Imports are an essential component of trade and it is vital to have an efficient import section to create value and take the economy forward. The process needs to be electronically supported to ensure seamless operation and be competitive in making it more efficient and effective to meet global standards, Chairman, Ceylon Chamber of Commerce, Import Section, Delano Dias said.
“Measures taken to reduce human intervention in the import process will benefit the sector. The import sector is looking forward to the implementation of National Single Window program and also the full implementation of National Export Strategy which will have positive impact on it. It is necessary to upgrade technology to provide a business friendly environment,” he said in an interview with Business Observer.
Excerpts:
Q. What is the role played by the Import Section of the Ceylon Chamber of Commerce?
A. The Ceylon Chamber of Commerce (CCC) which is a gathering of traders and industries is the most prominent and oldest Chamber existing for over 180 years. It recognises the key role played by the import trade for the national economy of Sri Lanka. As a result an import section was created 85 years ago. This is not a trade chamber but a part of CCC. This is the importance given to the import section by the premier chamber. The Import Section specifically looks at imports and trade and acts as a voice of the sector.
Q. What progressive action has the Section taken over the past few years?
A. We have monitored the laws and regulations impacting the import trade and have worked closely with the government border control agencies such as Sri Lanka Standard Institute to ensure importers do not get in to difficulties in liaising and operating when obtaining services. We intervene on a policy basis. We are a collection of importers and exporters doing genuine and ethical business. We represent a genuine section of trade which pay taxes, duties and levies to government and operate in a legal manner. We operate above board with all border control agencies in a professional and friendly manner. It there are any issues, the Import Section intervene on policy.
Q. How has the Import Section transformed over the years to its present level?
A. Eighty five years is a long period and the Import Section has evolved into a significant force within the CCC because of the work we do on a regular basis. Possibly early involvement of the Import Section was on issue basis. Today, the Import Section is involved with policy work with government authorities where it contributes in formulating policies because import trade is an ethical player in the value creation in the industry and trade.
From proposing policy changes to associating regulation improvement, Import Section facilitates better a business environment in Sri Lanka. The main chamber is committed to liberalization of trade and we are an integral part of the liberalization process. We are committed to improve Ease of Doing Business index and are working closely with the government border control agencies to come up to required changes in their business outlook and facilitation.
We firmly believe and work to get the National Single Window (NSW) program implemented as soon as possible. We are also working towards successful implementation of electronic business portal, electronic signature and promoting e-commerce platform. The NSW will ensure a transparent and efficient working environment for both exporters and importers. We are pushing towards electronically done transaction process for seamless operational capability. This is to have less human intervention at the border control agency level.
Q. How has the rupee’s depreciation impacted the Section?
A. Performance of imports in general has seen a decline in the first half of this year. There has been a major slow down in imports following the steep depreciation of the rupee. The devaluation of the rupee has been due to external factors. Consequent to that devaluation of Sri Lankan rupee it has reduced imports as most of the imported products prices were increased and naturally ensured a decline in consumption. The Easter Sunday attacks has also had an impact on imports.
Q. What are the key items imported to the country and its performance this year?
A. The import of items could be categorised into three basic sections such as consumption goods, intermediary goods and capital goods. The biggest part of imports comes from intermediary goods which are used in value creation.
People have a general view that most imports consist of cheap toys and eatables. This is not so. Imports are critical for the national economy because the bulk of it, in the form of raw material and capital goods, goes for value creation. Performance of imports in general has seen a decline in the first half of this year.
The devaluation of rupee has impacted on this decline. The consumption goods recorded a sharp 30 percent slowdown principally due to the 60 percent increase in vehicle prices. This saw a quick response from the consumers. Food and beverage imports too went down.
There is a 24 percent decline in total imports in the first half of this year. The intermediary goods recorded flat growth. The fuel imports also declined. Due to various factors imports declined in the first half compared to last year.
Q.What are your suggestions to the government to improve the related business environment? What reforms should the Import Section advocate with regard to the legal framework?
A. We understand the need of effective short term measures to curtail imports on national requirement. We also want the government to review these actions and take corrective measures. This will ensure that impact of the measures taken to relax once the need is met. There is a need of the economy to liberalise the strict action taken to create a normal situation for imports to continue.
It is necessary to amend the regulatory framework where appropriate. A lot of work is being done by the Ministry of Development Strategy and International Trade. It is important to make the policies more business friendly and to facilitate a business friendly environment. In that there are a lot of desirable reforms in age old Acts such as the Food Act and regulations governing the import sector which has a direct affect in its operational process.
This will facilitate the trade and industry to grow to its full potential improving efficiency and reducing cost making the country more competitive in the international market. If we could implement the National Export Strategy to its full potential, certainly import trade will also benefit adding value in the operational process.
It is necessary to fast track policy reforms and improve regulatory framework to facilitate and support to improve business environment. It is also vital for these measures to be put in place to reduce the cost which will have a positive impact on ease of doing business index.
Q. What is the Import Section contribution towards a better trade practice?
A. Over the years import section has got involved with the regulatory framework studying and educating its members with a view to promote transparent and ethical business practices.
We work closely with the related government institutes on a regular basis to improve rapport with the key persons of these institutions towards improving the understanding and building working relationships towards obtaining efficient service from them.
Q. What are the knowledge and capacity building programs conducted by the Section?
A. The Import Section organises seminars and workshops on key topics for member companies at large from time to time. These capacity building efforts are directed at finding ways and means to reduce the manual intervention in the operational procedures and to highlight the importance of having an electronic process to ensure seamless operation of activities.
Q. What are the challenges faced by the Import Section and what is the way forward?
A. The main challenge faced by the Section is the policy inconsistency and sudden changes to the existing laws and regulations. The changes to tariffs and rates are done without proper lead times or concurrence of the trade. It is essential to conduct a dialogue before making any changes to the current process.
The authorities should have a cordial dialogue and should make the changes effective in consultation with the trade chambers. We should work towards building confidence in the minds of officials with regard to the importance of import trade to the national economy. We should be given an opportunity to get involved in advisory capacity in jointly proposing amendments and improvements.
Q. In your view, what will be the position of imports in the next five years?
A. As you know imports will be a very sensitive topic with much talk about import substitution and protectionism. The imports are also sensitive to demand for exchange and it will be more challenging to perform under fluctuating exchange rate. There will always be a dip in imports when the rupee depreciates.
This is not an easy or positive scenario. But, if there is a continuous decline in imports it will not be a healthy situation because there may be a reduction in essential imports for value creation. There will be ups and downs in the imports due to cyclic nature and what is relevant is to consider the national requirement on timely basis.
Q. What are your plans for the Section during your tenure?
A. I will take measures to pursue the progress made so far. The Import Section will be advocating for a new Customs ordinance.
To this end substantial input has already been provided. We will pursue key trade facilitation measures to improve the process to be more efficient and effective.
Serious thought has been given to create a mindset among the related parties that imports are an integral component of trade and importers are doing a genuine and an ethical business contributing towards the progress of the economy of Sri Lanka.