Sri Lankan government to hold talks with Iran to develop payment mechanism for tea exports
A delegation of the Sri Lankan government is reportedly set to hold talks with Iranian officials this week to develop a payment mechanism for Sri Lankan tea exports to Iran.
Sri Lanka’s Plantation Industries Minister Navin Dissanayake has made this announcement through the local media.
The government of Sri Lanka has not yet found an effective mechanism to bypass US sanctions imposed on Iran, one of Sri Lanka’s largest tea markets. Hence, the sanctions have impacted tea industry payments where direct remittances through banks were not possible.
“We will see if we can set up a barter system for payments, we can export tea and we can get one of their products such as oil in exchange instead of payments,” Dissanayake has told the Daily FT.
According to reports, tea exports to Iran have suffered since economic sanctions were imposed by the US Government, with the country dropping to the fifth place from being the second largest importer of Ceylon Tea in 2016.
Meanwhile, the Sri Lanka Tea Board Annual Report of 2016 states that the Middle Eastern country imported 33.9 million kilograms during the year, making it the prime destination for Ceylon Tea after Russia.
However, according to the Tea Exporters Association, the quantity of exports dropped to 27, 418 million kilograms in 2017 and to 23,914 kilograms in 2018. This year’s first quarter has recorded a slight increase, with 7,077 million kilograms being exported to the destination, compared to 7,014 million kilograms last year in the same period.
The Daily FT has reported that the Sri Lankan delegation will also include Central Bank officials and Foreign Ministry officials along with Tea Board Chairman Lucille Wijewardena and Minister Dissanayake.
The Minister is also expected to fly to Korea to take over possession of the domain name ‘Ceylon Tea’ which is currently controlled by a Korean company. The company has agreed to give the domain name to Sri Lanka for free, he has told the media.
“I will go to Korea next month to sign the agreement handing over the domain name to Sri Lanka. The company has agreed to give it free of charge,” he has said.
Currently Sri Lanka only has domain name ‘pureceylontea.com’ as the domain name ‘ceylontea.com’ has been registered by a different entity for over 20 years, the Daily FT has added.
OSL take:
Sri Lankan authorities are engaged in uplifting the country’s tea industry by aggressively promoting tea exports in key foreign markets. The fruition of discussions with Iran, which is the key buyer of Sri Lankan tea, would be a great positive step for the country’s tea industry. Also, records indicate an increase in Sri Lanka Tea export earnings. Foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s tea sector or even look at possibilities of forming partnerships with local companies. Sri Lanka already has many trade agreements as well as trade concessions from foreign countries that could be used by exporters.
| Article Code : | VBS/AT/11062019/Z_3 |