The Hon. Ravi Karunanayake

¶ 01 Hon. Presiding Member, I am happy to speak on the Licensing of Container Depot Operators Bill because I think it is very timely and brings legitimacy to a trade that has been operating unregulated. I must compliment the team for doing so as well as the Association of Inland Container Depot Operators led, I know, by Chairman Shiran Dissanayake. This trade has been given lukewarm support.

¶ 02 One thing that has got to be done, if you are looking at the bigger picture of making this country a logistics hub in the world, is, we need to be proactive with our legislation and that is the reason why it is very important. This Bill is not anti-business; it is pro-trade and more than that, pro-efficient. It also ensures a sense of competition and that is what is needed for us to move forward.

¶ 03 There are around 13 container depots that are operating professionally. I guess that while there must be competition, there must also be fair revenue generation through these operations because logistics is something that could absolutely take Sri Lanka to the next level. Singapore is what it is today owing to their logistics operations, which they had the sagacity to take forward. Unfortunately, Sri Lanka got caught up in all the trade union activities with the sense of competitiveness being lost out to those factors and we basically gave that on a platter to Singapore. Therefore, before we lose it out to Port Klang, to Dubai, to Port Salalah or elsewhere, ensure that Sri Lanka gets it in its proper perspective.

¶ 04 What is the reason for the container depots, which hitherto were operating in a non-legal manner, being made to operate legally now? The shipping lines are the ones which essentially get the best out of them. They come, they operate, they do not have to pay any taxes at all, basically squeeze every dollar out of the container depots and move out. So, I think there has to be a fair revenue or a fair return to our local entrepreneurs for the services they render. Then, we must also ensure that there is digital connectivity. It is not just legislation that brings in revenue, but we must cater to the 21st Century world, where digital connectivity needs to be improved.

¶ 05 Then, when it comes to fair competition, we have to embrace the standards in compliance with what is adopted worldwide. ASYCUDA and all that which comes in thereafter would make it a professional outfit that is operating in Sri Lanka. After all, the Port of Sri Lanka is recognized as the 25th best port in the world at the moment. I remember that when my political guru Lalith Athulathmudali started to make the Colombo Port as a port to be reckoned with, it was ranked in the 12th or the 13th position in the world. While we are in the 25th position at the moment in port ranking, our logistics ranking is 76th in the world. Therefore, we need to rectify or correct the existing anomalies and make sure that we move on.

¶ 06 While we bring in the needed legislation, we must also bear in mind that we have got to look at the net revenue that comes into the country. Now, we have the SAGT, the CICT, the Hambantota Port and the Colombo West International Terminal operating and I am happy about it. But, the Customs officers operating in those terminals take more than three to four days for clearances. When that happens, the importers in this country have to pay demurrage and demurrage amounts to almost 40 to 45 per cent of the total revenue from container operations. Of the four terminals I mentioned, the Jaya Container Terminal, which is 100 per cent operated by us, and the Colombo East Container Terminal are operated by Sri Lanka. But, the revenues and dividends of the other two I mentioned go out of the country and it is almost worth US dollars 600 million. That is the reason why I asked why either the Minister or the Deputy Minister is not present here, because they are the ones responsible to take this forward. Since they are not here, at least have this discussed and provide an answer. So, I hope that this is rectified and gets up to the correct level. Also, ensure that we get a response to this.

¶ 07 Next, ensure that we optimize the port space and that ships come in and move out quickly after discharging containers because, today, there are large feeder vessels operating and they are operating on a very expensive budget. So, one hour lost due to delays at a port means a loss of millions of rupees for them. On that basis, if they find that the Colombo Port is taking a longer time to load or discharge containers, what happens is, they would bypass Sri Lanka. We have lost out many shipments during the past particular period to India owing to the fact that our delivery and discharge of containers have been far too slow to the expectations of the shipping lines.

¶ 08 Hon. Presiding Member, I would like to mention here that India maintains a vessel-turnaround time of 0.9 days. In Singapore, it is one day, in the UAE, 1.1 days and in Germany and the USA, it is between 1.3 and 1.5 days. So, the standard vessel-turnaround time in the Asian region is between one and 1.2 days, but Sri Lanka is still lagging behind. Therefore, we need to catch up because, otherwise, what will happen is, we will lose the opportunity to be competitive, providing cost-efficient rates for shipping lines and getting the maximum out of it. We have roughly 8.1 million containers moving out of Sri Lanka. Of that, about 70 per cent comes from India. But, now, we also see that India is developing its own ports. So, if we do not compete in the manner that is expected of us, before too long, Sri Lanka would lose the competitive edge we have. After all, we are happy that the Adani Ports is operating in Colombo, but they also have their own port in Kerala, the Vizhinjam International Seaport. So, ensure that we meet the needs to be competitive and provide the necessary answers.

¶ 09 So, while we are talking of that, as I mentioned, the port must basically be able to relieve itself of the congestion. The best way to reduce congestion is to ensure that we have dry ports outside the main port and there are many which are being looked into. But, we are taking time to ensure that they are put into operation. So, make sure that we put those dry ports into operation so that, then, we would be able to provide the shipping lines with speedy delivery. Also, ensure that the Colombo Port becomes competitive without any problems.

¶ 10 Then, when you look at the options that are there, you would understand why it is necessary to become competitive. Look at India. India had entered into a very extensive Free Trade Agreement with the European Union. When India agreed on a Free Trade Agreement with the USA, President Donald Trump, who earlier imposed a 50 per cent tariff on India, immediately reduced it to 18 per cent. So, Sri Lanka has now been given a jolt on competition at the moment because the tariff imposed on us by the USA is between 20 to 21 per cent, while it is 18 per cent on India. Moreover, India has zero tariff entry into the European Union on garments, fisheries and rubber-based items. So, where does Sri Lanka, which roughly has exports worth US Dollars 3.2 billion to the USA and sends almost 35 per cent of exports to the European Union worth about US Dollars 1.9 billion to 2 billion, stand? If we basically lose out to the Free Trade Agreements of India, our exporters will have a difficult time. That is the reason why we need an efficient logistics service. Having very efficient and quick container deliveries and ship turnaround times would help us overcome the problems that we face at this particular moment. That is why I took a moment to speak about competitiveness.