Shipping industry must be further liberalized

Expert says proper regulatory framework needed:

Sanjeevi Jayasuriya

The liberalization of the shipping industry has to be done with the best interest and benefits to the country in mind. It needs to understand the real requirements of customers and investors to attract capital to the country, an industry expert said.

If Sri Lanka is to liberalize its shipping industry it should do a proper study on realistic implications and at the same time need to put in place a proper regulatory environment, Shippers’ Academy Colombo CEO and Strategic Enterprise Management Agency senior consultant Rohan Masakorala told Daily News Business.

The importance of liberalizing the shipping industry has been discussed at various forums in the recent months. Indeed the Shippers’ Academy too believes that we need rapid changes in policies of post war Sri Lanka to make the country’s dream of being the logistics hub a reality, he said at an interview.

Excerpts of the interview

A large amount of work has yet to be done if we are to compete well in the region and to get the confidence of investors and customers in the logistics industry to move to the island, as the infrastructure projects are being done in ports, airports, railway and highways.

The port sector will be the key to backward integration for the rest of the industries that are involved in logistics, we have to look at getting good partners to come to Sri Lanka, through investment in the south harbour and Hambantota.

SLPA should look at going into terminal management agreements with interested multiple stakeholders with its new capacity enhancements at Colombo and Hambantota and even in Trincomalee, restricting trade activity by giving concessions to a single party is not the best solution as it takes the meaning out of the word competitiveness.

We may see interested parties coming up with new proposals and ideas to develop the south harbour and the southern port and related facilities by creating a level playing field to any terminal company, ship operator or investor.

By doing so those partners will make sure that their cargo and ships use the ports of Colombo and Hambantota and Trincomalee to either transship or value add and make sure the country becomes the centre of activity for logistics services in the Indian sub continent.

It is the service users of the port facility who can create the growth of the industry. Therefore in our view if any investor wants to come to Colombo to build a new facility be it a port terminal or warehouse such activity should be truly liberalized without giving a monopolistic environment to service the current trade volumes ignoring the long-term interest of the country.

Liberalizing shipping activities from the current status core will have to be looked not at micro level but at macro level.

Revenue that should be retained in the country from shipping services should be protected when liberalizing shipping activity.

At the same time backward linkages to the shipping industry should be promoted to the local entrepreneurs who have performed over the last three decades and encourage them to service the ship owners and terminal operators to recognize the country’s capabilities in competition.

Joint ventures could be one of the best options for them.

If capital investment, technology transfer and job creation at macro level can be justified liberalizing should be closely looked at to attract big players.

We need to attract third party logistics providers, the government should invest and invite investors to come forward to develop second level infrastructure such as warehouses and distribution parks and promote free port activity with e- commerce to facilitate such investors. The legal environment to do this has to be created first.

It is the responsibility of industry leaders to formulate macro policy for post war Sri Lanka and discuss them with senior government officials to see how we could progress as a nation hand in glove, that is what real PPP is.

The representative bodies should now be more mature and should not be focusing on micro issues but help government to understand the real issues to put the country back on track after 30 long years.

It is sad to note that very few people or private sector organizations who will even study a gazette and advice government on what is wrong and what should be done, at the same time public officials too need to change their attitudes and support a reform agenda.

It is time for all to pro-actively engage themselves with each other to make constructive dialogue to get the needed policy frame work in place for the country to progress for the next two decades, Masakorala said