By Madhusha Thavapalakumar
Sri Lanka’s importers who took a massive hit due to temporary import restrictions imposed in March have requested the Treasury to not to extend these restrictions beyond its original three-month period.
The request has been made to Treasury Secretary S.R. Attygalle by Ceylon Chamber of Commerce Import Section Chairman Delano Dias on Wednesday (6), considering the potential of import businesses going bankrupt if the ban is to be extended further.
The Government decided to temporarily suspend non-essential imports in mid-March this year in order to avoid a foreign exchange crisis in the country. On 1 April, this was extended to all types of imports except for pharmaceuticals and fuel. However, subsequently local exporters were provided exemptions to import raw materials necessary for exports. On 19 April, the import restrictions were extended until 15 July and further expanded to include rice, sugar, liquor, flour, and apparel-related products.
The letter requests the Government to not extend import restriction beyond 15 July.
“In the case of most finished goods importers, suspension causes stoppage of operations, sales, and distribution that impact the cash flow of such businesses. Naturally, the staff involved had lost their regular income by way of incentives, causing hardships to all dependents for the next two to three months,” it says.
Speaking to The Sunday Morning Business, Dias noted that the classification of “non-essential” items by the Department of Imports and Exports Control and the Ministry of Finance has been done considering only foreign exchange reserves but not the economic consequences it would have on import businesses. As a result, import-related businesses are enduring significant financial struggles.
“Due to this sudden suspension, our members are burdened with various issues. For example, they cannot delay or reverse their pre-ordered shipments because that is against international shipping conventions,” Dias added.
On a further note, he stated that international supply chains operate with 12-14 weeks of lead times and a sudden disruption of this nature would cause long-term delays in supplies, causing undue stockouts.
A considerable amount of such pre-ordered consignments are stuck at ports, causing more financial issues for importers as they have to pay demurrage costs for shipments that are yet to be cleared from the port, according to Dias. Demurrage charge is an amount payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed.
Containers that are pending clearance at the port have to pay two types of demurrage costs. One is the Port Demurrage Storage Rent Payable to Sri Lanka Ports Authority’s (SLPA) Jaya Container Terminal, South Asia Container Terminal, or Colombo International Container Terminal. Second is the Container Shipping Line Demurrage Payable to the shipping agents for the usage of the container that belongs to the ship.
In another letter to Special Advisor to the President Basil Rajapaksa, the Union of Customs House Agents and Importers President Nujjith Samarawickrama on Tuesday (5) stated that about 20,000 import containers are pending clearance at the port, which is the highest number in the entire history of the port.
The letter requested Rajapaksa to instruct the Minister of Ports and Shipping, Chairman of SLPA, and CEOs of the two port container terminal operators to waive off port demurrages up to one week from the date of the lifting of curfew to facilitate the clearance of the backlog of containers.
The union had also urged Rajapaksa to instruct the Minister of Ports to advise the Ceylon Association of Shipping Agents (CASA) and key mainline ship operators to grant trade waivers on the liner container demurrages for one week since lifting of curfew.
In April, the Ministry of Ports and Shipping announced a full waiver of port demurrage till 13 April 2020 and the recovery of basic port rent from 14 April till 7 May 2020.
Sri Lanka’s imports in 2019 amounted to $ 19.9 billion. On 19 April, the Ministry of Finance suspended importation of 156 products under selected payment methods. Products including sugar and flour are not allowed to be imported under Letters of Credit (LCs), Documents against Payments, and Documents against Acceptances. Further, 111 selected items that include milk and palm oil are allowed to be imported only on a credit basis. It is learnt that these decisions have also impacted importers significantly.
Sri Lanka’s importers who took a massive hit due to temporary import restrictions imposed in March have requested the Treasury to not to extend these restrictions beyond its original three-month period.
The request has been made to Treasury Secretary S.R. Attygalle by Ceylon Chamber of Commerce Import Section Chairman Delano Dias on Wednesday (6), considering the potential of import businesses going bankrupt if the ban is to be extended further.
The Government decided to temporarily suspend non-essential imports in mid-March this year in order to avoid a foreign exchange crisis in the country. On 1 April, this was extended to all types of imports except for pharmaceuticals and fuel. However, subsequently local exporters were provided exemptions to import raw materials necessary for exports. On 19 April, the import restrictions were extended until 15 July and further expanded to include rice, sugar, liquor, flour, and apparel-related products.
The letter requests the Government to not extend import restriction beyond 15 July.
“In the case of most finished goods importers, suspension causes stoppage of operations, sales, and distribution that impact the cash flow of such businesses. Naturally, the staff involved had lost their regular income by way of incentives, causing hardships to all dependents for the next two to three months,” it says.
Speaking to The Sunday Morning Business, Dias noted that the classification of “non-essential” items by the Department of Imports and Exports Control and the Ministry of Finance has been done considering only foreign exchange reserves but not the economic consequences it would have on import businesses. As a result, import-related businesses are enduring significant financial struggles.
“Due to this sudden suspension, our members are burdened with various issues. For example, they cannot delay or reverse their pre-ordered shipments because that is against international shipping conventions,” Dias added.
On a further note, he stated that international supply chains operate with 12-14 weeks of lead times and a sudden disruption of this nature would cause long-term delays in supplies, causing undue stockouts.
A considerable amount of such pre-ordered consignments are stuck at ports, causing more financial issues for importers as they have to pay demurrage costs for shipments that are yet to be cleared from the port, according to Dias. Demurrage charge is an amount payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed.
Containers that are pending clearance at the port have to pay two types of demurrage costs. One is the Port Demurrage Storage Rent Payable to Sri Lanka Ports Authority’s (SLPA) Jaya Container Terminal, South Asia Container Terminal, or Colombo International Container Terminal. Second is the Container Shipping Line Demurrage Payable to the shipping agents for the usage of the container that belongs to the ship.
In another letter to Special Advisor to the President Basil Rajapaksa, the Union of Customs House Agents and Importers President Nujjith Samarawickrama on Tuesday (5) stated that about 20,000 import containers are pending clearance at the port, which is the highest number in the entire history of the port.
The letter requested Rajapaksa to instruct the Minister of Ports and Shipping, Chairman of SLPA, and CEOs of the two port container terminal operators to waive off port demurrages up to one week from the date of the lifting of curfew to facilitate the clearance of the backlog of containers.
The union had also urged Rajapaksa to instruct the Minister of Ports to advise the Ceylon Association of Shipping Agents (CASA) and key mainline ship operators to grant trade waivers on the liner container demurrages for one week since lifting of curfew.
In April, the Ministry of Ports and Shipping announced a full waiver of port demurrage till 13 April 2020 and the recovery of basic port rent from 14 April till 7 May 2020.
Sri Lanka’s imports in 2019 amounted to $ 19.9 billion. On 19 April, the Ministry of Finance suspended importation of 156 products under selected payment methods. Products including sugar and flour are not allowed to be imported under Letters of Credit (LCs), Documents against Payments, and Documents against Acceptances. Further, 111 selected items that include milk and palm oil are allowed to be imported only on a credit basis. It is learnt that these decisions have also impacted importers significantly.