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Detrimental effects of upward revision of SLPA Tariff – Country’s export targets could be badly hit!!!

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Initiative of upward tariff revision by the SLPA   has become a controversial matter raising many concerns of exporters/importers during tough times where Sri Lanka is trying to find their position back in the world map as a competitive exporter. However, the SLPA seems adamant to go-ahead with this implementation disregarding the concerns raised by the industry sources revealed. Though the players who are engaged in the international trade continuously insisted that, rates remain unchanged, it is unfortunate that the Authorities are still trying to act in favor of the upward revision.

A tariff revision was imposed effective from 1st January, 2019 without any prior notice given to industry. This caused confusion, inconvenience, disruption of business & losses to the trade. Eventually when the matter was raised, it was agreed upon to take necessary action in order to revoke the Cabinet decision. This resulted in the former tariff (which was prior to 01st of January 2019) was re-implemented effective on the 07th of February 2019.  Industry argued that the additional tariff amounts charged, have not yet been refunded to the traders by the authorities. While incurring loss of the tariff charged during this period, now the industry has to get ready for the next upward tariff revision. Industry perceived this as a unilateral and arbitrary decision taken by the SLPA in a situation where they are enjoying the financial benefits of the rupee devaluation as well.

A consultation process has been conducted with the representation of Ceylon Chamber of Commerce, National Chamber of Exporters, The Shippers’ Council, The Ceylon Association of Shipping Agents, Sri Lanka Logistics & Freight Forwarders Association, Joint Apparel Association Forum, Association of Clearing and Forwarding Agents, Ceylon Freight & Logistics Association and several product Associations.  The stakeholders keep compelling and pointing out the adverse effects that can be emerged from this decision and the anticipated long-term disadvantageous impacts have also been highlighted. It was advised to the industry to provide a detailed analysis on the impact of the upward revision considering the last 20 years trade statistics and the sources of the industry stated that it is not practical to collect data and analyze due to its complexity and further they questioned the relevance to do such detailed calculation to understand the impact of any cost increase of this nature.

Industry sources pointed out that the tariff is paid in US dollars and, although SLPA’s US dollar rates have not increased during last period, exporters (and importers) have had to pay a substantial increase in rupees due to the depreciation of the Rupee. During the past ten years the Rupee has depreciated by 41.4% which means tariffs also have been increased by the same rate.

Having inquired from the EDB on this move, spokesperson said that being the apex organization to develop and promote exports, the Export Development Board (EDB) is very much concerned on the influence that can happen to the competitiveness of the export products, by this arbitrary rate increases.

It was also highlighted that there lot of imports are done as parts, accessories and raw materials for exporting products and increase of SLPA rates will also impact the competitiveness of these products.

Moreover exports are already hit by drought and power cuts and on top of those issues this rate increase will become rubbing salt on the wound. Spokesperson also indicated that EDB wishes to open this matter for a further discussions publicly considering its severe impact on the trade and importance of resolving the matter fast to ensure the smooth functioning of the trade as Sri Lanka cannot afford to loose any momentum as they could hamper the export targets of the country and also the effective implementation of smart strategies such as National Export Strategy – NES. Industry sources reiterated that all its effort to draw up the NES, spending 18 months are going to be wasted with this revision.