Importers face non tariff and invisible barriers

Sri Lankan importers are facing non– tariff and invincible barriers placed by the government on bringing down several essential and semi essential items into the country by indirectly restricting banking facilities and introducing a licence scheme.

Verbal directives have been issued to local commercial banks by high state authorities to reject the bank drafts sent by importers for the clearance of goods which are allowed to import with or without licences, several importers complained.

The aim is to discourage the majority of importers by imposing barriers and providing banking and other facilities to a few leading importers with political connections, they alleged.

Shipping documents for payments for goods in the importation are issued under three different ways such as Letters of Credit (LC), Documents against Payments (DP) and Document against Acceptance (DA).

The commercial banks have been directed verbally by some authorities to discourage the importers to use DP or DA methods as a massive foreign exchange transaction is being carried out legally under these two ways without the knowledge of the Central Bank and control of foreign exchange handling, informed official sources said.

Accordingly these indirect barriers will affect the imports of 175 items including agro chemicals, palm oil, coconut oil, tiles and sanitary ware which are allowed to import under a licence scheme.

Banks have already informed customers to open LCs to import the relevant items but several importers told the Business Times that their requests to open letters of credit are being turned down by the banks claiming that their LC limits and credit limits were not in the required limit.

However they noted that a few large scale importers and traders have been given the opportunity to spend foreign exchange lavishly allowing them to import their goods without any restrictions under LC, DP or DA methods.

Some of them said that they are also facing severe difficulties when they visit the Import and Export Controllers Department to obtain licences to import partially restricted goods due to lack of staff and facilities at the department located at Hemas Building in Colombo Fort.

They noted that this department has to issue licences for various items at present due to ad hoc decisions taken by the government from time to time and its staff cannot cope with the heavy work load.

A leading importer, who is in the business for around four decades, told the Business Times that a large number of importers will have to give up their business under the present environment of favouritism in allowing some favoured parties to handle much needed foreign exchange without any restrictions.