Import tax concessions hit pepper exports | Daily News


Auditor General: stop low grade pepper imports

Import tax concessions hit pepper exports

The import of pepper from Vietnam, Indonesia and India under special tax concessions and at lower prices during the harvesting periods has depressed the price of pepper in the local market, while export demand has declined by 77 per cent, the Auditor General’s Department has observed.

The AG in his latest report on ‘pepper cultivation and market in Sri Lanka’ observed that tax concessions had been granted for pepper imports without taking into consideration the harvest of pepper in Sri Lanka, import market and the surplus over consumption. The report highlighted that a surplus of pepper was observed in the local market due to increased imports and that this was a reason for the drop in the price.

The AG’s special report has recommended suspending the import of low quality pepper to the country.

“Even though the price of black pepper at local market was between Rs 1,200-1,400 per kilogram in 2015, the purchase price of black pepper remains between Rs 600-800 per kilogram at present. It was identified that the pepper imports have marked a significant increase lately, whilst the pepper exports to the Western and Middle East countries, which pay higher prices, had marked a decline. Further the Government or Import and Export Control Department had made no sufficient intervention to streamline the imports and exports of the country,” the report pointed out.

The total volume of pepper imported in 2018 was 3.39 million kilograms. Eighty percent of that volume had been imported from Vietnam, Indonesia and India.

“It was observed that pepper had been imported during the period from November to December and April to July, which are the harvesting seasons of pepper in Sri Lanka. Accordingly 2.5million kilograms had been imported between August and December, 2018. That amount held 74 percent from the total pepper importation in 2018,” the report noted.

“The demand from 18 Western and Middle East countries for Sri Lankan pepper had marked a decline by 77 percent in 2016 compared to 2015 and again by another 40 percent in 2017 compared to 2016. It is necessary to win these markets again. Nearly 85 percent of the total pepper exports had been to India at lower prices. Even though Sri Lanka has exported pepper to Vietnam in the past, pepper had been imported to Sri Lanka from Vietnam since 2016,” the report added. The report also highlighted that ‘Hayleys Free Zone Pvt Ltd’, an integrated logistics and entrepot trading company operating within the Katunayake Export Processing Zone, had re-exported 2.6 million kilograms of pepper in 2018. The bulk importation of pepper by the company had been from Vietnam enjoying various tax concessions. The report noted that the bulk importation of pepper had led to a decline of pepper prices in the local market.

The AG recommended a thorough supervision on pepper re-exportation within the harbor premises by private companies. It also highlighted the need to check the certificate of origin mentioned in those stocks. 

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