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By Ashwin Hemmathagama – Our Lobby Correspondent
Minister of Ports and Shipping Mahinda Samarasinghe yesterday took his battle against the 2018 Budget move to liberalise shipping and the freight forwarding sector to Parliament further exposing disagreement over the contentious proposal within the coalition Government.
Opening the 16th allotted day of the Appropriation Bill 2018 Committee Stage Debate on the Ministry of Ports and Shipping, the Minister stated that he would not allow foreign companies to come here to make money and take all profits as a result of the Finance Minister’s proposal.
“We have to go forward responsibly. In 1992 a Gazette was issued by the Minister who specified the stake for shipping agents and the shipping companies. According to this Gazette notification, which is still in use to date, shipping agents have 60% of their respective firm while the foreign-based shipping companies have 40% control.
This has enabled the creation of 12,000 employment opportunities in the shipping and freight forwarding industry in the country which exceeds 500 establishments. I am compelled to oppose the proposed full opening up of the sector. We should not break the backbone of local businesses and give the opportunity to foreigners to make money,” he explained.
The Minister stated that the current Government was able to reverse a process initiated by the Rajapaksa administration to privatise the Eastern Terminal of the Colombo Port.
“Colombo International Container Terminals (CICT) and the South Asia Gateway Terminals are private sector-operated businesses. CICT is the only terminal capable of receiving ships which require increased depth. The world is moving to use large ships and these ships require more depth. The previous Government had been just about to privatise the Eastern Terminal but the change of government led to the cancellation of the deal. Since then, unable to make use of the terminal, we have incurred a loss of Rs. 3, 500 million approximately. If the Eastern Terminal was operating as expected, we could have competed with CICT. The future of the Sri Lanka Ports Authority (SLPA) will depend on the fate of the Eastern Terminal,” said the Minister.
According to the Minister, SLPA has increased its profits from Rs. 1 billion last year to Rs. 11 billion this year. “We don’t take money from the Treasury. The fifth phase of the Jaya Container Terminal will start soon. It will enable us to berth two ships at the same moment. At the moment we can berth only one ship. I took over office in May and was able to sign the agreement for the venture with the Chinese on the Hambantota Port. Even before I took office Cabinet approval was obtained for a framed planned, which I was to execute. Having opened discussions with the party involved I could reach a favorable agreement for Sri Lanka. It received Cabinet approval and was also tabled in Parliament. Unfortunately, the debate could not be held due to the tense situation in the House. The previous Government took $ 1.5 billion at commercial rates for the Hambantota Port. Last year we paid Rs. 10 billion for debt servicing and this year we are looking at paying Rs. 12 billion,” he added.
The Minister also proposed to develop the Western Terminal, Northern Terminal and the Trincomalee and Galle ports for the Yacht Marina.
Joining the debate, former ports minister UPFA Joint Opposition MP Rohitha Abeygunawardana stated that the previous Government was unwilling to let foreign shippers own 100% of the business.
“Former President Mahinda Rajapaksa and the Treasury Secretary decided to protect local businessmen. Now the Finance Minister is proposing to give 100% to foreign shipping companies to attract key shipping companies to Sri Lanka. Well, all international shipping companies serve Sri Lanka. This will make Sri Lanka lose $ 800 million annually. What you need to do is to construct new terminals in all ports and offer more benefits. To start a shipping company in Sri Lanka all you need is Rs. 10 million. So there is no point of trying to open up the entire market just to get Rs. 10 million per company,” said MP Abeygunawardana, who lambasted the Government for keeping the responsible Minister in the dark before preparing the proposal.
By Skandha Gunasekara
Addressing the outcry over the new regulations proposed in the Budget 2018 on the opening of the shipping industry to international players, Policy Planning and Economic Development Deputy Minister Dr. Harsha de Silva said that it was crucial to take such measures if the country wanted to become a shipping hub in the Indian Ocean.
Taking part in yesterday’s Committee Stage debate on the expenditure heads coming under the Minister of Ports and Shipping, the Deputy Minister said that Sri Lanka must be realistic in tackling this issue.
“We have to connect Sri Lanka with the world and create competitiveness in the shipping industry. This does not mean the Government is going to neglect the local players in the industry as they are doing a good job and we have no intention of undermining their work,” Dr. de Silva said.
He said that Sri Lanka must utilise the economic growth in South Asia for her benefit and that this opportunity must be taken to do so.
“It is always said that we ‘missed the bus’ to become a regional player in the shipping industry but now we have a chance to get back in the game and develop our nation through the industry.”
The Minister said the Government hoped to create a regulatory body for the shipping industry as well as to introduce a competitive shipping tax.
“Everything will be done in consultation with the all stakeholders including local agencies.”
