Entrèpot trade to boost export revenue

by Lalin Fernandopulle

Entrepot trade can help Sri Lanka to boost value added exports and achieve the export target of US$ 20 billion by 2016, said Secretary, National Chamber of Commerce of Sri Lanka (NCCSL), Sujeiva Samaraweera.

Sri Lanka has great potential for entrepot trade which could be a very lucrative business provided exporters focus on value added exports. “There is immense scope for entrepot trade with adequate facilities and support from the Sri Lanka Ports Authority and the Customs to promote value added exports”, Samaraweera said.

An entrepot is a trading post where merchandise can be imported and exported without paying import duties, often at a profit.

The ports provide warehouse facilities with cool rooms for the storage of perishable goods. Security and logistical facilities in ports are ideal for entrepot trade. Entrepots were especially relevant in the 19th century and the early modern period when mercantile shipping flourished between Europe and its colonial empires.

Samaraweera said Sri Lanka is a neutral country and is well positioned to support trade in Asia and the African region.

Sri Lanka has a competitive advantage over Singapore, Hong Kong and Dubai which operates mega ports but has high port charges and labour cost. “Sri Lanka needs to move away from traditional exports to value added exports such as green tea if it is to achieve the target US$ 20 billion in the next five years.

A large quantity of Sri Lankan tea is yet exported in bulk form which does not provide a competitive edge over other tea exporting countries. Tea exporters believe that revenue could top US$ 3 billion in the next few years if value added exports are increased.

Exporters are aiming to increase value added exports to around five to 10 percent from around three percent. NCCSL has launched a country-wide program to educate entrepreneurs on the importance of using the Temporary Imports for Export Processing (TIEP) scheme to promote exports.

“Development in the port sector and the promotion of the hub concept will be a huge boost for exporters. The Hambantota port with facilities for air and sea trade in the South would be a unique advantage for Sri Lanka to position itself as a hub for port activities in the world”, Samaraweera said.