Regional Study on Improving Regional Trade Procedures and Processes: Sri Lanka

Transcription

1 Regional Study on Improving Regional Trade Procedures and Processes: Sri Lanka Suwendrani Jayaratne, Dharshani Premaratne & Deshal de Mel Institute of Policy Studies, Sri Lanka 1

2 Outline - Objectives of Study Trade Facilitation in Sri Lanka Export/Import Processes of Sri Lanka Products chosen for study & Typical Transactions Study Results Concluding Remarks 2

3 Objectives & Methodology Detailed analysis of trading procedures & processes of the identified products Procedures specific to chosen products and companies - Different documentation needs - Times & costs to export/import - SMEs & large - BOI and non-boi companies Identify Bottlenecks & Possible Solutions Detailed steps of processes, actors, documentation & costs acquired by face-to-face interviews with companies & clearing and forwarding agents The Business Process Analysis Guide To Simplify Trade Procedures was used to map the processes 3

4 Trade Facilitation in Sri Lanka Selected Indicators of Trade Facilitation, Country Mean Singapore Bangladesh India Pakistan Sri Lanka Nepal Prevalence of Trade Barriers (1) Burden of Customs Procedure (2) Infrastructure (3) Transparency of government policymaking (4) Irregular payments and bribes (5) Burden of Government Regulation (6) Global Competitiveness Index (Rank) Source: The World Competitiveness Report 4

5 Trade Facilitation in Sri Lanka cont Chart 1: Trading Across Borders Measures in South Asia Source: World Bank, Doing Business 2010 Indicator Sri Lanka South Asia OECD Average Documents to export Time to export (days) Cost to export (US$ per container) 715 1, , Documents to import Time to import (days) Cost to import (US$ per container) 745 1, ,

6 Export/Import Process in Sri Lanka 2 processes: (i) BOI and (ii) Non BOI BOI process for BOI approved companies to speed up licensing & customs requirements - provide an incentive to new investments in the country. Non-BOI process lodge documents through customs, normal process Have to submit a CUSDEC form to clear/dispatch cargo; to be lodged by persons having a CHA license Exports Imports 1. CUSDEC 4 copies 1. CUSDEC form up to 7 copies 1. Licenses and Permits if required 2. Commercial Invoice 2. Shipping Note/Airway Bill 3. Delivery Order 3. Invoice 4. Bill of Lading 4. Packing List 5. Exchange Documents 5. Boat Note 6 Packing List 6

7 Export/Import Process in Sri Lanka contd.. CUSDEC can be lodged manually/electronically Additional fee of US$ 2.5 has to be paid to EDI service provider After lodging CUSDEC have to visit Customs with hard copies Risk Management System - Red Channel, Yellow Channel and Green Channel 7

8 Products Chosen for Study Process Analysis Region Country Product In South Asia India Rubber tyres Export Outside Japan Tea In South Asia India Textile Import Outside SA Japan Motor Vehicles (2 nd hand) Textile Industry : - Garment Exports 40 % of total exports, 73 % of industrial exports & country s largest foreign exchange earner; niche market - 2 nd largest imports (12.2%) ; highest import of textile from SA India Motor vehicles imports: - heavily regulated & subject to ad-hoc changes in import regulations - highest value imports & important for BOP & government revenue. - outside SA, highest MV imports from Japan (31% of total MV imports) Tea exports : - Agriculture exports led by Tea (23% of total agri income) - Japan 8 th largest exp market & largest in Asia Pacific region Rubber Tyres :- important industrial export product of SL (US$ million) -India 7 th largest exp market 8

9 Typical Transactions Studied Tea- export of black (Ceylon tea) in bulk form to Japan in a 40-foot container by sea; 2 companies large & medium Rubber- exporting a 40 high cube container of new pneumatic rubber tyres to India by sea; 2 companies BOI and Non-BOI Textile - bulk purchase of fabric from India in a 20-foot container by sea; 2 companies BOI and Non-BOI Reconditioned Vehicle- Import of a single reconditioned car in Ro-Ro Ships (Roll-On/ Roll-Off ship) from Japan by Sea; 2 companies large & medium 9

10 Study Results Documentation & Agencies to be visited Product Agencies visited - Tea No. of Documents No. of Agencies Tea 24 9 Rubber Tyres 19 7 MV 18 5 Fabric 19 7 (1)Bank, (2) Tea Board, (3) Shipping Agent, (4) Insurance Company, (5) Sri Lanka Customs, (6) Sri Lanka Ports Authority, (7) Fumigation Company, (8) Department of Agriculture, (9) Department of Commerce or Ceylon Chamber of Commerce Documentation- Tea (1) Proforma Invoice, (2)Purchase Order, (3)Commercial Invoice, (4)Tea Export Permit (5) Blend Sheet (6)Fumigation Request Form, (7)Fumigation Certificate, (8) Phytosanitary Request Form, (9)Phytosanitary Certificate, (10)GSP form, (11)Shipping Note, (12)Release Order, (13)Customs Declaration, (14)Bill of Lading, (15)Packing List, (16)Insurance, (17)Cargo Dispatch Note, (18)Certificate of Origin (19) Delivery 10 Order, (20)Assessment Note, (21)SLPA Payment form, (22)SLPA Payment Receipt, (23)Gate Pass, (24)Panel Examination Request Form

11 Study Results Total Export Time for Export Products: Tea & Rubber Activity Minimum (Tea/Rubber) Maximum (Tea/Rubber) Average (Tea/Rubber) Total Document preparation 4 days/ 1.5 days 7 days/ 5 days 6.5 days/ 3.5 days Export Time Total inland carriage and Handling 8 hours 45 mins/ 4 hours 13 hours/ 13 hours 11 hours/ 7 hours Time Total Terminal Handling Time 7 hours/ 7 hours 30 mins 18 hours/ 11 hours 13 hours/ 8.5 hours Total Export Time 4 days 16 hours/ 2 Days 8 days 7 hours/ 6 days 7.5 days/ 4 days and 4 hours 11

12 Costs of Tea Exports & Car Imports Tea Exports MV Imports Activity Cost (US$) Activity Cost (US$) Assembling and preparing documents L/C Cost Customs clearance Ports and Terminal handling costs Inland Transportation & Handling Costs % of Value Assembling and preparing documents 5 L/C Cost 0.05% of Value Customs clearance 22 Ports and Terminal handling costs Inland Transportation & Handling Costs 26 (depends on the area size required for vehicle-square meters) Nothing significant as the drivers of the company drive the vehicles to the showroom Necessity of making informal payments present but unwilling to divulge 12

13 Does Size and BOI/non-BOI status lead to differences? No. of Documents : No differentiation for BOI and Non-BOI or SME/Large Agencies to be Visited: - BOI lodges CUSDEC through BOI service centres in Colombo or EPZs; no visit to Customs long room - Non-BOI CUSDEC submitted to Customs (long room) Processes: - If BOI company shipment is selected for inspection it is inspected at BOI office in EPZ - If non-boi company shipment is selected it is inspected by Customs outside ports 13

14 General Concluding Comments No. of documents & agencies to be visited high but companies seem acclimatized to the process maintaining the current documentation necessary to distinguish genuine importers Key TF Areas that need development 1. Taking forward the computerization and automation of trade procedures 2. Clearance during holidays 3. Better control over rates charged 4. Develop electronic payment system in ports 5. Delays in Acquiring the Necessary Documents - When exporting/importing from India shipments reach the ports prior to the documents Issuance of the Certificate of Origin only after the shipment is been effected leading to delays in clearance; shipping guarantee-additional cost 14

15 Thank You 15