Sri Lanka to become Indian Ocean hub in shipping and freight forwarding

The government also targets other maritime industry related services and plans to promote greater volumes of containers to be transshipped via terminals in Sri Lanka where public money has been used to develop such ports.


( November 10, 2017, Colombo, Sri Lanka Guardian) The government’s Vision 2025 has made a key policy proposal to make Sri Lanka an Indian Ocean hub. At the same time, port capacities in Colombo, Hambantota and Trincomalee will be expanded to maintain the competitive advantage to increase transshipment activities.

Without the owners and operators of the global shipping industry and logistics industry in Sri Lanka, the country  will not move on to the next phase of shipping and logistics. Agency business is a third party service provider only.

The government also targets other maritime industry related services and plans to promote greater volumes of containers to be transshipped via terminals in Sri Lanka where public money has been used to develop such ports. Sri Lanka needs to promote more loose cargo and consolidations cargo as well as entrepot trade.

Sri Lanka or other regional countries are not mega ship owners as they do not possess the global scale or capital to develop shipping activities since industry is very capital intensive. Therefore, it is essential to create a conducive environment for global operators in shipping and logistics to be given a choice and a free hand to provide services to the regional countries as well as Sri Lankan exporters and importers while making Sri Lanka a maritime hub rather than a transshipment location.

The government has adopted the policy to be the most liberal economy in South Asia.

The two major maritime economies of South Asia – India and Pakistan – have already fully liberalised the shipping sector, just as the hub of Singapore and other regional competitors.

The choice of having an agency or not should be the wish of the owner of the business who brings in vessels to the port of Sri Lanka and regional cargo to Colombo. The government does not want to restrict the global operators of ownership as it may deter them to look at Sri Lanka seriously if government ensures agencies by law, which amounts to a protectionist measure.

The government is of the view that the owners and operators have the freedom to decide on what their cost and what their operating model would be. Such a freedom would make Sri Lanka a competitive and an attractive choice to invest and relocate regional headquarters which will over a period with their expertise to transform the location advantage to a real meaningful logistics hub.

The presence of global operators will create new opportunities for the local industry partners and the country’s overall economic freedom will be reflected positively.

On the other hand, with liberalisation comes better options for local exporters and importers as they will have direct dealings without third parties which will eliminate costs such as commissions etc. and when global presence is increased the multiplier effect to the economy would be greater as time passes. The critical mass will also increase to become a stronger distribution centre in the Indian Ocean.

The liberalisation process not only gives choice but new opportunities for trade and trade agreements with increase connectivity. Serious players of the world will come to Sri Lanka for the long term partnership with the country. Others will still have agencies and joint ventures as they wish. This policy is a commitment by the government to make Sri Lanka a true Indian Ocean hub.

Country Foreign Ownership Allowed %
India 100
Pakistan 100
Singapore 100
Hong Kong 100
Oman 100
Malaysia 51%

 

In the Middle East, Salalah is 100% owned by Maersk, Dubai is a different model with a sleeping partner and a no tax regime. But there will be a regular tax for these companies who will have ownership as proposed.

India is trying its best to compete on trans-shipment with us and now not only shipping is liberalised, but even terminals are offering equity to shipping companies, while aviation too is fully liberalised.

Author: Sri Lanka Guardian

Sri Lanka Guardian has been providing breaking news & views for the progressive community since 2007. We are independent and non-profit.

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