The Tea Exporters Association (TEA) commends the allocation of Rs. 75 million for automation of the Colombo Tea Auctions, a long felt need to eliminate malpractices at the auction and save time and money for exporters.
TEA Chairman Jayantha Karunaratne welcomed the funding through the 2017 Budget for the automation of the auction, a dire need to speed up trade and minimise malpractices. “At present, the Colombo Tea Auction is conducted manually and exporters spend two full days at the auction for purchase of tea leaving only three days to market them,” Karunaratne said. Proposals to automate the tea auction has been in the pipeline for a considerable time.
However, lack of funds had prevented the implementation of the project. “We are pleased that an amount of Rs. 75 million has been allocated while the balance amount will come from Tea Board and the Export Development Board,” the TEA chairman said.
With the development of technology, many tea producing countries have automated auction centers. The tea sector still uses a manual auction system.
Tea exporters welcome the tax concessions, rebates on tax payment based on growth of export revenue and incentives for investment in export sector.
“We commend the steps taken to promote value added tea and the Sri Lanka Tea Board to extend guarantees to local tea exporters to obtain USD loans for brand promotion. Currently exporters are unable to obtain USD loans from banks for brand marketing,” tea exporters said.
TEA commends the abolishing of the Import and Export Control Fee of 1 percent on CIF price of Tea which up to now exporters had to pay a license fee of Rs. 10 per kg for import of CTC and other specialty tea for value addition and re-export.
“We welcome the move to ban the export of ‘Refuse Tea’ , Karunratne said. Exporters will be granted a rebate of an amount equal to the 75 percent of the tax attributable to the excess earnings that arises as a result of an increase of 15 percent or more foreign currency earnings for the year of assessment 2016/17 compared to 2015/16.
However, exporters are concerned of the delay in liberalization of tea imports for value addition and re-export purposes. At present Sri Lanka tea production is stagnating at around 340 million kg per year which restricts our export capacity.
Since there is no proper replanting program, importing of tea is the only option to increase our export volume.
TEA is also concerned over the termination of Simplified VAT system. In the past exporters submitted the VAT statement to IRD but did not make the payment.
With the termination of this system, exporters will have to pay the VAT and claim the refund.
“In our opinion, this may negate the other incentives granted to tea exporters. Since the situation in Middle East and Russia is still bad , the government should defer the termination of SVAT,” they said.