Paperless trade is to revolutionise Sri Lanka’s business competitiveness in the global sphere but delays in accepting electronic signatures by government agencies has led to the country not being able to fully realise paperless trade and it is eroding Sri Lanka’s competitiveness, a study by Verité Research revealed.
In a conference held recently at the Sri Lanka Press Institute, the panel highlighted how e-documentation was critical for Sri Lanka to achieve its ambition of being a regional logistics hub and the importance of paperless trade to enhance international trade.
What is this e- documentation all about?
According to the panel, e– documentation system is not something new to Sri Lanka. The law enabling acceptance of electronic signatures was passed in 2006 with the enactment of the “Electronic Transactions Act, No. 19 of 2006” (ETA 2006). ETA 2006 facilitates acceptance of all forms of e-signatures, electronic documents and electronic contracts in all but a few specific transactions (exclusions include creation and execution of a will, licence for a telecommunication system, a bill of exchange, a Power of Attorney form, setting up a trust and a contract for sale of immovable property), and it supersedes other previous and existing laws in Sri Lanka with regard to document processing requirements.
Research Manager, Verité Research Buddhika Perera explained that paperless trade refers to a trade process, where all contracts and documentation is handled electronically with little or no use of manual documents being required.
He said that there are significant benefits to both the private sector and the government sector in adopting a paperless trading system and added that it will help faster document handling, save precious time for all parties, improve global competitiveness of Sri Lanka’s exports and logistics, reduce processing costs to government and for business and better document tracking and predictability in processing.
Efficient trade transaction is vital for the country to improve its business engagements. Policy makers should focus on trade facilitation and look forward to a paperless era, added Perera.
The importance of e- documentation in international trade
According to the Head of economic research, Verite Research, Subashini Abeysinghe, Sri Lanka's regional counterparts have secured substantial process improvements in switching to electronic documents and electronic signatures in the trade process.
“The reluctance by government officials to accept electronic signatures is holding up wider use of an electronic ‘single-window’ platform launched in May 2016 by Sri Lanka Customs and the Finance Ministry which was meant to speed up export-import documentation,” she said.
She further said that Sri Lanka failed to attract export-oriented Foreign Direct Investment (FDI) and these companies come only if they know we have very efficient trading platforms.
The panel highlighted that this would also help the economic policy agenda of the government.
Chairman, Import Sector, Ceylon Chamber of Commerce Dinesh De Silva adding to the discussion explained that not only is acceptance of electronic signatures a pre-requisite for improving Sri Lanka’s trade dynamics, it is also a crucial element for all the key economic policy objectives set forth by the government.
Implementing paperless trade would also support the government to achieve the policy objectives such as; accelerating exports, attracting FDIs, plugging into global value chains by transforming Sri Lanka into a regional logistics hub and will help Sri Lanka in implementing a digital economy and electronic governance system that is similar to those in developed Asian countries such as South Korea and Singapore.
Need to improve export dynamics
Research conducted by Verité Research in collaboration with the Ceylon Chamber of Commerce revealed that Sri Lanka’s export sector growth has been inactive in the field of technology and the proposed remedies to improve the paperless trade have done little in improving the country’s export dynamics.
“This is evident by the value of Sri Lanka's exports, recording negative growth rates in the last two consecutive years.
Adoption of paperless trade and the benefits offered by such a system have somewhat been ignored. Whilst Sri Lanka is slowly moving on, its regional counterparts and direct competitors around the world have moved far ahead through the benefits of Internet and Communication Technology (ICT) adoption,” said De Silva.
He pointed out that while Sri Lankan traders are struggling to remain competitive; these slow processes add significant amounts of transaction costs that further lower traders’ ability to compete against low cost, high quality offerings from regional and global competitors.
However, this phenomenon was evident by Sri Lanka's low rank in a number of international indicators measuring efficiency in procedures that govern cross border transactions. For example, Sri Lanka lags behind most other competing countries when compared to the time taken to comply with documentation requirements for trade according to the World Bank’s Doing Business Index.
“In Malaysia, the document processing time for trade activities which took 12 hours on average under the manual system has now came down to 15 minutes under the electronic system.
Time taken for documentation for trade in Sri Lanka is 76 hours, while in Singapore its four hours and in UAE its six hours,” pointed out Abeysinghe.
She emphasised that even a poor country like Senegal in Africa has been adopting this method and added that one reason for Singapore to be ranked high in the World Doing Business index was due to the implementation of e-signature via ‘Singapore trade net'.
Many people are concerned whether e-documentation and e- signature systems would lead to more corruption and issues in the field of trade.
However, Abeysinghe emphasised that the implementation of paperless trade minimised corruption and bribery to a greater extent.
Dinesh De Silva noted that the lack of initiatives and inability on the government’s part to move the country forward through acceptance of electronic documents and electronic signatures, despite Sri Lanka having an enabling legislation and other requirements in place for almost a decade, was letting down Sri Lanka's cross border traders at many different levels.
“National level pressure should be imposed on all institutions requesting them to implement the paperless trade to make it a success,” Abeysinghe emphasised.
“Implementing e- documentation systems will also improve our export and import. It would pave the way for Sri Lanka to equally compete with the other nations in the trade sector,” said Executive Director, Verite Research Dr Nishan De Mel and added that there is no cost involved to implement the system.
He requested all stakeholders to extend their support in this regard and added that it will make the government accountable to implement the paperless trade system.
The reasons for the delay in implementing paperless trade
The “Electronic Transactions Act, No. 19 of 2006” (ETA 2006) allows public institutions the freedom to propose guidelines on types and methods of accepting e-signatures and to customise the process to fit their particular needs.
This 2006 Act was modelled after the globally accepted UNICTRAL model, passed 10 years ago. However, Sri Lanka has not succeeded in implementing the provisions of this Act.
According to Abeysinghe, the delay in accepting electronic signatures by government agencies is a “problem of attitude” since the law was already in place.
According to De Mel, Sri Lanka is attempting to revive the paperless trade initiative dating back to over 20 years.
Sri Lanka established a working group called the National Electronic Data Interchange (EDI) Committee in 1995 with representation from 20 public and private organisations to serve as a forum on adopting Electronic Data Interchange (EDI). Since then, there have been several attempts to revive the paperless trade initiative but they could not meet the goal.
The most recent effort to implement a paperless trade platform was in May 2016. The Ministry of Finance together with Sri Lanka Customs launched a “Single Window Platform”, which was meant to facilitate electronic communications between traders and respective government agencies.
However, Dr De Mel pointed out that currently this system covers only a few government institutions.
“It has failed to replace the need for a duplicate process of manual documentation in multiple copies. This is because documents need signatures and signatures are only accepted in hard copy, not in electronic form,” he said.
Electronic signatures are a method of verifying the sender’s intent to sign a document that is transmitted electronically, said Perera.
Dr De Mel said that Sri Lanka’s paperless system cannot be paperless without accepting Electronic signatures.
He claimed that today, even when a functioning electronic platform is available for use, public agencies still demand manual documents signed by hand for their records, neglecting the benefits of the electronic system.
De Silva emphasised that implementing paperless trade in all government and private institutions requesting them to accept e- documentation and e- signatures is one small step that the government can take even tomorrow, which will result in a giant leap forward for the country in terms of trade competitiveness
“We need an order from the highest level. If Prime Minister Ranil Wickremesinghe intervenes to get the institutions to act since the law was in place, this can be implemented in days,” he said adding that only institutional guidelines were needed.
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