The revolutionary economic changes set in motion in 1977, with the Open Economic Policies of the then government, saw the liberalisation of trade and payments and the rapid growth of Sri Lanka’s economy driven by increased industrial expansion and exports. These policies have continued with no substantial reversal. In parallel are witnessed the significant developments in transportation, automation, information technology, and trade facilitation techniques, together with the adoption of more sophisticated technology to interdict fraud, and threats to national security, while not impeding the smooth flow of international trade. The impact of these factors on the way international trade is conducted, together with the changing global trading patterns, severe competition to secure markets and still’ competition to attract investment are exerting increasing pressure on institutions such as customs organizations and ports authorities ties to increase the efficiency of their cargo clearance procedures.

To meet the challenges demanded by this new world order, most Customs administrations have employed, advanced concepts and techniques to modernize their administrations and operations. Unfortunately the Sri Lanka Customs Organization has been slow to adjust itself to the demands for modernization.

This situation calls for a remedial Plan of action

The organizational structure of the department does not provide for the efficient management of the department to meet the demands made of a modern customs administration. The functions of the department are so multifarious and complex that the responsibility of administrating the department cannot be left in the hands of one person. The establishment of a Board of Commissioners for Policy formulation and the efficient management and administration of the department to be given due consideration.

This Board will have the task of recorgnizing the department for the efficient conducting of its business, taking into consideration the developments in international trade, transport, communications and automation, while at the same time ensuring the securing of revenue, and the interdiction of fraud and smuggling. It will also act as appellate Tribunal and take measures to hold the balance between the trade and the officers of the department

The existing law, No. 17 of 1869 is a consolidation of laws dating back to 1806, and has been amended piecemeal from time to time, notably in 1979 and 1983 and 2003. This outdated law has to be completely revised. It is suggested that the scope of this law be redefined, and some of the functions regulated by the customs law be incorporated in other laws, for the more efficient implementation of government policy relating to fiscal maters and economic development. The ordinance should be limited to customs administration, disciplinary control, appellate functions, the interdiction of fraud and smuggling, security measures, curtailing of corruption and allied matters.

There is a need for the creation of a new Tariff Act, which should consolidate all matters relating to trariffs. The Revenue Protection Act No. 19 of 1967, and those provisions of the customs ordinance relating to tariffs, exports, valuation of goods for customs purposes and examination procedures should be incorporated in this law. All provisions of other ordinances, which impose any type of licensing requirements should be made a part of this law.

Anti-Dumping and countervailing duty provisions will have to be included in this law

It is understood that India has such a Tariff Act viz. The Indian Tariff, Act No. 51 of 1975

The customs Will administer this law

All regulation of local, foreign and joint investment should be under this law. The customs duty and tax exemption schemes should be administered under this act. The Board of Investment law should be re-designated as the Trade and Investment Law. The customs role in such a law will be to deal with fraud in co-operation with the Agency administering this law.

It is learnt that India has promulgated legislation for this purpose. Viz. The foreign Trade (Development Regulations) Act No. 22 of 1992.

The collation, revision, rationalization and publication of all laws, regulations, procedures and documentation relating to external trade, to facilitate and promote such trade is an urgent necessity.

Trade facilitation

While the customs department is required to regulate the country’s external trade, secure revenue and interdict fraud, it has the equally important task of ensuring the reduction of transaction cost in international trade by the adoption of efficient Trade Facilitation measures. Simplified, transparent, and efficient customs and port cargo clearance procedures are vital in attracting foreign investment ‘in a very competitive global environment as well as being impetus for the development of Sri Lanka’s industry and commerce and for the promotion of exports.

A well conceived Trade Facilitation Programme, to collate, rationalise, simplify and publish all laws, regulations, procedures documentation etc is essential.

Memoranda of Understanding should be entered into between customs and Traders to grant them facilities, while simultaneously making it obligatory for them to comply with the laws regulations etc.

Computerization of all customs and associated cargo clearance operations have to be given the highest priority. Legal provisions have to be introduced to the customs law to give effect to a comprehensive computerization programme, while ensuring due physical and administrative Structures are in place. Customs should ensure all p CS concerned with cargo clearance such as the Ports Authority, Ship’s agents, Freight forwarders etc are linked to the automated cargo clearance system

A well equipped Training Academy should be established to train not only customs officers, but also all others involved in the clearance of cargo, such as customs house agents ship’s agents etc Almost all customs administrations have such customs colleges, notably among these are those in Malaysia and Pakistan

Committee to make Recommendations

It is suggested that a committee be appointed to make substantive recommendations to give effect to the suggestions contained in this paper, and on any other related matters. The Report of this Committee should be submitted to the Government within three months