Appeal to Malik to fix problems in Colombo port

Dear Minister, we appreciate your efforts to re-structure the BOI and the EDB, we are happy that credible appointments have been made to the management positions at both these intuitions under your leadership; however as the minister of international trade we draw your attention to the port of Colombo as it is a critical institution for our export/import competiveness. The indication seems that the new management of SLPA is not sensitive to the vital export/import sector although the government policy is to improve exports.

Last few weeks we have seen on media how our LCL cargo is handled inside the port. End of the day exporters and importers pay millions for all the inefficiency of the SLPA by way of money and time and lose our international competiveness. Bribery and corruption too is rampant.

The trade is paying a US$ based tariff for all port charges including LCL cargo which means SLPA is earning more for local services by enjoying the currency depreciation for both LCL/FCL and all other logistics charges and wharf charges. In addition we all know that for local containers the industry pays nearly four times the transshipment container cost and is one of the most expensive ports in the region for domestic cargo lift on and lift off. Minister, you being a veteran exporter and an importer for export purposes knows how difficult it is to compete in the international market to retain our business, let alone expanding. The vision of late Lalith Athulathmudali in 1979 was that as transshipment volumes grow the benefit of increased revenue  should be passed on to the exporters to be more competitive in the global market  as they too pay the US$ tariffs. The port charges were amalgamated in 1987 and made as the current tariff which was one of the highest in South Asia. In 1987 on an average Rs. 45 was paid to the SLPA for one USD. Today each dollar brings Rs. 145 to SLPA which is a natural increment (nearly 9% for the last year alone). Also SLPA has reduced staff nearly 20% compared to a decade ago. And efficiency levels are much lower than SAGT and CICT.

The local exporters never protested on high local charges as they agreed that we pay more to subside transshipment for better connectivity from Colombo and expected benefits from the volume growth, unfortunately the volume growth benefits have only gone to the ship operators who now enjoy volume rebates, the local industry which contributes to the biggest revenue of SLPA has not got any reduction although the throughput of containers alone has grown from ‘0’ in 1979 to 5 million in 2015.

It seems that the current management of SLPA thinks that bad investments and corruption in the past should be passed on to the local export/import community and service providers, most government officials and service providers  have the mentality of ‘cost plus model’, which is passing any cost increase to the end customer without looking at innovation and technology. Minister, you know that we exporters can’t pass on costs as we like to buyers in the international market, which is why we believe in good, transparent competition regime to help us on our exports as most regional currencies including china have depreciated in double digits.

The latest, we understand is that port permits have been increased by 4,000%, even if you calculate from 1987 the Rs. 300, annul permit increased at 10% adjusted for annual inflation the cost would be as given below in 2016 around Rs. 4,500, but it has been jacked up to 12,000!

As you know the truckers as usual pass on the cost to the local exporters and importers and finally the manufacturer and the consumer will have to take on the cost burden. On the other hand, there are thousands of workers who enter ports for work at cement companies, flour mills and the dry docks along with other port users for logistics who enter the port. All this costs will end up as exporters’ and importers’ costs. We are made to understand one company inside the port will have to pay extra Rs. 37 million on permits to run the operation with the workforce they have to manufacture export vessels. 

Hon Minister, historically we see that most of the time, port management thinks their customers are only the ship owners and not the cargo owners, and ship owners and agents are taken as advisors to the port. They have given very little hearing to exporters and importers when policy is adapted. We seek your urgent attention in this regard, not only as the Minister in charge of international trade strategy but one with acumen with business knowledge and with great experience in the apparel trade and the export market.

Please take up the matter with the Prime Minister, Finance Minister and Port Minister and if needed appoint a committee before implementing unfair cost recovery from the local market when we are supposed to generate more dollars through international shipping development. Please don’t allow people who only know ‘cost plus passing mechanism’ to harm the export industry as we do not need such managers to do that and to run a port.

From a worried exporter