ECONOMYNEXT - Sri Lanka has proposed the removal of ban on foreign ownership of shipping and freight forwarding firms which was preventing the country from becoming a Singapore-style shipping hub, and also make changes to shipping regulation.
Warehousing remains to be liberalized for Sri Lanka to achieve its full potential and use its locational advantage which has not been addressed yet, analysts say. Port prices are also not fully liberalized.
"Restrictions on the foreign ownership on the shipping and the freight forwarding agencies will be lifted," Finance Minister Mangala Samaraweera said presenting a budget for 2018.
"This will enable major international shipping lines and logistics operators to base their operations in Sri Lanka."
Though Sri Lanka started liberalizing in the 1970s, all the shipping agencies were in an oligopoly controlled by a handful who wielded political connections, preventing the creation of a Singapore style hub, despite the islands' position in the Indian Ocean.
In logistics, special permission had to be given for one Japanese firm to buy a stake in a logistics firm.
Minister Samaraweera said Sri Lanka Ports Authority Act enacted in 1979 and the Merchant Shipping Act, enacted in 1971 will be changed to "cater to the demands of the modern day logistics and marine industry."
""This will also ensure healthy competition," Samaraweera said.
An independent port regulator will also be set up.
In the controlled era Sri Lanka also had a freight bureau which kept freight rates high.
The Indian Ocean and Bay of Bengal had been a vibrant area with shipping traffic until the independence from British rule, but the closed economies that emerged in India, Sri Lanka and other bordering states led to stagnation, economists say. (Colombo/Nov10/2017)