Sri Lanka’s ban on furniture imports while directing state institutions to procure all office chairs and furniture from domestic suppliers manufacturing will hit around 30 local firms, affecting the employment of 2000 people.
Furniture imports other than exclusive furniture for flagship projects have been banned and the procurement of government office furniture will only be from companies that have at least 50 per cent domestic value addition.
Although provisions are included for domestic preference in the Government Procurement Guidelines, the possibility to achieve benefits for the domestic suppliers and companies from those provisions is limited, a senior Finance Ministry official said.
The Finance Ministry will be working to issue the amended procurement guidelines in consultation with the National Procurement Commission, he added.
Import of raw materials for local manufacturing activities is to be permitted, provided domestic value addition is at least 30 per cent and foreign exchange savings from import replacement activity should be higher than the value of import of finished products.
This clause is included in the interim trade and custom based tax policy framework which is part of the COVID-19 Economic Revival Plan of the Government. Large firms use advanced technology for integrated furniture production process, he pointed out.
Local furniture companies and entities with 51 per cent Sri Lankan ownership will get preferential treatment when bidding for Government tenders under the new regulatory changes.
Around 1170 micro small and medium scale carpenters in the Moratuwa cluster are supplying semi finished furniture to the local market but they are incapable of producing quality office furniture in accordance with technical specifications at present.
This wood-based manufacturing sector cannot be upgraded to a domestic import substitution industry without providing these carpenters with necessary modern technical knowhow and financial assistance, an industry official said.
He said that this sector can be upgraded by a comprehensive development programme and improvement in product quality, adding that the up scaling and redefining the small scale is also essential.