Blessing in disguise for ‘reforms’

They say every cloud has a silver lining; we are a country that has been starving with reforms to connect to the modern world with technology to improve the country’s processes in logistics and trading capabilities to make it a true hub given its enormous advantage being in the centre of the east west linking shipping route in the Indian ocean.

SLPA partial work disruption

Last week, we encountered a partial destruction of work at Government-managed JCT by the unions. Fortunately the country’s customers who are the ship operators and regional shippers who transship via Colombo were not seriously disturbed due to the support extended by SAGT and the CICT being the private terminals and other stakeholders operating in the port of Colombo and Hambantota.

For the last one and a half decades, I have been highlighting the importance of SLPA adapting a proper landlord model to compete with global shipping hubs, investing and partnering terminal operations and management of the same with global standards. It was in the years 2000-2001 the then Minister Ronnie De Mel initiated the ‘JCT Ltd’ a company to run in par with the first private terminal SAGT and was established in 2003. But sadly this never became a reality in implementation although many governments changed hands.

Now it is time for the national government and the best opportunity to transform and reform SLPA within the next two years in to a landlord operator. In terms of capacity JCT is already out of reach for 10,000TEU vessels, that does not mean it is redundant as all ships are not going to be that in size, just as in the airline industry whilst there are A380s there are many A320s to handle, same applies for shipping and an efficiently managed JCT will always have business.

Yes in the medium term Colombo may have excess yard capacity, but as CICT is approaching 1.8 million TEU out of its 2.4 million design capacity, we will see the peak time traffic demanding more berths in the short run in Colombo. In my opinion it is time that government gets going to establish the first berth of the East terminal which should be in operation with cranes in 2017 to avoid mainline congestion or further declining volumes at JCT. ECT would also help both JCT and SAGT to sustain and develop more business into the country. 

Indian opportunity and India’s reforms

Given the continuous opportunities and challenges in the industry and the recent initiatives taken by India to develop its ports and maritime industry and liberalising its cabotage rules and starting direct service between India and Bangladesh, Colombo terminals will have to work more closely with reciprocity in developing new business and facing challenges and providing further value addition to its customers to attract new business to our ports. I am always a firm believer that we cannot be talking of what India is doing or not doing, but we must see the expansion of India as a great opportunity for business and especially for shipping and logistics.

Given the competitive environment, we hope the Government and the Minister will urgently re-look at SLPA policies and the Colombo port model and adapt the Hambantota management model in the short term with JCT Ltd. and then work towards the SLPA landlord and regulator model. Government must get its consultancy partner to do a 15 years and a 30 year volume/trade growth study, which is probably available with UNESCAP for the region and plan out demand and capacity strategy accordingly. 

I am sure the newly appointed MD of SLPA with his global terminal management experience would agree with us on the sentiments we have shared.

IMF: Conditions for automation

It is somewhat surprising and sorry to see that during the ongoing negotiations with IMF to get a 36-month standby arrangement, they have highlighted the need in their press statement that the country need to fully implement automation and ASYCUDA++ customs module. The question is why are our authorities waiting for someone else to say that our system and processes are wrong? The local industry professionals including the Shipper’s Academy and many other associations have been clamouring for more than two decades for processes to be simplified, automated and finally the IMF had to tell this to the Government!

The question is does the Government and its agencies understand the benefits of full automation of trade?

The WTO, WCO, UNCTAD, UNESCAP has had many forums globally and locally educating government authorities on how to implement trade facilitation and the importance of it and I have seen many of our leaders and officers attending these meetings around the world and in Sri Lanka, in fact during the last regime in 2013 secretary treasury invited the former Georgian Prime Minister to Colombo who had brought the doing business performance index of Georgia to no 12/185 with fully implementation of customs reforms and the single window and moving toward paperless trade facilitation environment. But in Sri Lanka the ground reality has been they attend conferences, listen and forget. 

The question is how many in government understand the benefits and the transformation that automation can bring to the country? Simply the valuation process alone must be leaking out billions of dollars as government revenue. More than 20 key institutions should be properly electronically linked and that is how government can obtain proper data and implement full trade facilitation and access transparent information. In my opinion the import/export data alone probably has a 10%-20% variation at any given time and that is why it takes two months to get some idea of the trade stats for a particular month.

The answer

The answer is for the Government to speedily set up a trade facilitation and automation unit headed by the Prime Minister along with key ministers as a PPP with an implantation authority via a parliamentary act. No ‘Not the ICTA’. This is the model all international agencies recommend and have given example starting from Mongolia.

Sadly our knowledgeable customs officers have implemented better systems on the invitation of the Papua New Guinea government in that country for e commerce!

Therefore the government being new and a united force must make the correct changes during the next one year, so that the country will benefit the fruits in terms of export facilitation and improve the overall business climate for investment, trade and logistics. I don’t think we have many more buses to miss but if this golden opportunity is missed to introduce strong reforms to be a regional and a global hub we may be left behind by the global trends.

If we do the reforms within the next two years the country would see a paradigm shift without any doubt. Indeed the recent negative developments have given another chance for the country to implement reforms that are much needed in the maritime and trade sector.

(The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, senior consultant Ports and Aviation – SEMA, past Secretary General Asian shippers’ Council.)