By Chandeepa Wettasinghe
The installation of an advanced container scanning system, which has attracted controversy, would take place within the next two to three months, Sri Lanka’s finance minister said recently.
“We will probably start in the next two to three months maximum,” Ravi Karunanayake said at the 12th Ease of Doing Business Forum, last week.
He was replying to a D. Samson Industries (Pvt.) Ltd (DSI) official, who complained that the competitors are importing cheap footwear from China and evading the protectionist Rs.500 per pair import tariff, which increases to over Rs.800 after accounting for logistical costs.
Deputy Treasury Secretary S.R. Attygalle explained that most footwear is imported hidden among other cargo.
“Certain importers, within other goods, they put these things. That’s the problem. It’s not under invoicing or a tax issue. That’s why we want to introduce these scanners,” he said. The scanners, which would replace the current manual customs clearance process, recently, drew criticism from a Customs trade union, which alleged that the scanners would be installed on properties owned by politicians and their stooges to derive commissions per container scanned, instead of placing them at lands belonging to the state. According to a government statement, the scanners would be operated by the private sector. Karunanayake had labelled those opposing the scanner installation as enemies of the public, who would stand to lose out when the sophisticated scanners would enable the government to double the Customs revenue to Rs.1,500 billion. The Customs revenue currently accounts for over half of government revenue.
However, a Customs official who wished to remain anonymous, told Mirror Business that given Sri Lanka’s budget constraints, it would have to procure the scanners, which may not be sophisticated enough to detect some smuggling operations.
The Finance Ministry has so far not provided comprehensive information on the scanner procurement process and where they would be installed.
The World Trade Organisation’s Trade Facilitation Agreement to which Sri Lanka is a signatory, is pushing the country to make its customs clearance process faster in order to save time and costs for traders— an objective which could be partly facilitated through scanners.
Meanwhile, the DSI representative appealed to the finance minister to save the local footwear industry by installing the scanners and adopting other measures.
Economists have noted that by entertaining firms engaged in industries which Sri Lanka has no comparative advantage, the Sri Lankan government is increasing the cost of living for the country’s population instead of releasing the resources to manufacture globally competitive products.