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CASA – Colonial cousins in Sri Lanka shipping

Comments / {{hitsCtrl.values.hits}} Views / Friday, 8 December 2017 00:00

 The Ceylon Association of Shipping Agents (CASA) in its website informs us that it is the leading voice of the shipping industry in Sri Lanka. 

The committee stage proceedings on the Ports Ministry demonstrated that it is indeed an indisputable claim. CASA in Sri Lanka shipping is as powerful as the American Rifle Association in the US Senate. CASA is as dogmatic on its exclusive preserve as the Mahanayake Theros on the unitary state. 

CASA wants to put asunder what geography has put together. 

The Port of Colombo is mainly a transhipment port. It is the pivotal point of entry to the Indian subcontinent. If it is to be developed as a mega port and a regional maritime hub it must break out from its protective cocoon that serves the short-term interests of ships agents who are the vestigial remnants of the colonial economy. 

CASA opposes the Budget proposal to open the shipping sector for foreign investment. Ports Minister Mahinda Samarasinghe opposes it. He complains that he was not consulted before the Budget proposal was presented in Parliament. He agrees with the former Project Minister of Ports Rohitha Abeygunawardene that CASA represents ‘deeshiya viyaparikayo’ – indigenous entrepreneurs who have made and are making immense contributions to the nation’s economy. It is a fallacy that ignores the realities of contemporary global maritime commerce. It also ignores the genesis of CASA which will be discussed later on in this missive. 

The idea behind liberalising the shipping sector is to make Sri Lanka a mega-portal of maritime commerce in 21st century Asia. 

There are ports that handle a lot of cargo but do not generate that much economic value. Colombo is a classic example. Colombo does not have trade clusters as in Singapore. It has no industrial real estate as in Rotterdam. It has no thriving waterfronts as in Barcelona.

A mega port cannot survive servicing as island economy. It must rely on and serve a regional economy beyond our borders.

We must not allow CASA to put asunder what geography has put together. 

A mega port according to industry experts has three dimensions; the cargo volume it handles, the economic value it represents, and the land and water surface it utilises. It is not sheer size of the port or its depth that matters. It is the economic force that it creates, that matters. 

Progress and continuity are not 

fellow travellers

Long years ago, this writer had his office located in the shopping arcade of the Ceylon Intercontinental hotel, the first international chain to set up shop in Sri Lanka. The chain was owned by Pan Am Airlines, nobody remembers. 

In retirement there is no need for this writer to visit that part of the city. A rare visit prompted by the desire of a visiting offspring to taste crab in an unlikely placed called a Ministry allowed the writer to discover the former Intercontinental of the seventies refurbished and its façade totally altered and rebranded as the ‘Kingsbury’. 

A clever rebranding. Kingsbury is the manorial seat of Sir Robert Peel, the Prime Minister who famously said: “Public opinion is a compound of folly, weakness, prejudice, wrong feeling, right feeling, obstinacy, and newspaper paragraphs.” 

Colombo Port has developed its facilities in a slow crawl into modernity over the years just as the old Intercontinental has metamorphosed in to the new Kingsbury. That pace of progress will not give us a mega port. Today the Shangri-La has dwarfed the Kingsbury. Progress moves on and waits for nobody.

The analogy is made with a purpose. Recently it was the venue chosen by the Sri Lanka Ports Authority to host the 19th conference of the International Network of Affiliated Ports (INAP). Addressing the Conference Minister of Ports Mahinda Samarasinghe promised to up the ranking of the Colombo Port. He also opposes the liberalisation of the shipping sector. 

The leap Colombo Port must make to be a mega port is more less the leap that the owners of the Kingsbury have to make to match Shangri-La! 

Ports of the future

An expert in port terminal operations, Dr. Oscar Pernia, makes a concise assessment of ports of the future that will thrive in the foreseeable future. He says that ports must make a quantum leap in technology. A proposition that is beyond the exaggerated capacity of CASA. 

The port of the future is not only about accommodating bigger vessels. The port must be a facilitator of broader carrier alliances. It must provide a hub and spoke network and be continuously engaged in evolving systems that reduce costs through capacity consolidation.

At the same time the port must attract increased investments that improve productivity and offer higher levels of service in the firm of value addition in transhipment. 

Managing and improving productivity will require significant investment in new technology. It calls for radical changes in operational mindsets and use and deployment of technology. 

Port operators of the future will be managing far more information technology than in the past. Futuristic ports will leverage cloud based networks to connect with far more shipping partners. It will process vast amounts of data to improve planning, controlling and execution of their operations. 

Leveraging geography of Colombo

Making Colombo a mega port compels us to comply with a natural certitude that Anushka Wijesinha, former Chief Economist of the Ceylon Chamber of Commerce, asserts with eloquent precession. In a June 2016 article in the Diplomat, he says, that we are “at the doorstep of a dynamic market – India. Already, 75% of Colombo Port volumes are transhipments from India; the Indian middle class market alone is set to expand to 10 times the island’s entire population. In addition, Sri Lanka has a Free Trade Agreement with Pakistan, which is going to be expanded to cover services and investment, and will have an agreement with China soon. These developments together will make Sri Lanka unique in having preferential market access to India, Pakistan, and China — combined, these markets account for 2.7 billion people.” 

If we disregard this reality and allow ourselves to be deluded by xenophobic imbeciles and purblind profiteers, we do so at our own peril. 

Geography has made India and Sri Lanka neighbours. History and necessity has made us reluctant yet interdependent allies. Fate and fortune commands us to be partners in exploring and exploiting maritime commerce of the Indian Ocean in the 21st century. Let not CASA put asunder what nature has joined together. 

Genesis of CASA 

We must now deal with the genesis of CASA – Ceylon Association of Shipping Agents. 

In its 200-year history, British imperialism in created what economic historians call the ‘grandest society of merchants in the universe’ – the British trading houses in their colonies. 

Thrithankar Roy, a Bengali-born economic historian of the LSE, in his monumental work ‘India in the World Economy from Antiquity to the Present’ says that colonial Indian territories which included Ceylon in the period 1757-1947 witnessed a dramatic growth in long distance trade. The shipping tonnage handled in the colonial ports in the subcontinent increased from 100,000 tons to over six million tons between 1798 and 1914. 

This is the fertile ground on which the ancestry of CASA is rooted. They are the colonial cousins who are bent on preserving the status quo. 

We call them agency houses. Their name-boards proudly announce the year of their founding in the 19th century and some even dating to the 18th century. 

These agency houses were pioneered by mostly Scottish and routinely roguish innovators who developed an imperial port first in Galle where Charles P. Hayley landed in 1878 and Patrick Gordon Spence landed in 1868. 

‘Deshiya Viyaparika Prajava’ – 

the indigenous merchant class

 These agency houses dominated the political and economic geography in the Indian Ocean until the late sixties in the last century. During those years, the so-called ‘Deshiya Viyaparika Prajava’ – the indigenous merchant class – were in the bazaar areas of the Pettah. The Agency House Sahibs were in the Fort.

In India and among Chinese in the Straits Settlements there was an ancient tradition of international trade. The indigenous merchants of India and Peninsular Malaya – the Marawaris in Bombay, Bengalis of Calcutta and Chinese in Hongkong and Singapore – restructured their colonial agency houses immortalised by James Clavell in his novels Taipan and Nobel House. 

In Sri Lanka the process was very different. The tycoons who came of age in the post JR market economy by accessing State-owned assets acquired ancient Scottish brands which they used to gain entry to the establishment. 

The merchants of the Pettah bazaar became the new sahibs in the fort. Continuity of the imperial order was guaranteed. To the upstart class, business skills and innovation was less important than skills in cricket and rugby. 

Their new world lingered uncertainly until T.B. Illangaratne from the village of Thumpane in Kandy infused 20th century common sense n to the tough craniums of the brown sahibs. He impacted all sectors but strangely left shipping to muddle along. This time, Mangala Samaraweera from the village of Walpola in Matara has decided to bring shipping into the 21st century. 

State capture by captor firms 

Though their antecedents differ, Mahinda Samarasinghe and Rohitha Abeygunawardena are both adept practitioners of clientelist politics. One is an elitist and the other a populist. CASA is a cartel for all seasons. CASA represents an entrenched business class that survives on their ability to shape rules of the game to their very substantial advantage. 

The phenomenon is not new. It is the most pernicious problem encountered in the political economy of meaningful reform. It is known as state capture. The powerful lobby groups are made of captor firms. Their resources even include the Buddhist clergy. This writer noted an eminent Buddhist monk describing ship agency firms as devout institutions, generously assisting the ‘Sasana’. 

Friends in high places 

Such captor firms are not a symptom but the fundamental malaise that cause poor governance. Such captured economies are trapped in a vicious circle in which, reforms of institutions and changes in policy are held hostage by powerful business interests. They have friends in high places. 

Policies are not good for some people and bad for other people. They are on balance, either good for society in the long term or bad. What is good for the colonial cousins of CASA in the short-term is bad for the nation now and in the long term.

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