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‘Maritime Development Project’ misinterpreted with Budget 2017/18 proposals

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‘Liberalisation of shipping industry’ is necessary to promote ease of doing business, to remove the shackles of non-applicable regulations, clear the fouling of archaic regulations with current industry needs and as far as possible to steam ahead with new facilitative regulatory regime or deregulation, if the Government policy is a liberal economy – Pic by Shehan Gunasekara


By Capt. Ranjith Weerasinghe 

Renewal of the Merchant Shipping Act, Ports Authority Act and to bring in an independent Regulator perhaps by way of ‘Sri Lanka Maritime Authority’ are amongst those landfall events the maritime expedition of this country has long been looking out for altering course and charting a new one towards destination of greener, thriving shipping and maritime industry of the blue economic seas. 

But anchoring on such scanty information of the Budget proposal as ‘liberalisation’ for maritime economy does not seem to hold ground in a tumultuous sea of misinterpretation of ‘Liberalisation of shipping agency and freight forwarding industry’. It is necessary to heave up anchor from those uncertain grounds of misinterpretation to head towards the safe berth of the thriving maritime industry expected by the Budget.

Shipping agency or freight forwarding are two minor components of the industry which however are considered major in the Sri Lankan context because of the absence of real major parts of the industry of ship owning and operation and local cargo. However, local shipping agency and freight forwarding companies more with able human capital than large financial capital outlay effectively and adequately meet the local demand of that component so that there is hardly any work left for foreign companies to set up office here for agency work which essentially is local component due in the country. It makes no sense if that component is also taken away from the country.

The two major components of the shipping industry are ships and cargo. The maritime industry follows next with ports and terminals and all other maritime services. Sri Lanka neither has a large shipping fleet nor a large volume of local import and export cargo to boast a shipping industry by any standard. Thus, it must be clear to all parties that shipping agency business is not the “shipping industry” itself. What we do have is a reasonably-sized maritime industry. 

Our ports and terminals as the primary part of the maritime industry or an industry by itself currently thrive on transhipment cargo. The associated maritime services to such cargo and its movement and ancillary services to ships calling our ports, anchorages and OPL are amongst the next major activity of maritime industry including agency work. However Sri Lanka has the potential to further develop the maritime services industry to capture the large market in our own maritime domain around the country if we could offer the right reason for those ships to call our ports other than cargo.

‘Liberalisation of shipping industry’ is necessary to promote ease of doing business, to remove the shackles of non-applicable regulations, clear the fouling of archaic regulations with current industry needs and as far as possible to steam ahead with new facilitative regulatory regime or deregulation, if the Government policy is a liberal economy. To navigate towards that kind of liberalisation, it is essential to dredge the roadsteads clear of some of the restrictive shallows of the shipping and maritime industry. Amongst them, the voyages of the following are notoriously impeded in the passage, though for most, they may have circumnavigated by sheer luck or still are beyond the visible horizon of ignorance. 

1.Ships: In the absence of an appreciable national fleet of ships, it is necessary to encourage the large ship fleet owners/operators/managers to set up offices here as in Hong Kong or Singapore. Also make the Sri Lanka Ships Registry attractive for such ships to register under our flag, so that more ships and maritime activities will keep the industry busy in and around our ports, harbours and roadsteads. It may naturally create more business opportunities for the entire spectrum of local maritime Industry, employment opportunities directly for local staff both afloat and ashore and indirect employment through supporting industries.

2.Local cargo: Enhancing local cargo volume is entirely out of the control of shipping and maritime industry; thus the country’s production must be voluminously increased both in industrial and agricultural sectors by other Government initiatives. The Government’s intentions of Hambantota industrial zone is a hope in this regard 

3.Transhipment cargo: Whilst Indian Sub continental container transhipment is sustained, infrastructure continuously developed and vigorous marketing is continued to compete at all times, visionaries must come up with other types of transhipment or similar activities to be promoted; such as entre-port operations, ship to ship transfers, oil storage tanks and terminals such as the Trinco tanks.

4.Maritime services: Development of ports, terminals and berths, and their efficiencies for all other maritime services to capture the vast number of ships plying our own maritime region. The maritime service sector must be developed as a project under the Maritime Authority. As for the Ports Authority Act , it is necessary to bring in the changes, so as; 

a. SL Ports Authority to be a commercial entity without regulatory authority.

b. ‘Sri Lanka Ports’ can be like ‘Sri Lanka Telecom’ (regulated by TRC) whilst JCT, SAGT, CICT and others carry on as corporate terminals under the regulations of the intended Sri Lanka Maritime Authority

What is the required “liberalisation of the industry?”

For all the above developments, we require a conducive atmosphere. Sri Lanka does not have a merchant shipping fleet of international trading vessels. For capital-intensive ship owning, it is not possible to have a national fleet overnight. The Sri Lanka registry is almost devoid of foreign-owned international trading vessels. A ship owner may be living in any part of the world, but Ships Registry, the management, operation, and charterers can be anywhere else in the world. Our efforts should be to make ‘that place’ be Sri Lanka. Efforts must be made to attract those to base in Sri Lanka. 

The Sri Lanka Ships Registry must be geared and attractive. Currently, Sri Lanka has no such policies or regulations facilitating such activities. No regulations even for ships trading international or coastal. What has been posed as regulations are only International Conventions signed by the country and not implemented by Parliament. At the moment the Sri Lanka Ships Registry is not attractive even to run a coastal vessel. Not to mention the non-existent regulations extended to small harbour-services boats and hard and fast arbitrary rules expected for tourist boats. Such a recent gazette notification by officials which mislead the minister with an unpublished code of safety kept in officials’ drawers purported as regulations meant for small vessels below 24 meters must be thrown overboard as environmentally permissible rubbish. 

Ship management companies, operating companies, and chartering companies should be able to start their offices here with 100% ownership as their earnings would come from those international trades and not from local agency or freight forward

ing. For all of this, merchant shipping regulatory structure, regulatory body must be efficient and attractive in all respect. 

Currently, there are more unwanted regulations than the applicable. So there is an absolute anarchy in maritime regulatory regime fettered by inappropriate inapplicable regulations. That is one reason why the Merchant Shipping Act needs a complete revision and the need for independent Maritime Regulatory Authority superseding all associate regulatory institutions. That is one of the ‘liberalisation’ aspects the industry expects from the Government. 

When inviting foreign ship owners, ship operators, and ship managers to set up local companies, they could be allowed to have 100% foreign shareholding and attractive incentives on such conditions as;

  • Registering a given tonnage of international trading vessels under Sri Lanka flag to set up a ship owning company, not necessarily offshore companies
  • Introduce a given number of ships to use Colombo as a port of call to set up an operations company
  • Introduce a given number of vessels to which local crew and shore staff are employed to set up a ship management company 
  • Or combinations of the above

The Maritime Project

In order to arrive at such a thriving green destination through the blue economic seas, the Government must embark on an enterprising ‘Maritime Development Project’ more like how Mahaweli project or a BOI system was embarked on. For which the keel must be laid for a brand new highly-efficient cruise ship of an apex body of ‘Maritime Authority’ which would be with wider command of powers, responsibility and accountability to promote, develop, facilitate, regulate and propel the entire spectrum of maritime activities of the country redesigning or revamping the existing institutions as a paradigm shift

(The writer can be reached via freedom@freedom-of-highseas.com.)

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