ECONOMYNEXT – Sri Lanka is considering price controls on cement Trade Minister Nalin Fernando said, while government imposed imposed protectionist taxes keep the prices of most building materials including steel and tiles artificially high.
“We will announce a maximum retail price once the companies discuss this,” Fernando told reporters on Tuesday.
Sri Lanka has in the past imposed price controls on cement when global clinker and energy prices went up creating shortages and disrupting construction activity, while keeping high import taxes on steel and tiles to give profits to domestic producers.
This was after cement companies announced they would be reducing prices by 150 rupees to 2,250 rupees for a 50 kilo bag.
“I don’t accept this reducing the price by 150, I want the maximum retail price to be 2,000-2,500,” Fernando said.
“We will announce a maximum retail price as soon as the companies discuss,” Fernando said. “If they do not comply, the consumer affairs authority can give a maximum retail price. But I hope they will act to the benefit of the consumer.”
The threat for priced controls on cement, where large volumes are made with imported clinker comes as other building material prices are kept high to protect domestic businesses.
Colombo think-tank Advocata has said that building material oligopolies have emerged due to import restrictions, and has resulted in anti-competitive practices in the Sri Lankan market.
A key reason for high costs was import protection given to tiles, aluminium for steel and cement.
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“Sometimes, they sell a bag of cement at 1,950 even though the maximum retail price is 2,400,” Fernando said. “Therefore, within 400 rupees, they can sell more to any customer. So therefore, the representative or the hardware can earn an unnecessary income.” (Colombo/Jun4/2024)