Wednesday Sep 25, 2024
Wednesday Sep 25, 2024
Thursday, 9 October 2014 00:00 - - {{hitsCtrl.values.hits}}
As latest transhipment volumes topped a whopping 3.2 m, Sri Lanka’s apex export body EDB lost no time and started to leverage the country’s historic free and bonded port declarations on 2 September, promptly joined by enthusiastic private shippers. Furthermore, the country’s second private sector free zone is now live.
“The July 2013 declaration of three free ports and three bonded zones has strengthened President Mahinda Rajapaksa’s committed hub vision for Sri Lanka. More importantly, we realise that it’s a major turning point for the Government’s $20 b export target,” said EDB DG Sujatha Weerakoone.
She was addressing the EDB’s maiden venture on global entrepôts and freeports, titled ‘Entrepôt Trade as a Service Export’ session held at the EDB on 2 October in Colombo. Taking part in the pioneering session by EDB were DoC DG R.D.S. Kumararatne, EDB Export Services Director Saman Maldeni and reps from Customs, the BOI, Logistics Shippers Academy, JAAF, SLFFA Cargo Services, SLPA, CL Synergy Ltd., Hayleys Free Zone Ltd., Expo Lanka, Expo Lanka Freight Ltd., Expo Lanka [EGDC]) and GL Synergy Ltd. The EDB functions under the Ministry of Industry and Commerce.
Due to its strategic placement in the Indian Ocean, Sri Lanka has historically been an entrepôt of sea trade, linking East with the Middle East, West and Africa. In present times, record tax benefits have been approved under commercial hub regulations of Sri Lanka’s Finance Act of 2013 for five major activities – entrepôt trade, off-shore business, front-end-services, headquarter operations, and logistics services.
In July 2103 the Government declared Colombo and Hambantota ports and Mattala MRIA Airport as ‘free ports’ and three EPZs (Katunayake, Koggala and Mirijjawila) as bonded zones. These tax exemptions for them are in addition to exemptions given under Customs Ordinance, Import and Export Control Act and the Exchange Control Act.
“We are among the top 50 ‘container ports’ in the world. Today when we talk of entrepôt trade in Sri Lanka, we are talking of something more than the traditional ‘entrecotes’ trading post – in fact, this is about a customs area,” said DG Weerakoone.
“It appears that entrepôt transhipments have another key advantage; in that, it is a faster way to link our SMEs to global trade. For example, most of the revenue in Singapore and Dubai are from SMEs. I believe the upcoming Lankan entrepôts can easily perform minor processing of imports and re-export without any change in Country of Origin, so our FTA exports are not at all affected. Entrepôts ask for only little resource commitments, and we can gain considerable forex earnings without any major investment outlays and from minimum resource commitment, which is our biggest export advantage through entrepôts.”
Sri Lanka currently ranks at 32 in World Shipping Council’s (WSC) top 50 world container ports, placed just below Saudi Arabia’s Jeddah (30) but ranking above Sharjah (in UAE at 35), and Nagoya (in Japan at 45).
Sri Lanka Ports Authority Chief Manager – Marketing and Business Development Upul Jayatissa revealed: “Our increasing transhipments show that it’s time we operationalise entrepôts in a big way. Even our Colombo container transhipment volumes have increased in January-July by 15.2% to 3.2 million. The number of containers coming from Bangladesh alone increased by 53,000 in the same period.”
“Entrepôts do not involve complex and difficult customs procedures. Entrepôts are free from all taxes and duties, while Country of Origin of the transhipped products will remain unchanged,” stressed Customs Director M.M.M. Rishafy, in his presentation.
“Entrepôts are ideal for computer accessories, chocolates, chemicals, cosmetics, watches and even yarn; this is where SMEs come in. Our April-September 2014 entrepot shipments totalled 231. In April-October 2014 to date, 231 shipments under entrepôt trade have been recorded by Sri Lanka Customs, and entrepôt shipments for August alone at 46. Our total entrepôt trade value (imports CIF and export FOB) for the same period stands at $5.4 million. What is important to note here is that these values are reported on their own since the July 2013 announcement; these strong numbers are reported despite no significant or major international promotion or marketing of our entrepôts since July 2013. This initiative can also help in boosting our global container port ranking.”
Reps from top shipping and freight forwarding agencies enthusiastically joined EDB’s 2 September initiative. “We believe support for entrepôt zones such as ours will help boost national export levels,” said Hayleys Free Zone Ltd. (HFZL) Director Amal Rodrigo. “Credit should go to the Government for enabling the setup of free zones to promote international trade.”
HFZL opened for business on 11 September and is Sri Lanka’s second private free zone, the first being the Expo Global Distribution Centre that started shipping this May.
