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Sri Lankan tea industry opposes govt seizing cess fund

Aug 29, 2016 15:05 PM GMT+0530 | 0 Comment(s)

  

ECONOMYNEXT – Sri Lanka’s tea industry has opposed a reported government attempt to take over a cess fund charged from exports in order to promote Ceylon tea globally, and demanded that if not the cess be suspended.

“All stakeholders of the tea industry express their unmitigated and resolute opposition to the intention, as reported in the media, of the Ministry of Finance to appropriate the funds accumulated by the Sri Lanka Tea Board, which had been collected from the industry for global tea promotion,” a statement said.

The statement issued by the Ceylon Chamber of Commerce said the industry appeals to the government to reconsider “this unfair action” in deference to the pledge made to the tea industry.

It said the government had pledged that the Global Tea Promotion Fund will be used exclusively for enhancing market opportunities for Ceylon Tea worldwide under the stewardship of the Promotion and Marketing Committee of the Sri Lanka Tea Board.

“Notwithstanding the protests of the industry, if the Government intends proceeding with this act, the industry will demand the immediate suspension of the Tea Promotion & Marketing Levy, as it will serve no further purpose,” it said.

The full statement follows:

All stakeholders of the Tea Industry express their unmitigated and resolute opposition to the intention, as reported in the media, of the Ministry of Finance to appropriate the funds accumulated by the Sri Lanka Tea Board, which had been collected from the Industry, for Global Tea Promotion.
 

In October 2010, a Tea Promotion and Marketing Levy was introduced by the Sri Lanka Tea Board, whereby a sum of Rupees Three and Cents Fifty [Rs.3.50] was charged on every kilogram of tea exported from Sri Lanka, to be used exclusively for the worldwide promotion of Ceylon Tea. On the guarantee provided by the Gazette of the Democratic Socialist Republic of Sri Lanka – Extraordinary No 1677/14 dated Wednesday, October 27, 2010, restricting the use of these funds for Tea Promotion, Exporters readily co-operated in this initiative.

 
At the outset, the Sri Lanka Tea Board clearly affirmed that, whilst the funds collected by the imposition of this levy would be administered by the Tea Board, the application of the funds would be regulated by representatives of the Industry. Accordingly, a Promotion and Marketing Committee was established, with wide industry representation. Since then, despite the successive changes in the Government and Ministers, the autonomy of the Fund, which now stands at Rs.6 billion, was consistently respected and the members of the Promotion & Marketing Committee remain unchanged. Due to various reasons there were some delays to implement promotion and marketing plan, but it is now ready to be implemented.

 The objective in establishing this fund was to conduct promotional activities in order to retain existing markets against strong competition from other origins, regain markets lost to competition and penetrate new markets. Subverting these initiatives would spell disaster for the Tea Industry, which contributes significantly to the country’s economy. It would also diminish the vitality of the potent brand “CEYLON TEA”, which had been developed through the concerted efforts of the Tea Promotion Bureau and its successor the Sri Lanka Tea Board and the Industry at-large, over several decades.

Unquestionably, the ownership of these funds, contributed by the Industry for a very specific purpose declared at the inception, belongs to the Industry. An analogy could be drawn to the Sri Lanka Tea Board’s role of administering these funds on behalf of the Industry, as a Bank administers the funds of its account holders. Notwithstanding the protests of the Industry, if the Government intends proceeding with this act, the Industry will demand the immediate suspension of the Tea Promotion & Marketing Levy, as it will serve no further purpose.

The Tea Industry of the country is in an extremely precarious position currently, on account of the decline in world commodity prices and volatile circumstances in many of its key export markets. This will only serve to exacerbate this crisis further. It will also surely imperil the livelihood of the over two million persons directly and indirectly employed by the tea industry, as well as their families/dependents.

We, therefore, appeal to the Government to reconsider this unfair action in deference to the pledge made to the Tea Industry that the Global Tea Promotion Fund will be utilized exclusively for enhancing market opportunities for Ceylon Tea worldwide, under the stewardship of the Promotion and Marketing Committee of the Sri Lanka Tea Board.

The statement was signed by The Colombo Tea Traders' Association, The Tea Exporters’ Association,
Sri Lanka Tea Factory Owners' Association, The Planters' Association of Ceylon, Sri Lanka Federation of Tea Smallholding Development Societies, and The Colombo Brokers' Association.
(COLOMBO, August 29, 2016)
 


 

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