Tea promotional cess finally at disposal

he much-awaited utilization of ‘tea promotional fund’ is expected to be put into its intended use before the end of this year, as 50 percent of the fund will be returned to the tea exporters to strengthen their existing promotional campaigns, according to the Plantation Industries Minister.

Started four years ago, the tea promotional budget has grown to become a US $ 50 million (Rs.6.6 billion) fund, but an exporter will have to spend part of the company’s promotional budget in order to obtain moneys from the government.

“Fifty percent of this fund will be at your disposal. You would of course have to spend some of your money to get our money. This is a matching fund that we have put in place,” said Minister Mahinda Samarasinghe.The disposal of the fund will complement with how much an exporter could afford to spend on promotional campaigns. However, the budget will dispose funds up to a maximum of US $ 1 million in the case of a single exporter.

Speaking at the 15th Annual General Meeting of the Tea Exporters’ Association (TEA) last week, Minister Samarasinghe said he would present the Cabinet paper within the course of this month and was optimistic he would receive the approval.

“The Cabinet-appointed negotiation committee has finalized their report and forwarded to me. I am in the process of studying this report and I am hopeful that I would be able to go before the Cabinet within the course of this month.

I don’t see any issues as far as the Cabinet is concerned as we have followed the procedure. I am hopeful that you will be able to start utilizing this fund during the course of this year,” he said.

The marketing and promotions levy of Rs.3.50 per kilogram of tea exports commenced from November 1, 2010, in addition to an existing export cess of Rs.6 per kilogram. But up till now the levy was not put into its intended use despite repeated calls from the exporters for many years.

Minister Samarasinghe’s decision to match the disposal of funds to the company’s own promotional expenditure appears to be a positive move as this will make the companies to earn this money instead of automatically being eligible to receive.

Despite the money is contributed to the fund by the exporters, the government may require to monitor whether the exporters are spending these moneys for the intended purpose.     

Meanwhile, the reappointed Chairman of the TEA for his third term, Rohan Fernando, welcomed the government’s decision and made no complaints on the method of fund disposal.

The tea promotional budget is the largest fund ever had with the Sri Lanka Tea Board and the minister urged the tea exporters to spend the moneys on penetrating new markets as well as re-enforcing the existing markets.

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