Friday, September 23, 2011

Sri Lanka steps in to tap from global rubber surge

Sri Lanka is moving to reap dividends from the uptrend in the international rubber market. The country is also attempting to promote value added rubber exports and to reduce rubber imports to the country.

“Considering the increase in price of natural rubber in the international market, the cess on export of raw rubber, has been increased from Rs 8 to Rs 12 per kilogram,” Industry and Commerce Minister Rishad Bathiudeen said on Wednesday.

“The cess imposed on rubber exports will serve as a measure to channel more resources to the value added industry by discouraging exports in raw, unprocessed forms” Minister Bathiudeen said.

The Minister was addressing Parliament on the amendment made to the Sri Lanka Export Development Act No. 40 of 1979. The Amendment, by an Extraordinary Gazette Notification No. 1712/23 dated July 1, 2011 increases the cess on export of raw rubber, and was tabled on Wednesday 21 for ratification by the House.

The order under the Sri Lanka Export Development Act was passed by the House on the same day.

The statement tabled by Minister Bathiudeen said: “In recent times, the prices for natural rubber have been in the upward trend in the international market.

The price of a kilogram of rubber, which was around Rs. 348 in January 2010, has increased to Rs 611 in January 2011.

While there is an increasing trend in the export of natural rubber, the government has given priority to the promotion of exporting finished rubber products as a policy.

Considering the increase in price of natural rubber in the international market, the cess on export of raw rubber, has been increased from Rs 8 to Rs 12 per kilogram or 2 percent of the F.O.B price whichever is higher.

In fact, Sri Lanka Association of Manufacturers and Exporters of rubber products has, in a letter addressed to me recently, urged to revise the cess on export of natural rubber to Rs 24 per kilogram. Rubber manufacture is a major component of the Sri Lanka’s economy.

Minister Bathiudeen said, the rubber industry is well established and well equipped with facilities for testing, quality control and research and development.

“Sri Lanka also has an abundance of highly trained chemists, technologists, engineers and technicians, technologically advanced manufacturing processes and sophisticated equipment which collectively enable Sri Lanka to offer high quality products at competitive prices. Despite our tremendous potential to manufacture high quality finished products targeting the end users, a considerable portion of our rubber is still exported in raw form.

The shortage faced by the industry has compelled the importation of raw rubber. Sri Lanka imported raw rubber to the value of US$ 101 Million in 2010 and to the value of US$ 105 million from January to July this year. Last year, Sri Lanka exported rubber in raw form to the value of US$ 170 million and rubber finished products to the value of us $ 567 million. Therefore, clearly, local raw rubber channelled to the industry will save valuable foreign exchange,” he said.
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