BOI orders Hayleys Free Zone to re-export cargo before 12 August

Friday, 26 July 2019 00:14 -     - {{hitsCtrl.values.hits}}



  • All hub operators also prohibited from importing waste for re-export or any other process 
  • Says resources recycling not allowed under local Entrepôt trade regulations 
  • Recalls BOI told Hayleys to suspend all future shipments on 26 Jan. 2018  
  • BOI in process of developing new guidelines in consultation with stakeholders

The Board of Investment (BoI) yesterday said it has directed Hayleys Free Zone Limited to re-export the cargo remaining in the Katunayake Export Processing Zone on or before 12 August, and also prohibited all hub operators from importing post-consumer materials for re-export or any other process. 

The BOI in an extensive statement also said it had on 26 January 2018 warned the Hayleys Free Zone Limited to suspend future shipments of used material, re-ship all such cargo in one month, and suspend all such imports without prior approval from the BoI and the Central Environmental Agency (CEA). 

The full statement by the BOI is given below.  

The Commercial Hub Regulation enable the Hub Operators to engage in five business activities, inter alia, Entrepôt Trade - involving an import, minor processing and re-export and Logistic Services - such as bonded warehouse, or in the case of  operation of Multi Country Consolidation (MCC) in Sri Lanka.

The import/export process is done through a Synchronised Operational Procedure outlined in the DOPL 934 of 7th July 2014 issued by the Director General of Customs in terms of item No. 4 of the above Commercial Hub Regulation, and is duly complied with, by the Board of Investment and the Sri Lanka Ports Authority. 

Although the above regulation enables the Hub Operators to import, store, process and re-export cargo on NFE basis, it is also subject to restrictions and prohibitions imposed under Schedule B of the Customs Ordinance on importation of goods. Schedule B stipulates among others, that importation of any article which is prohibited by any enactment, or any legal order now in force or hereafter to be enacted, or any rules, regulations, notifications, proclamations or orders made or issued thereunder, is prohibited. Further, Post-consumer materials are prohibited in terms of the National Solid Waste Management: Policy & Strategy of the Central Environmental Authority.

It is understood that media reports refer to two different batches of cargo containing post-consumer material brought into the Port of Colombo. The BOI and the Commercial Hub Operation pertains only to one such batch of cargo that has been consigned to and cleared by Hayleys Free Zone Limited (HFZL) to their facility located within the Katunayake Export Processing Zone, to which 130 Nos. of 40’ containers consisting of used mattresses, used carpets etc. were cleared, under the Commercial Hub Regulation. Although the Entrepôt Trade permits importation and minor processing, it does not encompass any kind of resources recycling activities. If any such activity is to be performed by a Hub Operator, explicit written approval must be obtained from the BOI and the Central Environmental Authority. 

The HFZL has engaged in separating the components of the used mattresses, sofas etc., and compressing them for re-export to different manufacturing industries, which tantamount to resources recycling activity. As such, the BOI has on 26 January 2018 directed HFZL to:

suspend all future shipments of used material with immediate effect;  

re-ship all such cargo within one-month; 

ensure that the cargo is not getting wet and infiltrated with surface or surface run-off to the surrounding areas; 

obtain prior approval from BOI for any value addition process to be performed;

suspend import of all post-consumer waste/material without prior approval of the CEA.

The HFZL has agreed to abide by such directives. Subsequently, 29 containers, i.e. 25 x 20’ containers and 4 x 40’ containers have been re-exported while the remaining cargo is still lying at the HFZL premises, in spite of such written commitments given.

Having taken note of the above, the BOI has given explicit directive to HFZL to prudently resolve and re-export of the remaining cargo on or before 12 August 2019.

Further, a directive dated 24 July 2019 was issued to all Hub Operators prohibiting with immediate effect, importation of post-consumer materials by any company for the purpose of re-export or for any other purpose, and engaging in any Resources Recycling Activities of any form.

BOI will take stern action for any non-compliance of its directives. In the same tenor, action will also be initiated for any lapses on the part of BOI.

BOI further wishes to clarify that the Commercial Hub Regulation does not permit or enable howsoever, to import and recycle, co-process or dispose any form of waste or garbage, as alleged by some parties. It is also clarified that the Commercial Hub Regulation and the Sri Lanka – Singapore Free Trade Agreement (SLSFTA), which came into effect on 1 May 2018, has no connection whatsoever. In any event, the allegation that the SLSFTA enables importation of waste & garbage to Sri Lanka is baseless. 

The BOI is in the process of developing new guidelines, in addition to improving the prevailing ones, in consultation with all relevant stakeholders.

Contrary to the allegations and misrepresentations made on the Commercial Hub Regulation, the BOI opines that the regulation was a positive measure taken by the GOSL to use our strategic location, connectivity, optimum utilisation of Port facilities through prudent and simplified procedures, thus improving Sri Lanka’s overall competitiveness.