Entrepôt trading in Sri Lanka does not permit waste recycling: BOI

ECONOMYNEXT – Sri Lanka’s entrepôt trading license does not permit recycling of waste, which is a specialized business requiring separate approvals under applicable environmental and other regulations, Sri Lanka’s investment promotion agency said.

So-called ‘hub operations’ involving the import and re-export of goods with minor processing (entrepôt trade, sending to different countries cargo from one or more countries (multi-country consolidation) or warehousing, without paying import taxes, was permitted from 2013.

Sri Lanka’s Hayleys Free Zone Limited, had cleared 130 containers with used mattresses and carpets for processing and re-export which were consigned to them from 2017.

On July 24, the Board of Investment had explicitly prohibited all hub operators from importing waste (post-consumer materials), processing or recycling them, promising against those who had broken laws.

"Although the Entrepôt Trade permits importation and minor processing, it does not encompass any kind of resources recycling activities," the Board of Investment said in a statement.

"If any such activity is to be performed by a Hub Operator, explicit written approval must be obtained from the BOI and the Central Environmental Authority."

The ‘hub regulation’ did not suspend any other law and any import and re-export is subject to restrictions under schedule B or Sri Lanka’s Customs Law.

"Schedule B stipulates among others, that importation of any article which is prohibited by any enactment, or any legal order now in force or hereafter to be enacted, or any rules, regulations, notifications, proclamations or orders made or issued thereunder, is prohibited," the BOI said.

Waste (post-consumer materials) were also prohibited under the National Solid Waste Management: Policy & Strategy of the Central Environmental Authority.

The BOI said what Hayleys Free Zone, by breaking up mattresses and sofas and compressing them for export engaged in ‘resource recycling’ and they had been ordered to halt such activities on January 2018.

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The BOI directives ordered Hayleys Free Zone to

a) suspend all future shipments of used material with immediate effect;

b) re-ship all such cargo within one-month;

c) ensure that the cargo is not getting wet and infiltrated with surface or surface run-off to the surrounding areas;

d) obtain prior approval from BOI for any value addition process to be performed;

e) suspend import of all post-consumer waste/material without prior approval of the CEA.

Though Hayleys had agreed to the orders, it had only exported 29 containers and the rest were still lying at their premises. They have been ordered to re-export the cargo by August 12. The BOI said reports of another set of containers lying at the port was a separate issue.

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