Opening agency reps to attract maritime industries, futile exercise
The recent proposal of the Minister of Finance to increase maritime activity in Sri Lanka is a laudable idea. In an effort to do so, he intends to remove the 40 per cent restriction currently in force for shipping agency representation. It is apparent from this that the Minister of Finance has not been correctly advised on this matter.
As of now, there are 127 shipping agency companies registered with CASA (Agents Association) providing employment to thousands of Sri Lankans and earning millions of dollars in foreign exchange for the country. In fact, agents have been doing so for more than 50 years.
Before we decide to break up such a vital sector of our economy we have to find out whether such action will have the desired effect of bringing other maritime or allied activities to Sri Lanka. To anyone aware of how international companies run their affairs, it would be obvious that no company involved in maritime activity will rush to invest in our country because agency business has been opened up.
Many experts and associations have recently countered the reasons brought forward by the Minister in support of this proposal and I therefore do not wish to delve in detail in this aspect. I would like however to comment on two points brought up in a recent letter by the Minister of Finance.
He has stated that Hong Kong, Singapore, India, Pakistan and Vietnam opened up the agency business sector. We are aware that both Hong Kong and Singapore are highly advanced economies with well-developed maritime sectors and both India and Pakistan are much bigger economies than ours and they are both capable of doing their own maritime development without outside help. In this connection, we have to realise that our situation is different to other countries while copying what others do is not the solution.
The second point the Minister has mentioned is that several of our own export organisations welcome this idea. I have during my career worked for over 10 years in one of the biggest exporters of Sri Lanka produce and cannot see the reason for the present export associations welcoming this idea. If it is with the intention of getting more advantageous freight rates, this proposal is unlikely to benefit them. As they are aware, freight rates are decided by the relevant freight conferences and the shipping agents have nothing to do with these decisions. If it is “other costs” that are involved in the export trade, I am sure they can discuss these with CASA to arrive at a solution.
Attracting investments in maritime activities
Obviously, this is a very desirable motive but for it to happen we need to be ready to make a concerted effort towards this end. For a start, we must have a Brains Trust Panel of five or six experts in the field of maritime activity, economics, environment, etc to study and decide:
1. What maritime activity is best suited for our country
2. In which port or area should we concentrate these activities?
3. Decide on how we can attract these investors. What incentives can we offer them? These will include tax concessions, infrastructure development, supplying qualified staff/ training of such staff, etc.
4. Once these decisions are finalised, we have to identify the Principals/Owners presently engaged in this type of business.
5. This will mean that we have to do intense canvassing, promotion and marketing to ensure that we convince them to invest in our country.
6. If and when we manage to win over a potential investor/s we must ensure that they have an easy passage in getting approvals, clearing of goods and assist in the myriad other problems an investor will face.
7. Once an industry has commenced its operations here, we must ensure they have a trouble free environment to operate in.
8. A major problem for any investor will be the endemic corruption at all levels of government. We have to ensure that these are minimised especially in those sectors that an investor will have regular contacts such as Customs, Import Control, Port, etc.
I have mentioned a few of the factors that came to mind on this matter. There will be many more to be considered. As we can see, attracting of foreign investment to the maritime sector will entail a lot of hard sustained effort. It would be presumptuous to imagine that just passing or changing a regulation will increase maritime activity in Sri Lanka.
P. Amarasekara
(Former Chairman, CASA)