Efficient border agency operations are crucial for any economy, especially for island nations such as Sri Lanka, where trade significantly contributes to economic growth.
Delays in cargo clearance disrupt the flow of goods, increase costs, and undermine the country’s competitiveness in global trade.
This article explores the importance of efficient border agency operations in Sri Lanka, provide an overview of the delays in cargo clearance, and examine their broader economic impact.
The need for efficient border agency operations
The economic ramifications are profound; cargo clearance delays result in lost foreign direct investment (FDI) opportunities and diminished GDP growth. Studies indicate that digitizing trade transactions could enhance processing times by 30-40%, significantly improving trade efficiency and bolstering economic output. These delays negatively impact government revenue collection by creating opportunities for misclassifications and under-declarations.
To address these challenges, streamlining cargo clearance procedures through efficient border agency operations are essential. Implementing digitisation across the trade activities can facilitate better monitoring of trade and compliance with regulations, ultimately strengthening Sri Lanka’s position in the global marketplace.
By modernising trade infrastructure and enhancing operational efficiency at border agencies, Sri Lanka can unlock its full potential as a competitive player in international trade.
Overview
In recent times, importers, exporters, and most other stakeholders involved in import and export operations, have faced significant challenges due to cargo clearance delays. Containers are often stuck in Custom’s examination yards for days or even weeks, primarily due to congestion.
This issue gained tragic prominence when a container truck driver, who had reportedly been waiting in line for three days, succumbed to exhaustion and dehydration. Such incidents highlight the severe human and economic toll of these delays.
Reports indicate that at times many hundreds of containers are stuck at ports, obstructing prime commercial land and disrupting port operations. Long queues of container trucks extend for kilometers as they wait to enter customs examination yards located in Colombo’s busiest areas.
Despite media coverage and public outcry from affected parties, government officials have largely remained unresponsive. It is disheartening to observe that the agencies involved and responsible for these congestions engage in a blame game rather than addressing the root causes of the problem expediting the clearance processes.
One possible solution is to create a large, automated container examination yard away from busy areas. However, successive Governments have not taken the necessary steps to implement this or other feasible options. This lack of action has permitted existing container examination yards to continue operating without facilitating trade effectively.
This inefficiency not only exacerbates delays but also creates opportunities for corruption, ultimately inflating consumer prices on imported goods for local consumption while losing export competitiveness on imported inputs for exports.
Cargo clearance delays have become a significant bottleneck at the Customs examination yards from time to time. These delays stem from several interrelated factors, including bureaucratic inefficiencies and outdated processes.
The inadequate infrastructure at Customs clearance yards including access roads, exacerbates the situation. Limited space for inspections, insufficient modern scanning equipment, and a reliance on outdated manual inspection processes by border agencies contribute to these substantial delays.
The economic repercussions of these delays are widespread, affecting multiple facets of the economy.
Cargo clearance delays in Sri Lanka are a significant impediment to economic growth, necessitating urgent reforms to enhance the efficiency of the Customs and border agency clearance procedures.
The following policy recommendations aim to streamline processes, improve inter-agency coordination, and leverage technology for better trade facilitation.
1. Avoid frequent policy changes
Frequent changes in trade policies create an unstable environment that complicates planning for businesses. When policies are constantly shifting, companies struggle to develop long-term strategies, leading to uncertainty in investments and operations. This unpredictability can deter foreign direct investment, as potential investors may view the environment as risky. Frequent policy changes can result in increased compliance costs for businesses. Companies must continually adapt to new regulations, which can divert resources away from core activities and hinder growth.
The lack of consistency also makes it challenging for businesses to build relationships with suppliers and customers, further impacting their competitiveness in the global market.
To foster a more stable trade environment, it is essential for policymakers to minimise unnecessary changes and focus on creating clear, consistent regulations. This approach will enable businesses to plan effectively, invest confidently, and contribute positively to the economy.
2. One-stop shop concept for a new Customs examination yard
The setting up of a one-stop shop concept in a new Customs examination yard represents a significant advancement in trade facilitation for Sri Lanka. By centralising all border agencies in a single location, this initiative streamlines the cargo clearance process, reducing delays and inefficiencies.
This integration permits traders to interact with multiple authorities without needing to visit different offices, minimising redundancy and enhancing operational efficiency. A well-designed examination yard with ample space for handling container cargo will improve inspection capabilities, ensuring quicker processing times.
Strategically located close to Colombo Port but away from busy areas, the new yard will help prevent traffic congestion, facilitating smoother logistics operations while alleviating public traffic issues. Overall, this one-stop shop concept not only enhances trade efficiency but also fosters economic growth by creating a more favourable environment for businesses saving cost, positioning Sri Lanka as a competitive player in international trade.
3. Fast-track the National Single Window (NSW) initiative
The National Single Window is essential for modernising cargo clearance. This integrated digital platform allows businesses to submit documentation once, enabling simultaneous access by all relevant government agencies. Despite being in discussion for over 30 years, accelerating the implementation of the NSW could significantly enhance trade efficiency and reduce clearance times.
The setting up of this system is aligned with international standards set by the World Trade Organization (WTO), and its successful implementation can serve as a catalyst for broader economic recovery in Sri Lanka.
4. Set up an advanced risk management system across all border agencies for cargo clearance
Setting up an advanced risk management system for cargo clearance, incorporating artificial intelligence (AI), is essential for enhancing trade efficiency and security. This system would analyse vast amounts of data to identify potential risks associated with shipments, allowing customs authorities to prioritide inspections and streamline the clearance process. By leveraging AI, the system can detect patterns and anomalies in trade data, improving the accuracy of risk assessments and reducing the likelihood of delays caused by unnecessary inspections. A sophisticated risk management approach can facilitate quicker decision-making and enhance collaboration among border agencies, ultimately leading to faster cargo movement and increased competitiveness in the global market. This modernisation not only boosts operational efficiency but also strengthens compliance and reduces opportunities for fraud, creating a more robust trade environment that eventually benefits the economy.
5. Capacity building for boarder agency officials and developing proper infrastructure
Investing in capacity building for border agency officials is vital. Regular training programs focusing on technological advancements, trade facilitation techniques, and international best practices will equip officials with the necessary skills to navigate modern trade complexities effectively.
Additionally, improving the work environment and fostering a positive attitude among officials can lead to increased productivity and efficiency in cargo clearance operations. While there have been attempts to introduce solutions, such as the construction of a new container examination yard in Kerawalapitiya, bureaucratic delays have stalled progress. The proposed facility, which could handle up to 3,000 containers, would significantly ease the current congestion at the existing multiple examination yards. Thus, necessary infrastructure development is critical.
6. Encourage Public-Private Partnerships.
7. Increase transparency and accountability in the process.
Setting up a transparent and accountable system is crucial for reducing delays in cargo clearance. This includes publishing real-time data on clearance times and holding regulatory bodies accountable for inefficiencies. By enhancing transparency, businesses gain better visibility into their goods’ status, which minimises uncertainty and potential delays.
