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Sri Lanka

Exporting to Sri Lanka

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Sri Lanka is among the most liberal economies in South Asia and in 2005 imported 113m British goods. The UK is the ninth largest exporter to the country. Sri Lanka is particularly attractive as an export destination for small and medium sized businesses with some exporting experience. If thinking of supplying to the rest of the India Sub-Continent or South East Asia, Sri Lanka makes an ideal location with it's geographical location on the main shipping routes, especially following the Indo-Sri Lanka Free Trade Agreement in 1998.

This guide highlights some of the key features of the Sri Lankan market, and explains how you can start to win export business there. It also identifies sources of support to help you.

 

Assess the opportunity to trade with Sri Lanka

Sri Lanka is among the most liberal economies in South Asia and in 2005 imported 113m British goods. The UK is the ninth largest exporter to the country. Sri Lanka is particularly attractive as an export destination for small and medium sized businesses with some exporting experience. If thinking of supplying to the rest of the India Sub-Continent or South East Asia, Sri Lanka makes an ideal location with it's geographical location on the main shipping routes, especially following the Indo-Sri Lanka Free Trade Agreement in 1998.

Recent governments have privatised public sector industries, abolished foreign exchange and import controls, reduced tariffs and adopted a development strategy to encourage foreign investment. Coupled with a relatively affluent population, these measures make Sri Lanka a good market for UK consumer goods both reconditioned and new.

Priority sectors for UK exporters in Sri Lanka include infrastructure, chemicals and pharmaceuticals, textile machinery and telecommunications. Additionally, the Sri Lankan government has recently announced incentives for the following sectors if they invest in machinery to increase production: engineering, electronics and components.

 

Understanding Sri Lankan Customers

Sinhalese, English and Tamil are the official languages. English is widely spoken and is the main language used in business. Most business people you deal with, when exporting, are likely to speak good English.

Regionalism, religion, language and caste are all factors that need to be taken into account when doing business in Sri Lanka. Behaviour, etiquette and approach are all modified depending on whom you are addressing and the context in which they are being addressed. Of all the cultural influences that most impact Sri Lanka business culture, hierarchy plays a key role. With its roots in Hinduism and the caste system, Sri Lankan society operates within a framework of strict hierarchy that defines people's roles, status and social order.

 

Building relationships

If your business dealings in Sri Lanka involve negotiations, always bear in mind that they can be slow. If trust has not yet been established then concentrate efforts on building a rapport. Decisions are always made at the highest level.

Winning new business can take longer than you would like. You should be prepared to invest time and effort in building a long-term relationship.

For more information, see the section in this guide on marketing and selling in Sri Lanka.

 

Trade visits to Sri Lanka

Successfully exporting to Sri Lankan customers depends on building relationships, and often requires several face-to-face meetings. Trade visits can help you identify potential customers and key contacts, and find out what they think of your product. You can also use them to build relationships with local advisers and other key contacts.

Find out about trade visits and business opportunities on the events section of the website.

To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make exporting decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.

 

Marketing and selling in Sri Lanka

To succeed in the Sri Lankan market, you need to compete with local, national and multinational businesses. As an exporter based in the UK, your costs are likely to be higher than those of many competitors. You therefore need to clearly demonstrate the value of what you offer. Superior technology and quality may give you an edge.

There are several ways to reach customers:

  • Exporting directly can suit high value products or services. However winning new customers is likely to require significant investment in building relationships, and several visits.
  • You may find it more cost-effective to work with a local agent or distributor.
  • A joint venture with a local partner can be a way of accessing the Indian market, particularly in highly regulated sectors.
  • Larger businesses, and increasing numbers of middle-market consumers, have Internet access.

You must be prepared to adapt your offering to suit the Sri Lankan market. Any advertising or other promotion should be adapted to suit Sri Lankan culture. You also need to take into account local product regulations.


 

Financing exports to Sri Lanka

Sri Lankan companies purchasing imports generally need approval. If you are selling to an experienced importer, they should be able to advise you of the documentation they require.

Imports are generally financed using import letters of credit or import bills. These are promises from your customer's bank to make payment to you once the goods or services you export are received and the documentation covering the transaction is properly and correctly presented.

 

TAXES, DUTY AND LEGAL CONSIDERATIONS FOR EXPORTS TO SRI LANKA

In the UK, you must declare all exports to HM Revenue & Customs (HMRC). You also need to keep documentary evidence of exports, and record the value of exports on your VAT return. Exports of most products to India are zero-rated for VAT. There are no additional export taxes.

Most goods can be freely exported to Sri Lanka.

 


Sri Lankan taxes and regulations

Import of goods is subjected to rules and regulations stipulated by the Import and Export control Department of Sri Lanka which is regularly reviewed.

To facilitate the exporters Sri Lanka Customs Export Procedure has been simplified to a great extent in recent past. Rules and regulations have been relaxed and duty exemptions and concessions on duty rates are given to exporters as an encouragement. Sri Lanka Customs pays a great attention in all export related activities to safeguard national wealth such as archaeological treasure and fauna and flora by implementing related laws.

 

Duty

When you export goods to Sri Lanka, they will attract import duty. You or your local representative will have to pay this before the goods will be released by customs. The level of duty will depend on the type of product.

To find out the duties paid on goods exported to Sri Lanka, you will need a 4 or 6 figure HS or Commodity Code number for your product, obtainable from the HM Revenue & Customs Tariff Classification Service Enquiry Line on Tel 01702 366 077.

 

Market access Database

The European Commission's Market Access Database is a free tool designed to assist exporters:

it provides information on trade barriers which may affect you in the individual countries;
the Applied Tariff Database section allows users to enter a HS code or product description to obtain a tariff rate and details of taxes applicable to a, enabling you to calculate a landed cost;
the Exporters Guide to Import Formalities database (searchable by HS code or by product), gives an overview of import procedures and documents, as well as any general and specific requirements for a product;
The SPS Database facilitates the identification of Sanitary and Phytosanitary export problems with any non-EU country
The Market Access Database can only be accessed with an ISP that is based in the EU.

CLICK HERE FOR MORE DETAILS


 

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