ECONOMYNEXT – Sri Lankan government is on the process for new reforms to reduce hassles faced by exporters and boost foreign inflows, President’s Secretary P B Jayasundera said.
Jayasundera, former finance secretary who still has influence over the island nation’s fiscal and economic policies said some agencies including the Customs have been trying to police the international trade instead of facilitating.
“If the businesses don’t feel comfortable in genuine transactions and deals, then foreign exchange cannot be improved. I think there is more restrictions for inflows than outflows,” Jayasudera told EconomyNext in an interview his presidential secretariat office in the country’s old parliament.
“Everybody knows the Customs is a barrier for trade, not the import restrictions. Customs, port, import and export control department have to work out a simple strategy. We are working on it, hopefully much more consolidated strategy will evolve because import, export trade must happen without hassle.”
Many reforms in the Customs have been resisted by the staff in the past. Under the previous government, the Customs and Inland Revenue Department protested against alleged attempts to set up an investigations unit to monitor revenue collection.
Successive governments also have complained over revenue leakages from the Customs, but there had been no effective reforms to arrest such misappropriations.
Other analysts have said high duties, para-tariffs and a negative to give tax-arbitrage profits to import substitution firms give un-necessary incentives to under-invoice and smuggle goods.
Jayasundera, however, said a presidential commission is working on carefully thought reforms to eliminate many restrictions, which have created distortions resulting ill effects in the economy.
“We need much more effective custom administration with a more simple and transparent system of tariff and system of negative list.
“What exporters and importers telling me is that they have to go from pillar to post to do a transaction. Exchange management department has the controlling mind, checking everything.”
Under the new reforms, the government plans to relax restrictive and controlling nature of the state agencies which are dealing with export trade.
“We are like are court houses. Even now, exchange management, bank supervision, import control and customs – these are agencies to facilitate,” Jayasundera said.
“These are agencies not to do investigations. That is a matter for police or bribery commission. Others are essentially regulators whose fundamental job is to create enabling environment to the market to work and not to prevent market improving. That is the weakness we have.”
Jayasundera said Sri Lankans have a “hypothetical fear” that everything is misused and bureaucracy will not make mistakes.
“That’s not true. If the bureaucracy reads the market signal, respect the governance and maintains its integrity, working with market is not corruption. That is the strategy we are looking at.” (Colombo/July29/2021)