- Vitamin, Protein Boosters, Also Impacted
Jobs of some 90,000 employed in the Cosmetics and Nutraceutical trade are at stake due to the Government increasing the cess of such imports from Rs. 200 to Rs. 350 from last month as per a budget proposal, Sri Lanka Cosmetics and Nutraceutical Traders Association (SLCNTA) Chairman Ahamed Rheyas at a meeting on Sunday said.
That means if five tubes, each weighing 200 grams of such a genre are imported, then the new cess liable is Rs. 350, he said. The new cess rate applicable is either Rs. 350 per kg. in the import of such cosmetics and nutraceutical products or a cess of 35%, whichever is higher.
The meeting was convened to discuss the new cess rate.
Rheyas further said that even supplements such as proteins and vitamin boosters, classified as nutraceuticals are subjected to this new levy. The Government wants people to eat soya instead of imported protein boosters, he said.
But when this reporter pointed out the impracticality of this move when considering certain health cases, he said that they would be meeting Director General of Health Services Dr. Ajith Mendis over this issue.
SLCNTA Secretary Priya Dissanayake said that the elevation of this cess was ostensibly to protect the local industry. He however said that they don’t compete with local manufacturers.
“The market that local manufacturers cater to, and the market that we importers cater to are two different markets,” he claimed.
But if the Government wants to promote the tourism industry, it must also encourage brands, Dissanayake said.
A tourist won’t buy an unknown cosmetic, he said. Part of the reason why the tourism industry in countries/states such as in Malaysia, Maldives and Dubai developed was by encouraging international brands into those territories with little or no duty charged, said Dissanayake.
A suggestion made by them to incorporate in budget 2011 was to allow easier access of brands into the local market, but that wasn’t approved by the authorities, he said.
Otherwise there may be a danger of inferior, locally manufactured products flooding the market, he said.
To ensure quality of local products they must compete with imported products, Dissanayake said.
Reyas further said that the new cess would lead to the smuggling of such products into the country via one’s personal baggage, leading to a loss in Government revenue. “It’s better to have a low import tax regime like what the Government introduced to the vehicle industry last year, where on economies of scale Customs was able to increase revenue, than a higher tax regime which ultimately retards Government’s tax revenue streams,” he said. Added to that a simplified tax regime is even better.
Reyas alleged that in India corruption has decreased because of the lowering and the simplification of its import tax regime.
Meanwhile Sri Lanka Customs daily revenue is estimated at Rs. 2.8 billion of which Rs. 1.5 billion is contributed from vehicle imports.
Reyas who is also the Chairman of the Harcourts Group of Companies, among the top five companies in the Rs. eight billion pharmaceutical industry, estimated the value of the Cosmetics and Nutraceutical trade at Rs. five billion, whilst predicting that it will soon overtake the pharmaceutical industry because of people’s desire to look good, young and pretty.
Dissanayake said that the cosmetics industry per se which was valued at Rs. 500 million was growing at the rate of 26% annually. Women between the ages of 16-32 are more concerned about their looks than food, said Reyas.
They would rather sacrifice a meal and buy a cosmetic that would help remove their pimples, he said. This also applies to garment factory girls. Now this has spread to even those who are between the ages of 40 and 60, with men too becoming particular about their looks, wanting to look young, he said.
A workshop they had on beauty at Kandy on Sunday was fully taken-up.
Reyas’s statement was also complemented by Dr. Ravi Liyanage, Chairman Raigam Group of Companies, which is also into the cosmetics business. He said that people are more concerned about their appearance than food, when this reporter asked him how successful would the sale of his new range of shampoos be in the context of the rising cost of living (see last week’s The Sunday Leader issue).
Liyanage further said that the number of clothing retailers that had opened-up in and around Kiribathgoda in recent times bore testimony to the fact that people were more conscious about how they looked rather than filling their stomachs.
Additionally the cosmetics industry supports 58,000 saloons, said Dissanayake.
Reyas further said that newspapers have misunderstood a Cosmetics, Devices and Drugs Authority (CDDA) directive which has said not to allow any advertisements of pharmaceutical items unless those have been registered with it. Newspapers, possibly due to their ignorance, as a result have even stopped accepting advertisements for nutraceuticals as well, but regulating nutraceuticals have not been mandated to the CDDA, though such legislation is in the pipeline, he said. As such publishing advertisements in the media promoting nutraceuticals is not an offence, said Reyas.