Posted on November 15th, 2022

By Ishara Gamage Courtesy Ceylon Today

The newly appointed Chairman of the Sri Lanka Ports Authority (SLPA), Dr. Sarath Obeysekera has called for immediate liberalisation of the shipping and logistics sectors in Sri Lanka.

In a letter to President Ranil Wickremesinghe, he stated that there is a general consensus among the majority of stakeholders in the shipping industry for such a liberalisation policy.

I have observed that Sri Lanka has not really capitalised to reap the benefits of liberalisation, which was mooted a few years back, despite the fact that the island is located on a strategic shipping route. If this industry is liberalised, it can contribute in a big way to enhancing the national GDP,” he stated.

The SLPA Chairman stated that Sri Lanka needs to open and liberalise the shipping and logistics sector to attract global capital as an investment.

Sri Lanka has no headquarters of international brands of shipping or logistics companies and is considered as just a cost centre, he said.

The Chairman further observed that competition in the region is extremely high.

The Port of Colombo is in direct competition with regional ports, which include Dubai and Abu Dhabi in the United Arab Emirates; and Salalah Port in Oman. Singapore Port Klang and the Port of Tanjung Pelepas in Malaysia’s east, he noted. 

In the near future, major ports being developed in India, such as Vizhinjam port in Kerala, too, will compete with us. In the past, Colombo was a main transshipment hub for the western coastal ports of India. But now they have attracted direct services, thus stransshipment via Colombo. Ports such as Ennore on the West Coast of India with deep water facilities have commenced attracting services that link ports in Bangladesh, thus depriving Colombo of its main catchment area”, he added.

Although Colombo happens to be the logically ideal port to transship cargo from Bangladesh to the western markets, major volumes still continue to flow through Singapore, PTP, and Port Klang. In these countries, the maritime logistics industry has been fully liberalised, thus encouraging major shipping lines to have their Asian bases there. They have also invested in and are managing joint venture container terminal facilities in these ports, the Chairman said. 

However, the SLPA Chiarman stated that the business of creating a logistics and shipping hub is in the hands of global ship owners and global logistics companies, who possess the capital, know how, technology, and sources to increase business and can change the dynamics of our location. 

Wherever there are ship owners and logistics companies, those countries have thrived as hubs.” These include the United Arab Emirates; Singapore; and Hong Kong in this part of the world; and ports such as Hamburg, Rotterdam, and Felixstowe in Europe and the UK.” he stated.

All these countries are fully open for investment without government intervention and protectionism in these sectors.

In India, in response to its economic crisis in 1991, it fully liberalised these sectors to attract investment.

Sri Lanka is in danger of losing its business to competition and investment opportunities. Major shipping lines and logistics companies indicate that they are reluctant to invest in Sri Lanka due to the non-liberal environment.

Dr. Sarath Obeysekera therefore recommends that the shipping and logistics sectors be liberalised to promote investment and long-term ambitions to become an international logistics hub. 

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