The Export Development Board (EDB) is currently restructuring the existing Temporary Importation for Export Processing (TIEP) Scheme in order to make importation of raw materials for export purposes easier, efficient and user-friendly for small and medium-sized enterprises (SME) sector, The Sunday Morning Business learns.
Speaking to us EDB Chairman Suresh de Mel stated that currently, legitimate export businesses use the TIEP scheme as a mechanism to import goods from another country for 100% re-exporting purpose, however, for it to be used for SMEs, a strong regulating mechanism has to be implemented first in order to protect the scheme from abuse.
“There are several SMEs that are very informal which could abuse the scheme by corrupting the leeway if they do not know how to use the scheme honestly. Therefore, we need to be very careful while restructuring the existing scheme so that it does not affect the legitimate business,” de Mel said.
Explaining further, de Mel stated that there are challenges for operating this scheme as businesses sometimes import goods and mix with the local goods before re-exporting. For example, a TIEP scheme user may import turmeric, mix it with local turmeric and re-export which has an adverse impact on the country as the exported goods would be of low quality.
“Opening up this option for SMEs, we become more vulnerable to this situation. Hence, we are rethinking the regulation and figuring simplified management out of this cumbersome process to benefit everyone involved,” he added.
When inquired by when the TIEP scheme for SMEs will be implemented, de Mel said that it would take time as approval is yet to be taken from the Cabinet of Ministers and other necessary measures are yet to be completed.
Announcing the Budget 2021, Premier Mahinda Rajapaksa who is also the Finance Minister said that the TIEP scheme will be implemented to export high-quality goods through high-value addition to local inputs by providing temporary import facilities for raw materials which are not available in Sri Lanka, spare parts, processing and packing materials, labels, stickers, catalogues and brochures to promote the products of direct and indirect exporters.
Subsequently, the scheme was said to be implemented by the special Export Facilitation Centre established by EDB and Sri Lanka Customs for SME exporters. Inspection of all documents including import/export declarations will be carried out by relevant institutions at this unit.
Further, Rajapaksa also implemented an insurance scheme through Sri Lanka Export Insurance Corporation with the contribution of an insurance premium of 1% of the export revenue to accelerate the financing facilities through export receipt confirmation.
Meanwhile, the objective of the TIEP scheme is to lower the cost of production of export products, improve the productivity of the small and medium entrepreneurs, facilitate storage of inputs and manufactured articles in the exporters own warehouse without placing them in a Customs bonded warehouse and also to support local industries.
According to Sri Lanka Customs, consumables such as catalysts, accelerators, processing chemicals, lab chemicals, research chemicals, retarders of chemical reaction, packing material including labels, stickers and tags to be used for packing the export products, raw materials for the manufacture of such packaging material, export catalogues brochures and raw-materials are the permitted inputs.
After such inputs, the scheme permits the import for processing such as sorting, assembly, packaging and complicated manufacturing in order to re-export again.