Shipping

Hambantota Port looks at more foreign investment

Peter Barbut

CMILT-UK, Course Director Logistics & SCM Programmes, Faculty of Business and Financial Management Aquinas University College, Colombo.

The present government of Sri Lanka under the visionary leadership of President Mahinda Rajapaksa has now embarked on a very aggressive development plan to regain the countries past glory as the first nation in the ISC-Region (India, Pakistan, Bangladesh, Nepal, Bhutan and Maldives) to have opened up the country to a market economy in 1977 and inviting foreign investors to participate in the free trade zones for manufacturing products for exports, which had resulted in several Asian and European investors having built and operated manufacturing plants in Sri-Lanka during the period 1977 to 2001. Major apparel manufacturers had shifted the production capacities from Hong Kong, Taiwan, South Korea and Malaysia to Sri Lanka due to cost-effectiveness and efficient labour market conditions which had prevailed..

Wan Hai vessel (3400-teu) entering Hambantota Harbour.

The government forces were successful to a military win over the conflict and serious development projects and stabilizing its economy in the coming years and to emerge as one of the most popular countries in the South Asian region for foreign investment primarily in the services sector, shipping and logistics, knowledge and export manufacturing.

Sri Lanka is steadily progressing in maintaining on her growth rate around of 6-6.5% GDP annually since the internal conflict came to an end in 2009.The country is presently in process of developing its second international port infrastructure and airport in the southern part of the island, at Hambantota and looks forward in attracting tourism and improving foreign investment and cater to the Export Promotion zones. The Hambantota port will also cater to the shipping and logistics services which will be an essential service for import/export products to and from duty free trade zones allocated in the south of Sri Lanka.

With this on-going development strategy, progress has to be inevitable for the Sri-Lankan economic health and sustainability. It will enhance the quality of life by generating employment opportunities to the masses who live in the eastern and southern regions.

Once this port is fully geared, it will accommodate vessels up to a draft of 17-meters and will also offer shipping lines an alternate port to Colombo, with vessel support services providing bunkering, ships stores, repairs and crew changes to vessels operators with the advantage of much shorter steaming time of less than an hour to reach this port for vessels from the largest international trade route from Far-east to Europe. At present only automobile carrier's trans-ship vehicles at the port of Hambantota, but it needs to develop more activities in the container trading areas.

Main Berth 600-meters long.

Primary advantage must be shorter transit-times to compliment the supply chain process / 'Just-In-Time (JIT) production ability for the manufacturing process in India, as today many global brands are outsourcing major components in the automotive, engineering and hi-tech industries to India.

The government should also seriously look at the additional options that it can provide create a value adding logistics hub-port in the region, Asian economies will emerge as power houses in the coming decades for cost-effective manufacturing centres.

Hambantota, can play a major role by providing the required warehousing infrastructure, for inventory storing, kitting, assembling and distribution to the sub-continent region coupled with cheaper operational cost within the port parameter and attract multinational corporations and logistics service providers who already has large global manufacturing companies as their customers, and in guiding Sri Lanka towards achieving this goal.

Having the correct service advantages, Hambantota can strongly compete with Singapore and Dubai which today commands leadership as logistics hubs, provided cost- effectiveness, efficiency, political transparency and accountability can be established, which are core fundamental principles.