By Indika Sakalasooriya
The Department of Foreign Exchange of the Central Bank wants to end its involvement in setting up rates for transshipment containers in accordance with the new Foreign Exchange Act, in the backdrop of government’s decision to liberalize the country’s shipping sector.
To this end, the Department of Foreign Exchange has requested Director General of Merchant Shipping to amend the Gazette (Extraordinary) No.684/9 dated 17/10/1991 to discontinue their involvement regard to establishing new rates for transshipment containers, Mirror Business learns.
The Department of Foreign Exchange has communicated this to the Director General of Merchant Shipping in response to a letter sent by the latter requesting the former’s involvement in setting up new rates for laden containers in the Ceylon Association of Ships’ Agents (CASA) tariff of minimum agency fees.
“We write to inform you that the Department of Foreign Exchange does not involve in industry specific issues at present. Therefore we are not in a position to give approval to issue a circular to the members of CASA establishing new rates for transshipment containers in the CASA agency tariff of minimum agency fees as proposed by CASA by its letter dated 02/03/2017 addressed to you as setting up of new rates is not related to foreign exchange transactions under the Foreign Exchange Act No.12 of 2017,” the letter read.
According to shipping industry professionals, the Department of Foreign Exchange was a key party that guided the shipping industry in setting up transshipment rates under the previous Exchange Control Act.
However, they said, with the absence of government involvement in setting up rates—under the new Foreign Exchange Act—the market forces will decide the rates and this will result in lower rates and greater volumes.
They also said that absence of such government involvement will open up the market for ship owners to play a more active role in connection to transshipments.