Customs Considerations When Exporting to Sri Lanka

Mufaddal K.

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Manufacturers looking to export their products abroad need to consider various factors when evaluating export markets.  One of those factors is the customs clearance infrastructure and processes within a given country.  This article presents an overview of the time and cost it takes for a local partner to clear imported products through customs in Sri Lanka.  This overview, along with a regional comparison, should help you better qualify Sri Lanka as an export market for your products.



Country Overview


Sri Lanka is located within the South Asia region.  It has a population of roughly 21 million people as of 2018.  19% of the population lives in urban areas.  The World Bank categorizes it as a lower middle income country with a GDP per capita (PPP) of USD$13000 per person.



Regional Comparison


The "World Bank's Doing Business project" publishes an evaluation of countries based on their efficiency of cross border trade.  When assessing import efficiency within a country it primarily reviews four factors:


1.  The time for border compliance (imports):  Compliance time associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


2.  The cost of border compliance (imports):  Compliance cost associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


3.  The time for document compliance (imports):  The time for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


4.  The cost of document compliance (imports):  The cost for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.



When evaluating border compliance time and cost amongst major regional economies, Sri Lanka ranks 2nd regionally in terms of border compliance time and 2nd regionally in terms of border compliance cost.  A US$50,000 imported shipment of auto parts would take 72 hours to clear border customs and cost roughly US$300.


Country    Border Compliance Time (Hours)    Border Compliance Cost (USD)   
Nepal 61 $190
Sri Lanka 72 $300
India 265 $543
Pakistan 129 $937
Maldives 100 $981


When evaluating document compliance time and cost amongst major regional economies, Sri Lanka ranks 1st regionally in terms of document compliance time and 4th regionally in terms of document compliance cost.  A US$50,000 imported shipment of auto parts would take 48 hours in Sri Lanka to have documents prepared & cleared and would cost roughly US$283.


Country    Document Compliance Time (Hours)    Document Compliance Cost (USD)   
Nepal 48 $80
India 61 $135
Maldives 61 $180
Sri Lanka 48 $283
Pakistan 143 $735


Detail for Border Compliance Time and Cost


Border compliance time and cost are calculated as a function of three driving factors: the time/cost related to working with customs authorities, the time/cost related to working with other agencies and finally border handling time/cost.  The border compliance time and cost for Sri Lanka are primarily driven by border handling.


Colombo Overview:


Detail Type    Time (Hours)    Cost (USD)   
Working with Custom Authorities 24 $73
Working with Other Agencies 0 $0
Border Handling 72 $227


Detail of Document Compliance Time and Cost


Document compliance time and cost is a function of the various documents required by the country when importing goods.  For Colombo, the documents required when importing goods from abroad include Commercial invoice, Packing list, Bill of lading, Delivery order, Customs import declaration, E-manifest, certificate of origin and SOLAS certificate.



Transportation Costs


Another factor that influences import trade efficiency is transportation costs.  For shipments bound to Colombo, the port where goods would most likely land would be Colombo port.  When calculating transportation cost for the US$50,000 auto parts shipment, the World Bank calculates that the shipment that would land at Colombo port would need to be transported 5 km with an average travel time of 6 hours.  This brings the delivery transportation cost for the shipment to roughly US$110.



Infrastructure Digitization


Greater use of technology within the customs clearance process helps improve efficiency and lower time and cost associated with customs clearance.  Today many countries use digital systems to streamline the customs clearance process.  Many of these customs systems are known as EDI or Electronic Data Interchange systems.  More recently however, there has been a push to develop even more integrated customs clearance systems known as SW or single window systems.  These systems provide greater integration within a given country and between multiple countries when managing customs clearance.



Sri Lanka does have an EDI system known as Sri Lanka Customs "Single Window".  It has no SW system.