Submitted By: Boat Building Technology Improvement Institute- The association of Boat /ship builders By gamini Herath

Submitted By: Boat Building Technology Improvement Institute- The association of Boat /ship builders

By gamini Herath

Posted by dr Sarath Obeysekera

Boat and Ship Building Sector- Includes all types of sea going vessels and vessels used in internal waters and nautical tourism including yachting and recreational boating. 

Boat and Ship Builders in Sri Lanka have contributed to national economy by generating over 80 MN USD worth of exports annually during the past 10 years and there is a requirement to build over 700 boats including yachts /pleasure crafts in the next few years to meet the growing demand in the country and for export. 

Our Focus: 

1. Promote Sri Lanka as a Boat and ship building hub    in South Asia 
2. Promote Sri Lanka as a Nautical Tourism, Yachting and Boating Destination 
3. Increase Export Revenue of Boat and Ship Building Companies 

Industry Capability:

Range of products manufactured in Sri Lanka

• Pleasure boats, Speed cruisers, Luxury sailing & Motor yachts 
• Military and Coast guard vessels, Surveillance vessels, Fast attack crafts, Rescue crafts, Sea cadet training vessels etc. 
• Work boats & Passenger Vessels, Ambulance boats, House boats, Floating restaurants, Pontoons, Paddle boats
• Boat accessories (Fishing gear, propellers, Life Jacket, Sail making) 
• Ship building & Ship repairing 
• Fishing boats, Fisheries research vessels, 

Market served

• Singapore, Maldives, Seychelles, Madagascar, Mauritius, India, Japan 
• Belgium, Norway, Netherlands, UK
• Nigeria, Tanzania, Somalia, Uganda, Oman, Bahrain 

Main Companies: (ISO, GL or LLOYD certified)

• Colombo Dockyard PLC –Ship building, military boats, tugs etc. (steel and aluminium)
• Neil Marine (PVT) LTD –Boats using FRP and composites including yachts, utility boats, fishing boats, pleasure crafts etc. 
• Dhanusha Marine (PVT) LTD –Boats using FRP and composites including yachts, fishing boats, pleasure crafts etc. 
• BAFF Polymech (PVT) LTD – Sail boats, Yachts of different sizes for individual and charter purposes using FRP and composites, carbon fibre 
• Solas Marine (PVT) LTD – Yachts, fishing boats, pleasure crafts, Coast guard vessels, Ferry boats with solar power using FRP and composites
• GL Yachting Asia (PVT) LTD – Sailing catamarans for export

• North West Marine (PVT)LTD –Fishing vessels, pleasure crafts using FRP and composites 
• Walkers Ship Yard (PVT) LTD – Utility vessels using steel and aluminium and pleasure crafts using FRP and composites 
• Sri Lanka Navy Boat Yard (Government) – Military, Coast guard vessels, Patrol crafts etc. 
• Saram Marine (PVT) LTD – Large fishing vessels using FRP and composites, Boat accessories
• Sealani Boat Yard – Large fishing vessels using FRP and composites 
• Jostein Viksund Design & Model Center (Pvt) Ltd – Pleasure crafts, sports fishing vessels, sports boats – Viksund Brand

This paper highlights the issues and opportunities discussed during the virtual meeting with the Minster of Sports and Youth Affairs Hon. Namal Rajapaksa.

Development Area	Specific suggestions	Rationale
Infrastructure: Infrastructure development for boat manufacturing, testing, launching, servicing and establishment of marinas for nautical tourism and recreational boating	1.1 Government supported Boat launching facilities to be established in Negombo, Beruwala and Welipatanwila (urgent and within next year)	Unavailability of Boat Launching Facilities to launch large boats for export on its own power and for domestic charter.
	1.2 Prioritize the creation of Marinas for recreational boats and yachts with all-inclusive facilities (including berths for vessels visiting and for domestic use and charter). Areas identified are Kapparatota(Weligama), Galle,  and Trincomalee each with 100 berths (with in next 5 years)	Feasibility study for the Kapparatota break water done and available. EOI being undertaken. Budget proposal for 2022 submitted for the construction of the Breakwater. Galle Mini Marina to be further developed with recreational facilities, boat house etc,
	1.3 Develop Fisheries Harbours to accommodate yachts and recreational boating activities to develop the domestic boat market and nautical tourism with particular reference to Beruwala, Mirrissa, Dikowita, Kalpitiya, Kalamatiya	Facilitating the local boat building industry to increase production, employment creation and export boats at more competitive prices. Make Sri Lanka as a boating and yachting destination in the world boating and yachting map. Increase foreign exchange earnings by another USD 500 MN from tourism sector.
	1.4 Modera Fisheries harbour facility to be developed as a yacht repair and service center for the Colombo Port City Marina and Galle Harbour repair facility to be further improved to cater to servicing and repairing visiting yachts	These two locations have been developed by walkers’ ship yard but need further investments to make them renowned yacht repair and service centers for visiting yachts in the future.
Quality Assurance: Protection from Import of used boats without quality assurance	Impose import controls over previously used Boats and set SLSI Standards for used Boats that are being imported to Sri Lanka with immediate effect.	Used low quality boat imports are both harmful to the consumer and the local producers and reduces the sustainability of local industries. During last two years import of boats topped 150 MN USD doubled the export figures for the same years.
	Adopt national boatbuilding (recreational and commercial boats) standards based on internationally recognized technical standards (CE) to expand export capacities
Regulations: Regulations for Manufacture, Register and Operation of all types of boats and vessels less than 24 meters in length in Sri Lanka	Implementation of the regulatory framework for manufacture and operation of boats in Sri Lanka prepared under the National Export Strategy with the auspices of EDB and replace all other regulations currently enforced for this sector with the new regulations –  This suggestion is already communicated to the Boat Building Ministry to set up a digital one stop shop for implementation.	The Sri Lankan boat building industry, and commercial boat operators for the tourism and transportation industry, are adversely affected due to the high expenditure for GA plan approvals and certifications payable to Classification Societies.   Since there is no local authority, all payments are transferred to Oversees Classification bodies, and their chargers vary from 6500 USD to 25000 USD per boat. Neither the Boat builder nor buyer can absorb this high amount, resulting in the collapse of the local boating industry.
	Should establish an independent local body with full authority and technical expertise for boat yard registration, GA plan approvals, inspections, and testing of locally manufactured boats and boat registration for use in domestic operations at affordable costs. Also, to implement the regulations proposed for registration of foreign yachts visiting and operating in Sri Lanka
Trade Promotion:	Provide Budgetary allocation to assist the Boat and ship builders to participate in International Boat shows and marketing events and organize the domestic boat show for next five years.	Country’s boat and ship building capabilities are yet not known to many countries due to less exposure of our industry to the world. NES has provided some directions in this regard. However, as an important component in the industry development policy, promoting the local boat and ship building industry in the international arena will bring new investments, technological advancement and innovation and much needed foreign exchange. Developing nautical tourism even though might not directly related to industry develop will stimulate the growth of the domestic market which will enhance the competitiveness of the industry to compete in the foreign markets too.
	Develop a branding strategy for the boat building industry through joint efforts of boat industry consortium of companies by developing: common industry logo; marketing materials;    communication channels;        promotional campaign; promotional activities through foreign trade missions and consulates.
	Develop and implement a national strategy for promotion of nautical tourism in Sri Lanka including recreational boating in inland waters
Fiscal Measures:	Develop and implement adequate HS-8 digits level codes for marine industry inputs to allow the accurate national classification for imported products for boat building to be categorized under materials for boat building and not under construction materials.	This will facilitate the calculation of the import content of the product more accurately for GSP+ concessions as well as for import duty concessions.
	Exempt from upfront VAT, on the transaction of locally built yachts and recreational boats and sailing yachts from manufacturer to a local chartering company/ individual user including BOI manufacturers and users for next 5 years.	Charters bring foreign exchange to the countries and could be deemed as export earnings and will encourage and develop the boat building industry (expansion of the local market for boats).If a BOI company, imports a similar boat, will be exempted from all fiscal levies discouraging charter companies purchasing from the local builders
	Abolish passenger and crew levies for yachts and leisure boats built, owned and operated by Sri Lankan companies/individuals for first 5 years from date of first registration of the yacht/boat.	Nautical tourism industry in Sri Lanka is in its infant stage and need support to grow. With COVID 19 the situation of high spending tourists coming to Sri Lanka has stopped and the industry expansion will take some more time. Our product needs to be made competitive and therefore, initial fiscal support is necessary.
	Any ship imported by a private owner should also be made liable for taxes similar to local transactions In the case of government tenders evaluation criteria without taxes” should be fair and reasonable for the local ship builders against foreign bidders and importing agencies.	According to the present Value Added Tax (VAT), importation of ships is exempted from VAT. Present government recently exempted NBT which was also there earlier. However, when the same ships are built locally to a local client, the Shipyard is liable to pay VAT to the Department of Inland Revenue at the time of selling. As most of the local clients are either VAT exempted or un-registered for the purpose of VAT, these taxes result an additional cost to them. Therefore, there is more than 8% cost benefit to local clients when importing ships/ boats from foreign countries through a local agent compared to building it locally. This encourages importation of ships without manufacturing it locally, resulting in foreign currency outflows from the country. It also affects gaining experience in building ships/ boats in the country and enhance exports through competition.
	Reform the existing investment incentive structure which focuses only on tax breaks that comes into operation years after setup and instead introduce alternative incentive tools like accelerated depreciation, upfront capital write-off, and investment credits that reduce investment costs.	It is important attract FDIs to develop a fleet of charter yachts and leisure boats for the nautical tourism sector. Also due to COVID 19 Pandemic all hotels and travel and tour companies are bleeding at present, therefore to induce these companies to consider the investments in nautical tourism activities, we recommend this action.
Human resources development: Industry oriented skills development	Develop industry-oriented skills, improve worker employability and soft skills, productivity and mobility by expanding industry specific vocational skills training and better re-skilling programs of updated technology	Boat and ship building industry technology is fast developing, and many innovative technologies have emerged globally particularly concentrating on environment protection and enhancement of safety of vessels and operational cost advantages. Therefore, it is important our industry is allowed exposure to such technologies for sustainability of the industry.
	Reconstitute the Skills Development Fund for private sector to get motivated to encourage their workers to better equip with necessary and timely technical skills
Support the Grow Boating Campaign of the Industry	With the involvement of the National Youth Council, promote the boating as a sport and a hobby among youth to establish a youth contingent to compete in international boating and yachting events.	Improving the boating and yachting activities will improve the domestic boat markets for recreational boats, yachts, sailing boats and many services required for the sector which will create employment opportunities for youth in the sector and recreational field. Finally, Sri Lanka will be placed in the world map of boating and yachting as an attractive destination.
	Establish recreational boating and yachting school in Sri Lanka under the Ministry of Youth in association with the industry to promote the boating as a lifestyle among youth and also adults.
	Organize sailing events (local, regional and international events) to promote a boating and yachting culture among the youth in Sri Lanka

Regards

Dr Sarath Obeysekera