ECONOMYNEXT – Danish shipping line Maersk has said it is waiting for Sri Lanka’s government to implement plans to lift the 40% foreign ownership limit on ship agency and freight forwarding firms, which the latter have strongly opposed.
The world’s biggest container shipping line moves one in five containers in Colombo port, which it sees as a strategic hub, Maersk Lines Managing Director for South Asia Steve Felder said.
Lifting foreign ownership limits on ship agency and logistics firms would reduce costs and encourage foreign investment, he told a news conference.
Minister of Finance Mangala Samaraweera announced plans to liberalise the sector in the government’s 2018 budget presented last November, to try to make the island a shipping hub like Singapore and Dubai.
Felder said it was too early to say what Maersk would do if the shipping sector was liberalised but noted that “just the fact it opens up opportunities would be a good sign.
“We feel the sector should be fully liberalised in terms of ownership like in India.”
“In a free market trade should flow in line with its own merits and enable importers and exporters to do business,” Felder said.
“Sri Lanka is one of the few countries today that stands out as having not liberalised the sector yet. So we’d like to see the process move to a conclusion,” he said.
“It also will send a strong signal for investors that Sri Lanka is open for business.”
The Ceylon Association of Shipping Agents (CASA),and Sri Lanka Logistics and Freight Forwarders Association(SLFFA) have opposed the move, saying it would put at risk the over 750 local shipping and freight forwarding and clearing agents employing over 12,000 direct staff.
Samaraweera told parliament during the budget debate in December 2017 that five Sri Lankan companies control the agencies of shipping lines that account for 74% of the global shipping market.
“Whilst these companies have opposed liberalization of the sector, Sri Lanka’s apparel exporters (JAAF and the Sri Lanka Apparel Exporters Association), the Tea Exporters Association of Sri Lanka and the Sri Lanka Export Association, have all hailed the move to liberalise the shipping industry since it enables more competitive pricing and better services to the entire export industry,” he said.
“Do we want to undermine the interest of thousands of export companies, and hundreds of thousands of their employees, to serve the interests of a handful of entrenched shipping agency companies?”
Samaraweera said the government will ensure competition will be fair and balanced, eliminating unfair trade practices by enacting prudent regulation.
“This is why the proposal on shipping liberalization is coupled with the proposal to implement an independent regulator for the industry.”
Advocata, a private sector think-tank, has said liberalising shipping agencies would help transform Colombo into a maritime hub.
While Sri Lanka has 750 local shipping, freight forwarding and clearing agents, Singapore’s open market has over 5,000, showing that opening up the agency business would not necessarily mean the end of the local agents, it noted.
Around 20 of the world’s top 25 logistics companies have based their global or regional operations in Singapore.
(COLOMBO, July 6, 2018)