NCE, EASL and JAAF welcome market free initiatives to improve export competitiveness
Thursday, 28 November 2013 00:00
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The National Chamber of Exporters (NCE), Exporters Association of Sri Lanka (EASL), and the Joint Apparel Association Forum (JAAF) welcomed market free initiatives to improve export competitiveness in a statement released yesterday.
Following is the full text of the statement:
We are delighted that the 2014 Budget presented to the Parliament by the President on 21 November 2013 has brought redress to the export sector, manufacturers and consumers. This bold and pragmatic policy decision taken has addressed a very long standing grievance of the industry which suffered due to unfair trade practices being used by strong parties.
The grievance of the exporter was the imposition of charges levied outside of the freight contract by various parties in the logistic chain. The origin of this issue traced back to 1990’s where the shipping lines arbitrarily and unilaterally introduced a separate Terminal Handling Charge (THC) which was in fact part of the freight until 1997, where exporters were able to negotiate market driven freight rates.
In the case of FOB shipments, the buyer paid the full freight. Since the imposition of THC in 1997, the importers and exporters are now burdened with over 42 different charges added on outside the freight by the rest of the supply chain services at their own will. The most affected were the SME exporters, garment exporters and the domestic consumer.
The failure was that while liberating the shipping policy, authorities did not introduce a system of checks and balances in the international trade services like in other countries. Exporters continuously protested since 1997 by seeking redress from various authorities to resolve this issue without success.
However, the importing community with no opportunity to seek redress, silently waited and the cost of all imports have increased not only in relation to industrial imports but in relation to essential commodities such as dhal, onion, green gram, garlic, etc. and added those charges in the final cost in the domestic market, which had a direct impact on the cost of living of the people of this country. Agony was that sometimes the concept of zero freight was also used while other charges are collected from the importer.
It is once again President Mahinda Rajapaksa who, displaying his capacity to take bold policy decision in the right direction, has taken the courage, time and the challenge to address this problem.
We are glad that having studied, analysed and with a proper understanding these new directions have been now announced on a fair and balanced judgment by pronouncing to bringing proper legislation to promote the shipping economy in a more structured manner and to prevent the monopoly pricing in the shipping trade.
Introduction of a fully-fledged Merchant Shipping Authority by introducing timely amendments to the Merchant Shipping Act to meet modern demands displayed the wisdom of the Government in identifying the need to harness the full potential benefits of improved connectivity through infrastructure development, far sighted hub regulation and realising all hub concepts enshrined in the ‘Mahinda Chinthana’ – the mid-term policy framework of the Government.
At the same time, in order to curb elements which are hindering export competitiveness, no charges other than freight and specified international charges for container cargo will be permitted to be imposed effective January 2014. Displaying a fair and balanced approach, the Government has recognised that the shipping industry has to be promoted and has offered a substantial tax reduction from 28% to 12% to boost shipping related activities making it at par with export revenue.
We see the clarity and consistency of the policy framework. We are certain that while exporters will benefit, the consumers of essential imported commodities will be in an advantageous position as this measure will have direct impact on the cost of living.
We, on behalf of the export community, would like to place our sincere appreciation and congratulations to the President, the Treasury and all other policy makers, officials and the Government for announcing a balanced, farsighted budget and taking a fair and a professional approach to strengthen the competition laws of Sri Lanka which has been lagging since 1977 when the economy was opened. This will certainly help to eliminate present day anticompetitive practices and bring in discipline and justice to the export sector and address the most long outstanding grievance of the exporters.
