Sunday Sep 22, 2024
Sunday Sep 22, 2024
Monday, 7 July 2014 00:00 - - {{hitsCtrl.values.hits}}
I am very grateful to Admiral Colombage, Commander of the Sri Lanka Navy, for having accepted our invitation to be the Chief Guest today. Admiral Colombage is also the Chairman of Ceylon Shipping Corporation, which is being revived again with the purchase of new vessels. He is also appointed the Hub Master, and will drive the Government’s initiative to be the maritime hub of South Asia. Your presence this evening, Admiral, is a great honour to all of us.
I also wish to acknowledge the presence of very senior and important personalities from the Government institutions and the industry. I wish to thank them all for their presence. I also would like to acknowledge the presence of the past Chairmen of SLFFA, who have been a great strength to me and the Executive Committee, in offering valuable advice, especially on larger issues in the industry.
Turbulent environment
Having completed one year as Chairman, it is time that we looked back to see what we have done and achieved. Needless to say, we have had a very turbulent environment in the year under review, as the Government introduced new regulations unexpectedly, and that led us to make drastic changes in our operations and systems. I’m referring to the removal of Terminal Handling Charge in January this year, followed by the relaxation of restrictions in foreign shareholding in our industry.
We know that the Government is giving a lot of attention to the shipping and transportation sector, expecting it to propel the economy to achieve the rapid growth that is projected. We also know that the introduction of these new regulations is with that objective in view.
However, it is very important that the view points of all stakeholders are taken into consideration prior to introducing such regulations, and I must say that there were no discussions whatsoever with the service providers, before these regulations were introduced.
If I may take you few years back to year 2011, prior to introducing the Licensing Regulation that was effective from 2012, the Government held many discussions with the stakeholders such as SLFFA, CASA and Shippers Council through the Director General of Merchant Shipping. As a result, a comprehensive and an acceptable licensing procedure was introduced. However, though the regulation was in place, there were a number of forwarders that still operated without a license. That was due to poor implementation of the regulation. During my term of office, I placed this point on top priority, and wanted to assist DMS to successfully implement the licensing regulation. Accordingly, SLFFA held several discussions with DMS, and then submitted a proposal with suggestions to move forward.
We are thankful to DMS for accepting the proposal and taking certain steps as suggested by SLFFA. That include the insertion of newspaper advertisements announcing a deadline to all non-licensed freight forwarders to register before a given date, issuing instructions to all banks and the Exchange Control Department to accept negotiable documents only from forwarders that have Class A License, and meeting with the Director General of Customs and requesting him to restrict dealings to only the licensed freight forwarders through the Customs software. That worked very well, and many non-licensed forwarders registered thereafter, and with that, the first step in regulating the forwarders was successful, thanks to the continuous dialogue by DMS with the industry stakeholders.
Negative side of THC removal
Our next objective was to assist DMS to try and streamline the local charges collected by the Forwarders, as there were many complaints of over-charging situations by certain operators. SLFFA Executive Committee debated on the best practices to be implemented and we were in the process of preparing a comprehensive document in this respect. It was at this point that the Government announced the removal of Terminal Handling Charge at Colombo, through a Gazette Notification in January 2014. Since this came to us as a surprise, we had to make fresh plans on the charges.
The new regulations may have certain positive factors, but they have totally lost sight of the negative side, where we will lose certain businesses and revenues as a country. The best examples are the Import De-Consolidations and the Multi Country Consolidations. What was collected and remained in the country on de-consolidation is now being collected outside our country, resulting in loss of foreign exchange. THC concessions given to forwarders to attract more volumes, competing with other hub ports, is no longer available since the THC is now pre-paid, and is collected in full at origin. Therefore the country is losing its competitiveness in handling MCC operations. Apart from that, the importers are now paying higher freight rates, and also higher Customs duties.
We wrote to the relevant authorities, highlighting the issues faced by forwarders. Though several meetings were held with DMS and the Secretary to Treasury, no solutions have been found as at date, and the discussions are continuing.
Meanwhile, the traders have been looking at a single-line D/O Fee without Liner D/O recoveries. Accordingly, SLFFA made a proposal to DMS on the D/O Fees, however, the trade associations did not agree on it, and therefore, SLFFA reverted back to the old system of applying the D/O Fee that is filed with DMS and recovering the Liner D/O Fee separately.
The Secretary to the Treasury, at a meeting held to review the implementation of new THC regulation, noted that the D/O Fee matter is not resolved yet, and accordingly, on a suggestion made by SLFFA, he agreed to convene a meeting with all stakeholders. We are now waiting for his call to meet with him along with other trade associations.
This is where it stands as at now with regard to the THC regulations and the D/O Fees.
Foreign shareholding and airline surcharges
The next issue that we took up with the authorities is the relaxation of restrictions on foreign shareholding. As we all know, the shareholding of foreigners in shipping and forwarding industry have been limited to a maximum of 40%. This was clearly defined in the initial licensing regulation too, under clause # 5. The Government however issued the Licensing Gazette Notification once gain at the beginning of this year, excluding the clause that was listed under # 5. Through representations made to the authorities, we are happy to say that we have been able to get a direction from the Minister of Investment Promotion to the DMS, requesting him to observe the restriction. We are however pursuing with authorities to bring back the regulation to this effect.
I took time to explain this area at length, because this is the hot topic among all our members and all forwarders are concerned what is going to happen next. Therefore, placing the correct picture before you is my responsibility.
Beside the above issues, we also saw a few airlines notifying the trade last year of their intention to collect all surcharges on the ‘chargeable weight’ instead of the gross weight, which had been the practice. SLFFA objected to this, and together with Sri Lanka Shippers Council, and with the assistance of the Exports Development Board, made representations to the Director General of Civil Aviation. The DCA had discussions with the airlines and then in conclusion, gave a direction to the airlines that they should only calculate surcharges on gross weight, or else they should quote all-inclusive rates. We are thankful to DCA for the direction, and the EDB Chairman for lobbying on our behalf.
Operational issues
Apart from giving our highest attention to the above-industry related issues, we have been meeting with relevant officials at SLPA, Customs, BOI, Airports and Aviation etc., to resolve operational issues.
We are thankful to SLPA for the positive signs given on investing in lifting equipment at warehouses in order to ease up the operations, which has been a long felt need. We are also thankful to the Logistics division of SLPA for their assistance at all times to resolve various operational issues.
As for the Manifest submissions to Customs, we still have some technical issues, as the system often doesn’t accept our submissions. We now understand that the current software system will be replaced soon by ‘Cargo Targeting System – CTS’. The trade has been supporting the Customs initiatives to facilitate e-manifesting and E-CUSDEC for quite some time, and we hope that early steps would be taken to implement a suitable system that will work for us. We as SLFFA will continue to assist and support Sri Lanka Customs in achieving the results as early as possible.
Training
As for training, AITT continued to work jointly with Achievers in promoting the Foundation, Certificate and FIATA Diploma level courses. These courses are recognised by the DMS for issuing Forwarder License, and also the New Zealand Career College (NZCC), which is a New Zealand Government funded institute, as entry qualification to their Diploma in Procurement and Supply Management. We therefore encourage the young staff of our Membership to use this facility and support the Association to further improve AITT operations.
Apart from the AITT courses, SLFFA also received the ATS status recently, i.e. IATA Training School status in Sri Lanka, and SLFFA conducted the first ever DGR program and the Refresher program using our own lecturer who is qualified by IATA.
Website and Newsletter
SLFFA has been maintaining a Debtors Database as a part of its website. The response from the Membership however has not be that encouraging, even though we have made it fully automated where individual members would be up loading the data to the system and getting system generated reports. We encourage all members to participate in this program, as the Members could also derive good results from the reports generated by the system in return.
Meanwhile, we thought it is time we improved the database system as well as the website to make it more interactive. Accordingly, we went through a tender process and identified the best service provider to re-do the website and the database. We hope to complete the project within the next few months, so that our members could use the facilities in the new system.
We are also happy to mention that we were able to revive our quarterly Newsletter this year. We hope all our members receive it, and please give us a feedback on the contents for further improvement.
Social events
We also held the SLFFA Cricket Carnival in September last year and the ‘Members Nite’ in March this year and we had a very good participation in both events. I would like to thank all our members for their active participation in these social events.
We have also scheduled the SLFFA Dinner Dance for 21 November, and I look forward to the support and assistance of all members. As for our CSR theme, we have decided to continue to support the Lady Ridgeway Hospital and are looking at donating a special equipment to handle surgeries.
Finally, I must thank all sub committees that functioned quite well and helped me achieve the objectives. I also thank all members of the out-going Executive Committee for their support given to me to complete a year filled with many events.
We are commencing a new year of activities from tomorrow, and I’m looking forward to the continued support of all members of the Ex-Co and the general membership.
With that I will conclude. Once again, let me thank you all for the confidence placed in me, and I pledge to do my best to the Association.
Thank you.
Pic by Lasantha kumara
