. Aluthgama on scaling quality and operational discipline. A keynote and fireside discussion with Dr. Paiboon Eksangsri, President of the Private Hospital Association of Thailand, explored lessons from Thailand’s private healthcare development and conditions for making Sri Lanka more competitive for healthcare investment.

By Sanath Nanayakkare

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Atlas SipSavi Naththal Poronduwa records positive public participation, benefiting 10,000 students

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Atlas, Sri Lanka’s No. 1 learning brand, successfully concluded Atlas SipSavi Naththal Poronduwa, a national initiative that saw strong public participation in supporting children at risk of dropping out of school due to financial hardship. At a time when more than 22,000 Sri Lankan children leave school each year due to rising economic challenges, the initiative reinforced Atlas Sipsavi’s long-standing ‘No Child Left Behind’ promise by turning seasonal generosity into meaningful educational support.

The initiative reached 10,000 students, with beneficiary schools carefully selected to ensure support reached those most in need. The collected books were distributed to children at risk of dropping out, including those whose education had been disrupted by recent adverse weather, ensuring students had essential learning resources at the start of the new school term. Through its flagship Atlas SipSavi programme, the brand focused on improving access to education by providing essential learning tools, scholarships, and infrastructure to create better learning environments, bringing its purpose of ‘making learning fun’ to life in a meaningful way. As part of the initiative, the public was invited to donate schoolbooks, with each contribution matched one-for-one by Atlas. Donation boxes were placed at all Keells outlets island-wide and at Sarvodaya District Offices, making it easy for communities to take part.

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John Keells Logistics expands strategic engagement with CWIT through inter-terminal transport operations

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Representing JKLL: Lasitha Manchanayake: CEO, Dilum Liyanage: Snr. Manager - Transport Operations, Kavinda Jayasinghe: Manager - Operations and Randi Peiris: Asst. Manager - Commercial. Representing the John Keells Group: Zafir Hashim: President - Transportation, Plantations and IT Sectors and Asha Perera: CFO. Representing CWIT: Munish Kanwar: CEO, Iresh Siriwardena: COO, Devanshu Bhatia: Head of Techno Commercial, Madhuranga Wijesekara: In Charge - GATE Process, Sandun Niroshan: Duty Manager.

John Keells Logistics (Pvt) Ltd (JKLL), one of Sri Lanka’s leading third-party logistics solutions providers, has successfully expanded its operational engagement with Colombo West International Terminal (Private) Limited (CWIT), through inter-terminal transport services within the Port of Colombo. This enhanced engagement further strengthens CWIT’s efforts to improve operational efficiency, reliability, and scalability across terminal activities.

Inter-terminal transport plays a critical role in modern port operations, requiring high levels of coordination, precision, and operational discipline. JKLL’s appointment for ITT operations reflects CWIT’s confidence in the company’s demonstrated capabilities in managing complex transport operations within a high-throughput port environment.

The ITT operations are underpinned by JKLL’s technology-enabled logistics framework, incorporating real-time fleet tracking, performance monitoring systems, and data-driven operational planning. These capabilities provide enhanced visibility and control over transport movements, while ensuring compliance with established safety, productivity, and service quality standards.

The awarding of this engagement to JKLL is a testament to the successful implementation of the Inter-Terminal Vehicle (ITV) operations undertaken by John Keells Logistics at CWIT during the previous year. The ITV assignment was executed through structured operating procedures and disciplined service delivery, contributing to improved cargo movement, operational coordination, and service continuity within the terminal. The performance outcomes of the ITV operations provided the basis for the subsequent expansion of the partnership into ITT services.

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