Complex import rules trigger milk powder shortage
Sri Lanka is facing a milk powder shortage once again owing to a complex procedure in the clearance of containers, dollar shortage, difficulty in opening Letters of Credit (LCs) and import policy inconsistency, several high officials of leading milk powder companies complained.
Several brands of milk powder were not available in retail outlets and even at most of the supermarkets as many local firms had to face different bureaucratic red tape and the present complex approval procedure for imports, several top officials of milk powder companies disclosed.
A CEO of a leading milk powder company said different companies used to import this essential commodity following different methods such as Open Account, Credit Lines, Documents against Acceptance, and Documents against Payment terms. The complexity in the government approval process for import of essential commodities including milk powder, Custom’s clearance of containers and the scarcity of dollars has compelled most of the companies to restrict their imports creating a shortage in the market.
The clearance of 17 containers containing 400,000 kg of milk powder stocks has piled up at Colombo port for over 25 days due to this crisis, former President of the Milk Food Importers Association (MIA) and Chairman of Anods Cocoa (Pvt) Ltd, Lakshman Weerasuriya said adding that his company has to pay demurrage of over Rs. 4 million for the stocks of milk powder imported under the Pure Dale company brand.
These containers are stuck at the port as a result of the delay in approving documents by the Department of Exports and Imports Control as his company imported milk powder under the terms of Open Account using his business relations of over 20 years with foreign suppliers, he revealed.
He noted that his company had to get approval from the ministries of trade, industries, banks, Department of Exports and Imports Control for documents of importation causing unnecessary delay in the clearance of these 17 containers stuck at the Colombo Port.
But Exports and Imports Controller General Upulmalee Premathilaka said there was no delay in scrutinising and approving import documents if those were in proper order.
The government has permitted milk powder importers to use open account to bring in the essential commodity with an aim to ease shortages of milk powder. But the move comes despite the central bank’s concerns over open accounts.
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