Dilrook Kannangara

Sri Lanka is in a foreign exchange crisis. It has short term and long-term reasons. In 1977 when the economy was opened, it was done in a haphazard way. Due to those deficiencies the nation faces many nasty consequences. A powerful, wealthy, criminal and anti-national import mafia has been created. They import anything they like from narcotics to bombs. It is time to wrest control of the imports industry and fix the largest national security loophole in the country.

How Did We Get Here?

After winning the 1977 election on the promise of opening the economy, the government simply did just that. There was no planning, no phasing and certainly no national economic policy underpinning the opening of the economy. Within years the government realized it had opened floodgates and so many nasties crept into the country while it bled the foreign reserves dry. However, the import mafia is a very powerful, rich and influential group that dictated terms to the government. As a result, no government was courageous enough to take them on. A vain attempt was made by President Premadasa without much success.

The import mafia falsify cost of consignments and avoid paying their due taxes, hide narcotics and even bombs within falsely declared goods imported, falsify documents to import banned or restricted imports and engages in many other anti-national and criminal activities. It is not the Central Bank or the National Economic Commission that determine the exchange rate policy and trade deficit management. The import mafia decides all these! Sri Lanka’s imports are roughly twice the value of exports.

Way Out

All import activities must be carried out by a state corporation based on submissions from businesses and consumers. No one else must be authorized to import anything directly. This obviously excludes gifts and small imports made for consumption. Simply by introducing such a mechanism would eliminate most illegal imports and unnecessary imports saving billions of dollars annually. It will put the state in a position to claim the correct amount of import taxes and monitor income taxes and VAT as well. It will close a huge loophole in national security and the national economy. At the very least, restrict the number of entities who can import to entities and individuals the government can trust.

It will also allow the true protection of local industries that need protection.

It will ensure Sri Lanka honours trade agreements with other nations and take retaliatory action against nations that do not allow favourable access to Sri Lankan exports.

The government is leaving no stone unturned in looking for ways to get more foreign income. However, a dollar saved is a dollar earned. Saving the wastage of forex is the easiest and most effective way to overcome the crisis in the short and long run.

In addition, it will weaken the anti-Sri Lanka political camps including the separatist camp, the underworld and extremists which mostly rely on the import mafia for funds.

There are existing agency contracts with local businessmen but these can be easily updated to include the government as genuine overseas suppliers are not bothered about personalities. And there are always substitutes.