BOI clarifies on importation of post-consumer waste by hub operators

The Board of Investment (BOI) issuing a statement yesterday clarified its position on the recent controversy regarding the importation of garbage containers by certain parties, under the Hub Act.

Following is the full BOI statement.

In view of several interpretations and media releases in respect of importation and processing of post-consumer wastes by the hub operators conducting their operations under the Commercial Hub Regulation No. 1 of 2013, the Board of Investment (BOI) of Sri Lanka wishes to clarify the correct status.

The Commercial Hub Regulation enable the hub operators to engage in five business activities, inter alia, Entrepôt Trade – involving an import, minor processing and re-export and Logistic Services – such as bonded warehouse or in the case of  operation of Multi-Country Consolidation (MCC) in Sri Lanka.  The import/export process is done through a Synchronised Operational Procedure outlined in the DOPL 934 of July 7, 2014, issued by the Director General of Customs in terms of item No. 4 of the above Commercial Hub Regulation and is duly complied with by the BOI and Sri Lanka Ports Authority.

Although the above regulation enables the hub operators to import, store, process and re-export cargo on an NFE basis, it is also subject to restrictions and prohibitions imposed under Schedule B of the Customs Ordinance on importation of goods. 

Schedule B stipulates among others, that importation of any article, which is prohibited by any enactment or any legal order now in force or hereafter to be enacted or any rules, regulations, notifications, proclamations or orders made or issued thereunder, is prohibited.

Further, Post-consumer materials are prohibited in terms of the National Solid Waste Management: Policy and Strategy of the Central Environmental Authority (CEA).

It is understood that media reports refer to two different batches of cargo containing post-consumer material brought into the Port of Colombo. The BOI and Commercial Hub Operation pertains only to one such batch of cargo that has been consigned to and cleared by Hayleys Free Zone Limited (HFZL) to their facility located within the Katunayake Export Processing Zone, to which 130 Nos. of 40’ containers consisting of used mattresses, used carpets, etc. were cleared, under the Commercial Hub Regulation. 

Although the Entrepôt Trade permits importation and minor processing, it does not encompass any kind of resources recycling activities. If any such activity is to be performed by a Hub Operator, explicit written approval must be obtained from the BOI and CEA.

The HFZL has engaged in separating the components of the used mattresses, sofas, etc. and compressing them for re-export to different manufacturing industries, which tantamount to resources recycling activity. As such, the BOI has on January 26, 2018 directed HFZL to:

a) suspend all future shipments of used material with immediate effect; 
b)  reship all such cargo within one month;
c) ensure that the cargo is not getting wet and infiltrated with surface or surface run-off to the surrounding areas;
d) obtain prior approval from the BOI for any value addition process to be performed;
e) suspend import of all post-consumer waste/material without prior approval of the CEA.

The HFZL has agreed to abide by such directives. Subsequently, 29 containers, i.e. 25 x 20’ containers and 4 x 40’ containers have been re-exported while the remaining cargo is still lying at the HFZL premises, in spite of such written commitments given.

Having taken note of the above, the BOI has given explicit directive to HFZL to prudently resolve and re-export of the remaining cargo on or before August 12, 2019.

Further, a directive dated July 24, 2019 was issued to all hub operators prohibiting with immediate effect, importation of post-consumer materials by any company for the purpose of re-export or for any other purpose, and engaging in any resources recycling activities of any form.

The BOI will take stern action for any non-compliance of its directives. In the same tenor action will also be initiated for any lapses on the part of the BOI.

The BOI further wishes to clarify that the Commercial Hub Regulation does not permit or enable howsoever, to import and recycle, co-process or dispose any form of waste or garbage, as alleged by some parties. It is also clarified that the Commercial Hub Regulation and the Sri Lanka-Singapore Free Trade Agreement (SLSFTA), which came into effect on May 1, 2018 has no connection whatsoever. In any event, the allegation that the SLSFTA enables importation of waste and garbage to Sri Lanka is baseless.

The BOI is in the process of developing new guidelines, in addition to improving the prevailing ones, in consultation with all relevant stakeholders.

Contrary to the allegations and misrepresentations made on the Commercial Hub Regulation, the BOI opines that the regulation was a positive measure taken by the GOSL to use our strategic location, connectivity, optimum utilisation of port facilities through prudent and simplified procedures, thus improving Sri Lanka’s overall competitiveness.