Sri Lanka: Sri Lanka’s government has been urged to simplify the process for registering exporters to make it more effective, as the present system is seen as too cumbersome and time-consuming, and open to abuse.
Although the current registration process was introduced with the intention of identifying and supporting new exporters, its execution severely impedes the achievement of this goal, a new study by Verité Research, a think-tank, has found.
Some of the features of the registration process undermine its aim by making the process lengthy and inefficient.
“The lengthy, inefficient and burdensome process currently in place does more to hinder rather than help Small and Medium Enterprises (SMEs) that are more in need of government assistance to enter international markets compared to larger firms,” the study said.
“The process also imposes an undue burden on businesses, particularly SMEs that are registered as sole proprietors/partnerships and that are located outside the Western Province.”
Rules and regulations that are burdensome and lack a clear rationale serve to discourage businesses from exporting, and therefore undermine the objective the government aims to achieve, it said.
“In this light, the government may benefit from re-evaluating this process to identify how it can be made simpler and more effective in achieving its objectives,” Verité Research said.
“The government can reduce financial and time costs significantly, by rationalising and simplifying the process and making all the relevant information available at a single, easily accessible location (preferably online).”
The study found that the current registration process is unnecessarily lengthy, inefficient and unduly burdensome for sole proprietors and partnerships in comparison to other businesses.
“Many of these unnecessary steps cannot be justified on a rational basis,” it said.
These steps stem from fulfilling the requirements of the registration process at the Export Development Board (EDB), which enables businesses to export.
Registration with the EDB is also a prerequisite for registration with two other government agencies that are central to the export process: the Inland Revenue Department (IRD) and Sri Lanka Customs (SLC).
The Verité Research study found that the current registration process for a sole proprietor and partnership involves a minimum of 10 steps and six different agencies and can take between 1-3 weeks to complete.
Businesses exporting products that require export permits or licenses are subject to an extended process that adds a further 2-4 weeks, increasing the total time taken to register as an exporter to 3-7 weeks.
Verité Research said the present process is burdensome due to its opacity and information paucity given difficulties businesses face in finding information for registration.
“Due to the lack of a single source of information, detailing the entire registration process, businesses are required to peruse every institution’s website and/or visit the agencies in-person to obtain information,” it said.
Verité Research also said the current process is vulnerable to abuse, with some businesses having for the EDB certificate to strengthen their chances of securing a loan, as banks consider an EDB exporter registration certificate as an indication of the credibility of the applicant’s business.