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Mattala made free port to give it life
Areas surrounding the Mattala Rajapaksa International Airport have been declared a free port in the latest bid to attract business to this multi-billion rupee venture. There will be exemptions from customs duty, exchange control and import-export regulations, in terms of an order signed by President Mahinda Rajapaksa as Minister of Finance and Planning.
The order for declaring the MRIA premises as a bonded area along with its boundaries in Thammennawa Kurudana of Thammennawa in the Hambantota Divisional Secretariat area has been made by the Department of Trade and Investment Policy, under the Customs Ordinance.
A part of the development plan for MRIA is to set up a tax-free industrial zone within the area allocated for the airport.
The exemptions will apply to Board-of-Investment-registered companies engaged in entrepot trade involving import, minor processing and re-export, offshore business where goods can be procured from one country, to be manufactured in another country and sent to a third country, without bringing them into Sri Lanka.
“Entrepot trade” has been described in the Finance Bill, under which the new regulations were made; as any manufacturing activity carried out by a new enterprise for re-export with a domestic value addition at a minimum rate of ten per centum, within a declared Free Port area.
The bonded area will also apply to businesses that provide front-end services to clients abroad. The other businesses that will get the exemptions are those with headquarters operations of leading buyers for management of finance supply chain and billing operations as well as those that provide logistic services such as bonded warehouse or multi-country consolidation in Sri Lanka.
The enterprises to which the exemptions will be granted are required to ensure the proper maintenance of documentation in respect of inward and outward remittance of foreign exchange and other transactions and report on inward and outward remittances of foreign exchange annually or when directed to do so by the Director-General of Customs, the Controller of Exchange or the Controller of Imports and Exports.
Recently the Government further slashed aircraft handling charges at the Mattala Airport. A fifty per cent discount in landing and parking charges — earlier valid only for 2013 — was extended up to March 2014, when the largely idle airport will celebrate one year in operation.
Airline industry sources said MRIA had failed to attract traffic despite incentives to international airlines. At present, only 14 flights operate (one way) a week from the airport. The majority of these are SriLankan Airlines aircraft that land at Mattala on their way to BIA or to an overseas destination such as Male or Bangkok.
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