Op-ed/Special Reports

Call to liberalize Sri Lanka shipping for export competitive economy

Wednesday January 4, 2023 7:18 am

ECONOMYNEXT – Liberalization of Sri Lanka’s shipping business to end current protectionism in the agency business, with other countries now taking the initiative to move ahead, two senior officials representing shippers have said.

Countries that liberalized have seen more overall businesses, including for small and medium businesses they said. Protection and restrictions however may be holding back the potential for Sri Lanka to become a maritime hub going beyond transshipment.

“The only beneficiaries of such policies have been those who hold agencies with the major shipping lines,” Global Shippers’ Forum Chairman and the Chairman of the Apparel Logistics Sub-Committee of the Joint Apparel Association Forum of Sri Lanka (JAAF), Sean Van Dort said in a statement.

“But the harsh economic reality we now face as a nation have made it impossible to justify sacrificing the interest of the nation, and the competitiveness of its exporters, exclusively for the benefit of just a few parties.

“Based on what the President and other key officials have stated in the lead up to Budget 2022 and subsequently, I believe that policy makers are starting to appreciate this fact.

“Throughout Sri Lanka’s post-independence development, every Government has signalled their ambition to transform our nation into a regional maritime hub.

“However with the exception of the bold efforts of the late Hon. Mangala Samaraweera, there has never been a Government that was willing to pursue the liberalization policies necessary to facilitate such a transformation.”

Reaping the benefits of an open, liberalized economy starts with shipping

From a global perspective Sri Lanka’s unwillingness to reform risks eroding the overall competitiveness of its logistics sector as a whole, Shippers’ Academy International Founder, Rohan Masakorala.

“Across Asia, and particularly in the Indian Ocean, Sri Lanka remains the only country to have maintained protectionist policies for shipping agents,” he said.

“By contrast, acknowledged global leaders in maritime logistics like Singapore and the UAE allow for 100% ownership of shipping and freight forwarding agencies, while countries like Malaysia are over 70% open.

“Most recently, Philippines and Vietnam also announced plans to liberalize their domestic industries, while Europe, the U.S. and even China allow for foreign ship owners to open local offices.

“If we fail to commit to a similar path of reforms, we risk lagging even further in our development, and eventually being left behind altogether Either we reform and adapt or we perish. There are no other choices.”

Opening for foreign investment and ownership, the sector as a whole would be forced to enhance its competitiveness, and eliminate hidden inefficiencies, he said.

It was as mistake to believe that opening will overall reduce opportunities for local businesses, as evidenced by countries like Singapore which has seen an overall growth.

Singaporean logistics sector, was home to 140 global shipping line headquarters, and still has room for over 5,000 local shipping agents.

“Meanwhile, the investments, knowledge and technology transfer infused through foreign ownership would expand the economies of scale across the Sri Lankan logistics sector, creating new niches for smaller players, and making export markets more accessible to Sri Lankan SMEs,” Masakorala said.

Those opposed to liberalization say that the shipping industry is already liberalized except for the “insignificant” business of local shipping agents, which are currently protected from foreign ownership, Maskorala and Van Dort said.

Opponents of liberalization also say opening up domestic shipping agencies to complete or even partial foreign ownership would risk removing domestic participation in this lucrative business, without securing any significant benefits for the nation.

Proponents of liberalization have argued that such policies only protect the interest of local shipping agents, while discouraging global shipping lines from engaging with the domestic market, and blocking private sector foreign direct investment into critical infrastructure.

While both camps have been deadlocked for decades, Sri Lanka’s unprecedented economic crisis and urgent need for foreign currency inflows has re-energized arguments in favour of liberalization the duo said.

In Sri Lanka freigh forwarding is also restricted for foreign investment.

The success of ExpoLanka, in which foreign investment was allowed with a temporary lifting of restrictions demonstrated the potential, Van Dort said.

“Foreign ownership brings numerous extremely valuable benefits, and we need not look further than the success of Expolanka, or any of the other logistics hubs that Sri Lanka is competing against to see the proof,” he said.

“By lifting ownership restrictions, we encourage international ship owners to get engaged and invested in Sri Lanka, and properly utilize our location to link up with their global networks.

“Instead we are currently treated as purely a cost center that feeds regional competitor ports that actively encourage ownership from global shipping lines. The added control that results encourages them to instead treat such ports as profit centers.”

Countries like Singapore and Dubai however have monetary stability allowing for stable economic conditions.

Sri Lanka however has a flexible exchange rate which has led to currency crises, permanent depreciation and social unrest. Instability has worsened after so-called flexible inflation targeting, where an attempt is made to target inflation without a floating exchange rate. (Colombo/Jan04/2022)

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Weather and Climate

Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Monday June 3, 2024 2:17 pm

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

Politics

UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

Monday June 3, 2024 1:59 pm

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

Accidents

300 of 100,000 trees in Colombo considered high risk: state minister

Monday June 3, 2024 1:05 pm

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)