Trade Policy

Sri Lanka, the pioneer in the free market economic reforms in the South Asian region embarked on a programme of liberalizing its economy in 1978 by introducing fundamental reforms in the broad areas of investments, fiscal policy, tariffs and exchange rates. Sri Lanka is currently known to be the most liberalized economy in the entire region of South Asia. Series of unilateral measures implemented during the past, which resulted in rationalization and simplification of the country’s tariff structure to a large extent.

Today, tariffs and other border levies act as the key tools for regulating the foreign trade regime of Sri Lanka, while there are no other barriers or controls such as licensing and quotas on either imports or exports. The tariff policy of the government aims at providing a transparent and predictable framework for all stakeholders in the foreign trade sector.

Based on product categories, currently, Sri Lanka maintains the following 5-band tariff structure.

1. Essential goods 0.0%

2. Intermediate products 15.0%

3. Basic raw materials 2.5%

4. Other finished products 28.0%

5. Semi-processed goods 6.0%

Sri Lanka has granted preferential tariff benefits to a wide range of products imported under the Indo-Sri Lanka Free Trade Agreement, Pakistan-Sri Lanka Free Trade Agreement, South Asian Free Trade Area and Asia-Pacific Trade Agreement

Being a pioneer member of the World Trade Organization (and also one of the founding members of the GATT), Sri Lanka remains fully committed towards pursuing a rule based multilateral trading system that will ensure a transparent and predictable trading environment to the international business community.

The progressive liberalization of the economy during the past two decades has resulted in a business friendly environment. The private sector is recognized as the engine of economic growth with the role of the state being to provide an institutional framework wholly supportive of private sector participation in development activities.

The trade policy objectives of Sri Lanka include moving towards a more outward-oriented trade regime, strengthening and increasing overseas market access for Sri Lankan products, and further integrating Sri Lanka into the global economy. These objectives have been pursued through multinational, regional and bilateral trade negotiations. Policies have been aimed at enhancing production and productivity through a continuous process of economic reforms, with a view to promoting a more efficient allocation of resources, while improving the environment for private domestic and foreign investment. Special stimulation was given for private investments and export oriented activities. As a result, Sri Lanka has attracted by the foreign investors and subsequently the volume of foreign investment in the country was remarkably increased during the past two decades.

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COLOMBO STOCK EXCHANGE

Share trading in Sri Lanka commenced in the 19th century, when British Planters needed funds to set up Tea Plantations in Sri Lanka. The Colombo Share Brokers Association commenced trading of shares in limited liability companies in 1896, involved in setting up plantations in the country.

The Colombo Share Market continued operations for almost a century, experiencing several vicissitudes due to political and economic factors during the period. A landmark event in the history of share trading in Sri Lanka was the formalization of the market with the establishment of the “Colombo Securities Exchange (GTE) Limited” in 1985, which took over the operations of stock market from the Colombo Share Brokers’ Association. It was renamed ́Colombo Stock Exchange ́ (CSE) in 1990.

The CSE is a company limited by guarantee, established under the Companies Act No. 17 of 1982 and is licensed by the Securities & Exchange Commission of Sri Lanka (SEC). The CSE is a mutual exchange and has 15 full members, 6 Trading Members licensed to trade both equity and debt securities. All members are licensed by the SEC to operate as stockbrokers. All members are corporate entities and some are subsidiaries of large financial institutions.

Go to the webpage of CSE www.cse.lk

TEA HISTORY

Tea (Camellia Sinensis) came to be a principal crop in Sri Lanka in the early 1870s’. Prior to 1870s Sri Lanka’s main crop was coffee and no planter showed much interest in tea. The Pioneer of commercial tea cultivation in Sri Lanka was James Taylor who arrived in Ceylon in 1852 to work in “coffee plantations”. In 1869, a leaf disease destroyed the Island’s coffee plantations and estate owners looked for alternative crops. The 19 acre Loolecondara Estate where Taylor did the first commercial planting of tea became the model for future development of the tea industry in Sri Lanka. Other planters quickly followed Taylor. From 400 hectares in 1875, the Island’s tea extent grew to 120,000 hectares by 1900. Today it covers 200,000 hectares in the highlands and southern low land areas of the country. This pioneer period laid the foundation for the gentle green countryside which is characteristic of the tea growing areas of Sri Lanka today.

The first ever tea auction was conducted on 30th of July 1883, by Mr.William Somerville at the Broking House in Colombo. Five lots of choicest Ceylon Tea were offered. The first lot of 999 pounds, described in the catalogue as” Kaboragalla unsorted” was sold and the rest were unsold. Today Colombo is considered the largest tea auction center in the world. In 1873, a small package of 23 pounds was exported from Sri Lanka, formally known as Ceylon, to the United Kingdom. In 1886, the quantity had increased to nine million pounds and the estimate for 1890 was forty million. Sri Lanka emerged as the world’s largest tea exporter in 1990, with production increasing after the re-privatization of plantation management. Sri Lanka’s tea production is around 300 million kilograms, with a share of around 22 percent of world tea exports. Around 20 percent of Sri Lanka’s export earnings come from Tea, which also contributes significantly to government revenue and Gross Domestic Product. The tea industry generates 600,000 direct jobs (and many more indirectly) and is Sri Lanka’s largest single employer.

Ceylon Tea Lion Logo which appears on Ceylon tea packs denotes not only the country of origin but also the quality of Ceylon Tea. Sri Lanka Tea Board is the legitimate owner of the Ceylon Tea Lion logo which has been registered in many countries in the world. The usage of Lion Logo is subject to the following conditions: The Lion Logo can be used only on consumer packs of Ceylon tea; The packs should contain 100% pure Ceylon tea; The brands which use the Lion Logo should be packed in Sri Lanka. Overseas Importers/packers are not allowed to use the Lion Logo on their tea packs even if the packs contain pure Ceylon Tea; The brands which use the Lion Logo should conform to the quality standards set out by the Sri Lanka Tea Board. When you next buy your tea look for the Lion Logo on the pack which is your guarantee for quality pure Ceylon tea.