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and friends, on behalf of the SLSC, I extend to you a warm welcome to the post-business session of the 44th Annual General Meeting of the council. We are indeed privileged to have Dr. P.B. Jayasundera accepting our invitation as our Chief Guest along with Ashroff Omar who is present today as our Guest of Honour.
Sir, with the advent of peace, political stability, infrastructure development and more importantly regulatory reforms, we are now witnessing economic progress in all frontiers. As the council representing the shippers of this country, I thought it’s appropriate to take a few moments to reflect on the past that has propelled us to the present moment in time.
On one hand our gallant security forces were engaging a ruthless element that was trying to divide our motherland; on the other hand our Government was confronted by international pressure to halt the humanitarian relief effort that was pregnant with a vision to eradicate war and bloodshed once and for all from Sri Lanka. However, during this time, you together with the authorities under the direction of the President continued to create a conducive environment for economic development.
In the meantime, the importers and exporters of this country were still facing a competitive issue in the international market as a result of unethical, anti-competitive, non-market friendly behaviour of some service providers who were imposing various charges and surcharges on the trade, even though they were not providing a service to us. In other words, they have contracted with one party and recovering such cost from us for providing a service under the guise of nominated service providers. We struggled approximately for 18 long years, without having a proper forum to submit our case who was willing to listen to our grievances.
Taking up the challenge
Sir, for years we suffered. Each time we brought up the issue, we were told to adjust our sales contracts whilst not looking into the contractual obligations of the transport contracts. We were shown the international commercial terms. Therefore, sir, we took up the challenge, and commenced our homework before approaching you and the authorities. Sir, we travelled to Canada in the 2008 and made a presentation to the Global Shippers’ Forum in Montreal where the world’s strongest customers and trading houses are found. We realised that they are not facing such problems and those countries have very strict regulatory measures to protect exporters, manufacturers and consumers.
At the Montreal Forum, GSF agreed for us to present a paper through the Asian Shippers’ Council for the same to be ratified in London in 2010. In London, the proposal submitted by the Asian Shippers’ Council was agreed upon by the global body and they, including the United States and Europe decided to support our changes at the International Chamber of Commerce in Paris.
We submitted our drafts, presentations etc., to the Paris Drafting Committee of the ICC and convinced the rationale to be in line with best practices in the world, taking into consideration the developments in the containerised cargo. The ICC Drafting committee incorporated in their new guidelines in the INCOTERMS 2010 publication, which provided clarity and identified proper terms to be used in the containerised cargo reflecting the actual position.
Sir, it is only then that we came to you. You will appreciate that we did not request the Government to interfere in fixing prices or charges, but to recognise the fact that such charges are part of the freight and we requested to provide a regulatory mechanism to bring transparency and accountability to establish fair trade practices and to avoid uncompetitive behaviour of stronger parties.
Sir, we are fully aware that since 2010 you have been studying this matter, understood the rationale and brought about the regulatory mechanism to bring about transparency which the world has now accepted and given credibility.
Moving to the next level
Having reached this historical landmark, we in fact elevated this to the next level by creating awareness of this mechanism within the world’s recognised shipping bodies. When some of our service providers were painting a bleak future claiming that there will be a serious negative impact on our export revenue since buyers will move away and no shipping opportunities will be available in the port of Colombo if this regulation is continued to be enforced. Sir, you may not be aware that some of our service providers in fact went to the extent of suggesting to create an artificial space crunch to pressurise the Government to reverse the regulation.
In fact sir, we had a serious difficulty with the British Shippers’ Council who were influenced by a leading buyer of Sri Lanka who were misinformed by certain service providers and made a statement that Sri Lanka was corrupting the internationally accepted INCOTERMS quoting our piece of legislation and complained to the Global Shipper’s Forum that this should not be supported.
We intervened and explained our position and the principles behind our law to the Global Shippers’ Forum. We explained that it is not the Government or the exporters and importers of Sri Lanka who were violating this law but the unethical behaviour of trading houses and nominated service providers who were violating the INCOTERMS and principles of contracts of carriage, and the British Shippers’ Council has now understood the ethical and rationale principles in this law.
Sri Lanka shows the way
Sir, I personally represented Sri Lanka Shippers’ Council at the Asian Shippers’ Council forum in Shanghai in 2013 and the Global Shippers’ Council in Los Angeles in January 2014, and it is my privilege to inform that the Secretary General of the Global Shippers’ Forum, Chris Welsh said.
I quote: “Shippers in Africa, Asia and South America have now called time on these unacceptable shipping practices which long ago disappeared in European, North American and liner shipping trades in other more developed economies. As part of a coordinated global campaign, the GSF will take the matter up with the main political, UN and other international agencies such as the African Union, UNCTAD, WTO, OECD, ASEAN and MERCOSUR. In addition we will support the implementation of the kind of national legislation introduced in Sri Lanka to deal with this widespread problem.” Unquote
It is also encouraging to note that the spirit of more ethical service providers are now adhering to the new regulations, particularly multi nationals who are exposed to the international best practices, while an unscrupulous few are still trying to dodge such clear regulations.
Additionally, sir, the efforts taken by us with the clear direction of our Government was well appreciated by 18 countries of the Union of African Shippers’ Council, Brazil, Pakistan and India. So much so, these entire Shippers’ Councils in those countries have requested and were provided with this piece of our legislation. Furthermore, no lesser person than the Secretary to the Ministry of Commerce of India during a recent visit to Sri Lanka has met the Director General of Merchant Shipping and carried out extensive discussions on this legislation as the Indian importers and exporters too are experiencing similar situations.
Given these facts, sir, we are extremely proud that the President, you and the authorities have set the best example on the necessity for government intervention, at the right place, right time and with the right spirit, without interfering in the market, whilst protecting the interest of the trade so as to ensure that unequal bargaining power of one party will not distort free and fair trade.
Smooth flow of exports
I am also pleased to report to you sir, that all major buyers, particularly of the apparel industry that I represent, are now adhering to provisions in the law of our country and a smooth flow of exports is witnessed. We do engage and bargain with our buyers and have come to an understanding, and the position we took is that, as ethical manufacturers we are required to abide by our law and similarly being ethical trade partners, they should follow suit.
Sir, while introducing this regulation, you have been generous and conscious about our small and medium service providers and permitted to charge a delivery order fee, but, unfortunately a segment of the service providers are attempting to misuse this facility. Sir, the situation has been corrupted to such an extent where certain trade associates are still trying to subvert justice and trying to continue these unfair practices without being innovative, creative and efficient to differentiate their services in the market but challenging the authorities.
We are aware that you have already set in motion the mechanism to resolve this issue and we believe that nobody will be given permission to violate the basic principle that cost can be recovered only from the party who is contracting for such services and no other. This is the basic principle enshrined in this legislation. This vision of the Government should not be permitted to be tarnished or manipulated by anybody, be it big or small players.
Sir, my desire in elaborating the above was to emphasise that the reform agenda that you have carried out on the direction of the President has created a historical landmark, not only in this country but beyond boundaries. Similar regulatory mechanisms were earlier found only in the Western world, but today Sri Lanka has taken the lead to introduce these best practices to the entire Asian and African regions. Sir, I may say it is yet another first-of-its-kind in this part of the world and we thank you for all support extended.
e-commerce
Sir, we need to request your attention to the area of e-commerce. The Shippers’ Council is working very closely with the Customs, SLPA and BOI. We are delighted that on the basis of directions given by you, and more fully described in a number of budget proposals, in the previous years, we the exporters effective July 2014 will pass our export documentation online, connecting all these three stakeholders. This is another trade facilitation measure that is now introduced by our Government and it will further improve our competitiveness in international trade.
Sir, we look forward to the full implementation of electronic documentation on imports as well, which is now being developed by the Department of Customs.
Ladies and gentlemen, I made an effort to elaborate the beneficiary policy framework that has been created by the Government for our membership engaged in industry, imports and exports.
We are confident that, as a result of this supportive policy framework which empowers and enables us to reach the expected targets for an export turnover of $ 20 b by 2020, it would be a reality and not a dream. We, the exporters and importers of Sri Lanka, pledge our full support in this journey and place our confidence with the authorities.
Sir, before I conclude, I wish to congratulate the Government on its proposal to establish a fully-fledged Merchant Shipping Authority in order to meet the demands of modern maritime transportation and the maritime hub aspirations of our motherland. We would like to be a party in the deliberations of the development of this authority.
I thank you sir for your kind presence and accepting our invitation, and welcome all of you in the audience on this occasion.
