logistics strategy · [ iii] [ message of the logistics industry ]careful and focused coordination...

Government of Sri Lanka

NATIONAL EXPORT STRATEGY

OF SRI LANKALOGISTICS STRATEGY 2018-2022

The National Export Strategy (NES) of Sri Lanka is an official document of the Government of Sri Lanka

For any queries about the NES, please contact :

Ministry of Development Strategies and International Trade

Address: Level 30, West Tower, World Trade Centre, Colombo 01.Phone : +94 (0) 112337629Phone : +94 (0)112337627 E-mail : [email protected]

Sri Lanka Export Development Board

Address: No. 42 Nawam Mawatha, Colombo-02, Sri Lanka.Phone : +94-11-230-0705 / 11Phone : +94-11-230-0715E-mail : [email protected]

This Logistics Strategy was developed on the basis of the process, methodology and tech-nical assistance of the International Trade Centre (ITC) within the framework of its Trade Development Strategy programme.

ITC is the joint agency of the World Trade Organization and the United Nations. As part of the ITC mandate of fostering sustainable development through increased trade opportunities, the Chief Economist and Export Strategy section offers a suite of trade-related strategy solutions to maximize the development payoffs from trade. ITC-facilitated trade development strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors.

Technical support was provided by Charles Roberge, Olga Khomula, Rohan Masakorala, Vincent Lee and Chullante Jayasuriya.

Financial support was provided by the European Union, as part of the ‘European Union –Sri Lanka Trade Related Assistance : Increasing SMEs’ trade competitiveness in regional and European Union markets’ project. The contents of this document can in no way be taken to reflect the views of the European Union.

The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products, and product brands does not imply the endorsement of ITC. This document has not been formally edited by ITC.

The International Trade Centre

Street address: ITC 54-56, rue de Montbrillant 1202 Geneva, SwitzerlandPostal address: ITC Palais des Nations 1211 Geneva 10, SwitzerlandTelephone: +41-22 730 0111Fax: +41-22 733 4439E-mail: [email protected]: http://www.intracen.org

Layout : Jesús Alés (www.sputnix.es)

NATIONAL EXPORT STRATEGY OF SRI LANKA 2018-2022

LOGISTICS STRATEGY

Government of Sri Lanka

Photo: World Bank Photo Collection

MESSAGE OF THE LOGISTICS INDUSTRY

The Sri Lankan Logistics Industry is conscious of the increase in regional com-petition and the systemic digitisation of the industry. These two aspects highlight the need for accelerated structural reform of the logistics industry.

Regional neighbours such as India, United Arab Emirates and Singapore have intensified their efforts to capitalise on mentioned changes in the industry and are ahead of the curve in terms of their preparedness to attract emerging economic opportunities – be it in the manufacturing or the services sector.

In this changing regional context, Sri Lanka has aspirations to become South Asia’s leading maritime, logistics and distributions hub. Sri Lanka is geographi-cally well positioned in South Asia, at the crossroads of the fastest growing region of the world. The country’s proximity to many emerging markets has positioned it favourably as a very important hub in the region. With its ports being the only ports in the world to experience double digit growth in 2016, this strategy will consolidate Sri Lanka’s existing strengths to achieve its goals.

Stakeholders of the logistics industry in Sri Lanka hail this document as a long-awaited strategy that will create a cohesive regulatory framework to fully optimise the enormous potential of Sri Lanka’s logistics industry. The advancement of the logistics industry will be a prominent enabling factor to facilitate the growth and expansion of the other mature and priority sectors.

The development of the logistics sector as a key Trade Support Function of the National Export Strategy is strongly welcomed by key public and private stake-holders. This strategy is a collective endeavour of public and private stakeholders to define priorities, coordinate and monitor activities and implement Plans of Action over the course of the next five years.

This strategy creates the condition for achieving the ambitions of the industry. It emphasises key reforms required for the industry to reach new heights. The provision of efficient logistics services will be possible through amendments to the Merchant Shipping Act, SLPA Act, Finance Act/Commercial Hub Regulation, Customs Ordinance, and Electronic Transaction Act as key to successful imple-mentation of the strategy. Additionally, the strategy also considers a key interven-tion, the creation of the conditions ( land, logistics zones ) for private sector to lead development of cold storage solutions and multi-user facilities across the country and provide value added services through MCC, LCL de-stuffing, entrepot trade and commercial hub activities.

[ iii ]

[ MESSAGE OF THE LOGISTICS INDUSTRY ]

Careful and focused coordination of all activities, monitoring of progress and optimal mobilisation of resources will be key to the successful implementation of this strategy.

We wish to express our commitment to successfully implement the logistics strat-egy of the National Export Strategy of Sri Lanka and look forward to contribute towards prosperity and development of our country.

Chrisso De Mel Chairman Sri Lanka Shipper's Council

Jagath Pathirane Chairman Sri Lanka Logistics and Freight Forwarders Association ( SLFFA )

Rohan Masakorala President Hub Operator's Association

Ruwan Waidyaratne Chairman Ceylon Association of Shipping Agents

Photo: © advantis.world

[ v ]

[ ACKNOWLEDGEMENTS ]

ACKNOWLEDGEMENTS

The Logistics Strategy was developed as part of the National Export Strategy ( NES ) of Sri Lanka, under the aegis of the Ministry of Development Strategies and International Trade ( MoDSIT ) and the Sri Lanka Export Development Board ( EDB ), with the financial support assistance of the European Union ( EU ), as part of the ‘EU-Sri Lanka Trade Related Assistance’.

The document benefited particularly from the inputs and guidance provided by the members of the Logistics national stakeholders that steered the formulation of the Strategy, namely :

Name Designation Name of institution

Mr. S. Mahesan Director of Customs Sri Lanka Customs

Mr. Upali W. De Zoysa Director - Logistics Sri Lanka Ports Authority

Rear Admiral D.E.C. Jayakody Project Director - Maritime Cities Development Project

Ministry of Mega polis & Western Development

Mr. Jagath Pathirane Chairman Sri Lanka Logistics and Freight Forwarders Association ( SLFFA )

Mr. Sean Van Dort Member Joint Apparel Association Forum - Logistics committee

Mr. N.J. Chrisso De Mel Chairman Sri Lanka Shippers Council

Mr. Ruwan Waidyaratne Chairman Ceylon Association Of Shipping Agents

Mr. Harin de Silva Chairman Exporters Association of Sri Lanka

Captain A. Banerjee Managing Director ZIM

Eng. Nishal Samarasekara Senior Lecturer Department of Transport and Logistics Management

Ms. Manori Dissanayaka Assistant Secretary General Ceylon Chamber of Commerce

Mr. Dinesh De Silva Chairman Import Section of the Ceylon Chamber of Commerce

Mr. S.R.P. Indrakeerthi Director - Trade Facilitation & Trade Information

Export Development Board

The full list of public and private stakeholders that contributed their precious time to the design of this Strategy are detailed in Appendix 1.

mailto:[email protected]


[ vi ]

[ SRI LANKA LOGISTICS STRATEGY ]

CONTENTS

Message of the Logistics Industry ii

Acknowledgements v

Acronyms ix

EXECUTIVE SUMMARY 1

GLOBAL INDUSTRY GROWTH DRIVEN BY DEMAND 3

SRI LANKA : IMPORTANT REGIONAL TRANS-SHIPMENT AND COMMERCIAL HUB DEVELOPING OTHER LOGISTICS ACTIVITIES IN THE REGION 7

LOGISTICS SERVICES MAP 15

FOCUSING ON THE MOST PRESSING ISSUES 18

DEVELOPING SRI LANKA INTO A GLOBAL LOGISTICS HUB 23

THE FUTURE OF THE INDUSTRY 23

MOVING TO ACTION 31

THE STRATEGIC FRAMEWORK 31

IMPLEMENTATION FRAMEWORK 33

PLAN OF ACTION 2018-2022 37

ANNEXES 47

Appendix 1: List of participants in the public-private consultations 48

Appendix 2 : Current logistics infrastructure in Sri Lanka 50

References 55

[ vii ]

[ LIST OF FIGURES ]

LIST OF FIGURES

Figure 1 : Global TEU container throughput ( millions ), 2000–2014 4

Figure 2 : First quarter 2017 container throughput by region ( % ) 4

Figure 3 : Shipping density in the Indian Ocean 8

Figure 4 : Marine freight for Colombo Port ( container traffic type in thousand TEUs ), 2012–2016 9

Figure 5 : Trans-shipment volume of containers for India ( million TEUs ) 10

Figure 6 : Container throughput in millions ( TEUs ) for Sri Lanka and regional peers, 2008–2014 12

Figure 7 : The average cost incurred to import and export one TEU for Sri Lanka and regional peers ( US $ ) 13

Figure 8 : The average time taken to import and export one TEU for Sri Lanka and regional peers 13

Figure 9 : Logistics services map 16

Figure 10: Long list of constraints faced by the logistics industry 17

Figure 11 : Future logistics services map 24

Figure 12: Main areas of improvements in the logistics sector 25

Figure 13 : Institutional framework for logistics industry development 34

Figure 14 : Sri Lankan rail network 51

Figure 15 : Air passenger and air cargo handling in Sri Lanka, 2012–2016 52

Figure 16 : Expressway network in Sri Lanka 53

Figure 17 : Locations of export processing zones in Sri Lanka 53

Figure 18 : Concept Plan for Logistics Corridor of Western Region Megapolis Master Plan 54

[ viii ]


LIST OF TABLES

Table 1 : Detailed Logistics Performance Index rankings of Sri Lanka and regional peers in 2014 12

Table 2 : Performance of port services, 2013–2016 51

[ ix ]

[ ACRONYMS ]

ACRONYMS

The following abbreviations are used :

3PL Third-party logisticsB2B Business-to-businessB2C Business-to-consumerBIA Bandaranaike International AirportBOI Board of InvestmentBOT Build-operate-transferCBSL Central Bank of Sri LankaDoC Department of CommerceEDB Export Development BoardEPZ Export Processing ZoneFDI Foreign direct investmentFCCISL Federation of Chambers of Commerce and

Industry Sri Lanka ITC International Trade CentreLCL Less than container loadLPI Logistics Performance IndexMIC Ministry of Industry and CommerceMCC Multi-country consolidationMoDSIT Ministry of Development Strategies and

International TradeMoF Ministry of Finance

MoMWD Ministry of Megapolis and Western Development

MoNPEA Ministry of National Policies and Economic Affairs

MoPS Ministry of Ports and ShippingMoTCA Ministry of Transport and Civil AviationMoTDI Ministry of Telecommunication and Digital

InfrastructureMSS Merchant Shipping SecretariatPMO Prime Minister’s OfficePoA Plan of ActionPPP Public–private partnershipR&D Research and developmentSCM Supply chain managementSLFFA Sri Lanka Freight Forwarders' AssociationSLPA Sri Lanka Port AuthoritySMEs Small and medium-sized enterprisesTEU Twenty-foot equivalent container unitTF Trade facilitation TISI Trade and investment support institution

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[ ExECUTIvE SUMMARY ]

ExECUTIvE SUMMARY

The development of the logistics industry in Sri Lanka is a five-year endeavour that was defined through a consultative process between public and private sector stakeholders. Transforming Sri Lanka into a leading maritime, logistics and distribution hub in the Indian Ocean will depend heavily on the ability of the industry to implement activities defined in this Strategy. Stakeholders will need to coordinate actions, monitor progress and mobilize resources for Strategy imple-mentation in order to achieve its targets. Implementation will succeed only if an adequate regulatory environment is fos-tered, and operational procedures and guidelines for provi-sion of efficient logistics services are followed.

Sri Lanka aims to transform into South Asia’s leading mari-time, logistics and distribution hub to support the national economy. This will be achieved by fostering the right regu-latory environment and implementing enabling procedures and guidelines for provision of efficient logistics services. These actions will create the conditions for the private sec-tor to lead development of the logistics sector, attract the investment needed to install the proper facilities across the country ( cold storage solutions and multi-user facilities ) and provide value added services through multi-country consoli-dation ( MCC ), less than container load ( LCL ) de-stuffing and commercial hub activities.

Strategically located in South-East Asia, at the crossroads of the fastest-growing region in the world, Sri Lanka is close to many emerging markets and is already an impor-tant logistics hub for the region. The overall performance of port-related services has been improving. Total container handling in 2016 increased by 10.6 % to 5.7 million twenty-foot equivalent container units ( TEUs ), from 5.2 million TEUs handled in 2015.1

While Sri Lanka is one of the major trans-shipment hubs in Asia, the logistics industry has not fully tapped the grow-ing opportunities in trans-shipment and e-commerce. There is a unique opportunity to develop a world-class lo-gistics hub and enter the global supply chain industry that is rapidly digitalizing and evolving with a new generation of consumers.

1.– Central Bank of Sri Lanka ( 2016 ). Annual Report 2016, chapter 3.

Because it is situated on the main east–west and north–south shipping corridors that connect Asia to Europe and Africa, Sri Lanka has not diversified its business model to attract other types of ships and related services. The coun-try is known mainly as a container shipping hub in South Asia. Over the five-year Strategy period, Colombo Port will be the major trans-shipment hub of South Asia. Sri Lanka will service all types of ships and provide ship-related ser-vices – for example, crew changes, supplying and replenish-ing victuals and water – through its network of major ports in the west, east and south connecting the international east-west shipping route and increasing trans-shipment business through its ports.

Modern technologies have transformed the logistics in-dustry by facilitating trade-related operations and grow-ing opportunities for intraregional markets, e-commerce and services for integrated connectivity. By encouraging large, medium and small global trading companies to use Sri Lanka as a major distribution hub for the Indian subcon-tinent and beyond, the country can become a connecting point for all of South Asia by providing business-to-business ( B2B ), business-to-consumer ( B2C ) and e-commerce ser-vices. The potential lies in the development of entrepot trade, bonded warehouses or MCC logistics services, international buyer-seller consolidations and front-end services to clients, air / sea transfers and value addition services. Developing logistics is the best way to expand indirect export revenue and provide backward and forward links for industries that would expand export processing, trading and manufactur-ing in Sri Lanka.

Becoming a multimodal logistics hub providing integrated services and facilities requires physical and information technology infrastructure to ensure a seamless flow from one mode of transportation to another. Currently, three terminals in Colombo Port and Bandaranaike International Airport ( BIA ) are already reaching maximum capacity. An underused rail network for transportation of reefer contain-ers, limited availability of land and no proper cold storage facilities or infrastructure for storage and value addition ser-vices hinder export opportunities. Allocating land and form-ing the ecosystem to attract more foreign direct investment ( FDI ) will create the conditions for the private sector to lead

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the development of cold storage solutions, multi-user facili-ties, LCL de-stuffing and commercial hub activities across the country.

The following key areas of intervention are priorities to fa-cilitate the implementation of the Strategy :

� Urgently implement operational procedures and guide-lines for provision of efficient logistics services ( amend-ments to the Merchant Shipping Act, Sri Lanka Port Authority Act, Finance Act–Commercial Hub Regulation, Customs Ordinance and Electronic Transactions Act ).

� Create the conditions ( land, logistics zones ) for the pri-vate sector to lead development of cold storage solutions and multi-user facilities across the country and provide value added services through MCC, LCL de-stuffing, and commercial hub activities.

The following is a delineation of the proposed vision and strategic objectives of this Strategy. This vision statement was agreed on by all stakeholders of the Sri Lankan logis-tics industry.

“ Sri Lanka : The Indian Ocean maritime, logistics and distribution hub

providing all services and facilities for integrated connectivity ”The strategic Plan of Action ( PoA ) responds to this vision

by addressing key constraints and leveraging opportunities in a comprehensive manner. Emphasis is on the following strategic orientations.

• Creating a conducive business environment for industry expansion by providing efficient logistics services through operational procedures and guidelines is the main priority.

Strategic objective 1: To create an enabling and efficient business

environment driven by technology and public-private coordination

• Creating conditions (land, logistics zones) for the private sector to lead development of cold storage solutions and multi-user facilities across the country and attracting skilled labour will allow industry capacity to expand.

Strategic objective 2: To ensure adequate facilities and availability of a

qualified labour force

• Increasing market outreach and building the country's image will help build awareness of the country's locational advantages and attract more FDI.

Strategic objective 3: To promote the image of Sri Lanka as a logistics hub

worldwide

Coordinating activities, monitoring progress and mobi-lizing resources for implementation will be critical to suc-cessful achievement of these targets. To that effect, an advisory committee for the logistics industry was estab-lished, operationalized and empowered. The logistics ad-visory committee is responsible for overall coordination, provision of policy guidance and monitoring of industry de-velopment along the strategic orientations.

An effectively organized and supported committee can plan industry development strategically. High-level sup-port from the Government, in collaboration with strong championship by the private sector, will be the real driv-ers to truly make Sri Lanka a leading maritime, logistics and distribution hub in the indian Ocean.

3

[ GLOBAL INDUSTRY GROWTH DRIvEN BY DEMAND ]

GLOBAL INDUSTRY GROWTH DRIvEN BY DEMAND

The global logistics and supply chain management ( SCM ) industries are expanding, and this is expected to continue. Since the beginning of 2017 global container port through-put has grown by 5.8 % compared to the same period in 2016, and is expected to reach 4.6 % annual growth in 2017.2 The industry – including roads, waterways, rail and air trans-port, and any related logistics services – is growing in val-ue at around US $ 350 billion to US $ 380 billion per year.

With advances in information technology and the internet of Things, the industry’s sophistication has evolved. The range of logistics services is quite large, including transpor-tation, customer service and inventory management but also warehousing, packaging, material handling, maintenance and information. Industry services have evolved in sophistication, with service offerings ranging from individual transport and storage solutions to customized, integrated SCM services as well as electronic tracking, paperless operations and digital services throughout the value chain. The industry has grown continually as the pace of outsourcing gathers momen-tum, namely through SCM and other value added services.

Modern technologies have transformed logistics and con-tinue to facilitate trade-related operations. Most countries are taking steps to improve the transport and logistics sec-tor and to support its growing manufacturing activities and external trade by lowering costs and improving the perfor-mance of ports. Globally, transport operations have moved from being labour-intensive to using automated guided ve-hicles and cranes. Optical readers for containers have im-proved container management within yards. Modern hubs and warehouses have management systems enabled by information technology. Scanners, optical readers and ra-dio frequency identification have reduced human errors and improved accuracy.

The logistics industry today represents a growing op-portunity for integrated connectivity of intraregional mar-kets, e-commerce and services. The world’s major ports

2.– Alphaliner ( 2017 ). Website. Available at www.alphaliner.com.

are opening up to establish connectivity with the rest of the world. This increased connectivity brings competition be-tween carriers, which lowers the cost and promotes efficien-cy among service providers. Cooperation between global container terminal operators has also improved port perfor-mance. Connectivity and innovation in the digital economy reduces trade costs and creates positive spillovers by in-creasing the efficiency of Customs operations, transparen-cy and reliability for the private sector. Physical delivery of goods still depends on physical connectivity though, includ-ing transport networks, intermodal connections and func-tioning transport service providers.3

Geographical position can give comparative advantages to a country, although improving the efficiency of trade lo-gistics services and providing a conducive business en-vironment are the keys to increasing trade performance and satisfying the requirements of trading customers. Increasing logistics efficiency through trade facilitation ( TF ) requires policy changes, and trade and transport servic-es can bring more investment to the logistics sector and strengthen trade relations with partners.

South-East Asia’s fast economic growth and East Africa’s development both offer potential for the logistics sector in the indian Ocean as a lower-cost supply base. Increases in population and middle class consumption, and fast-grow-ing regional economies, provide important multimodal op-portunities for maritime countries willing to serve as a hub and provide logistics services for passing regional cargoes.

international shipping of trade goods has grown in recent years. The development of port handling reflects the evolu-tion of world trade. Looking at global container throughput between 2000 and 2014, there was a steady annual increase of 6 % on average in volume ( see figure 1 ). This growth is ex-pected to continue. Container handling growth at main ports

3.– Organization for Economic Co-operation and Development and World Trade Organization ( 2017 ). Aid for Trade at a Glance 2017 : Promoting Trade, Inclusiveness and Connectivity for Sustainable Development.

http://www.alphaliner.com

4


around the world since the beginning of 2017 has been un-even, however. Ports in South Asia, Africa and Latin America experienced volume growth, with Chinese ports including Hong Kong ( China ) being the key driver of the 7.3 % year-on-year increase in the first quarter of 2017 ( see figure 2 ), as well as North European and North American ports.4 The top five world container handling ports remain Shanghai, Singapore, Shenzhen, Ningbo-Zhoushan and Hong Kong ( China ).

4.– Alphaliner ( 2017 ). Website. Available at www.alphaliner.com.

Figure 1 : Global TEU container throughput ( millions ), 2000–2014

224,774,536

679,264,658

-

200.000.000

400.000.000

600.000.000

800.000.000

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

2014

Source : World Development Indicators

Figure 2 : First quarter 2017 container throughput by region ( % )

12%

10%

8%

6%

4%

2%

0%

China &

HK

North A

sia

Southe

ast A

sia

North E

urope

South

Europ

e

North A

merica

Latin

America

Middle

East

South

AsiaAfric

a

Ocean

ia

Global average %

Source : Alphaliner


5

[ GLOBAL INDUSTRY GROWTH DRIvEN BY DEMAND ]

increasing trade of goods and services, advances in infor-mation and communications technology, and globaliza-tion have changed the industry trade patterns for logistics services. Many countries are making efforts to attract cus-tomers and satisfy key client requirements, providing ready-made logistics solutions, new infrastructure, and fast and cost-effective services.

� E-commerce is transforming the global business, open-ing up more opportunities for firms to trade internationally. Globally, e-commerce sales in 2015 reached US $ 25.3 trillion, 90 % of which were in the form of B2B e-commerce and 10 % in the form of B2C sales.5 Cellular phone and Internet penetration, the rise of the middle class in devel-oping countries and easy access to international online platforms drive growth in supply from new e-commerce players as well as increasing logistics options. New tech-nologies help overcome several logistical constraints, providing sophisticated equipment and powerful software to deliver goods more efficiently.

� Logistics services outsourcing includes various func-tions outsourced to third-party logistics ( 3PL ) service providers. By 2020, the global 3PL market is expected to reach US $ 925 billion.6 3PL companies provide inte-grated logistics services according to customer needs by incorporating transportation, warehousing, packaging, inventory control, order processing, customer support, Customs procedures and other logistics services in an SCM system. Logistics services outsourcing contributes to overall logistics cost reduction and high quality of cus-tomer services.

� Fourth-party logistics is the integration of all logistics procedures within one company involved in a different stage of the supply chain. Using fourth-party logistics benefits companies by providing a broader base of

5.– United Nations Conference on Trade and Development ( 2017 ). Maximizing the development gains from e-commerce and the digital economy. ( Note by the Secretariat TD/B/EDE/1/2 ). Available from http ://unctad.org/meetings/en/SessionalDocuments/tdb_ede1d2_en.pdf.6.– Orbis Research ( 2015 ). Third Party Logistics ( 3PL ) Market Analysis By Service ( Dedicated Contract Carriage, Domestic Transportation Management, International Transportation Management, Warehousing And Distribution, Software ) And Segment Forecasts To 2020, 2015.

potential suppliers, increased market transparency and reduced market research costs.

� Reverse logistics was introduced to support sustaina-ble development and consists of all logistics activities to gather, disassemble, remanufacture, reuse and recycle used products and materials. This type of service helps to reduce environmental impact and improve corporate social responsibility.

These developments represent an opportunity for value chain diversification. However, Sri Lanka will need to move quickly to establish the right business environment if this op-portunity is to be taken full advantage of.

• The global logistics industry and SCM are expanding, and international trade is expected to grow in the future.

• Modern technologies have transformed the logistics industry and continue to facilitate trade-related operations.

• The logistics industry today represents a growing oppor-tunity for integrated connectivity of intraregional markets, e-commerce and services.

• The increase of logistics efficiency through TF requires policy changes and trade and transport service adaptation in order to bring more investment to the sector and strengthen trade relations with partners.


http://unctad.org/meetings/en/SessionalDocuments/tdb_ede1d2_en.pdf

6


Box 1 : The United Kingdom of Great Britain and Northern Ireland, the world’s leading maritime business services hub

The United Kingdom has a 35 % share of global marine insurance premiums and 26 % of global shipbroking revenue, while 25 % of the world’s maritime legal partners are based in the United Kingdom.1 British companies offer a wide variety of maritime business services : marine insurance, shipbroking, legal services, education, maritime finance, accountancy and consultancy. The industry contributes US $ 6.3 billion yearly to the economy and employs over 10,000 people.2 It is estimated that 80–85 % of its business comes from outside the country.

The United Kingdom is a pre-eminent international maritime centre by virtue of the strong, interlocking maritime services cluster that it has built up over the years. Many of the world’s leading maritime law and shipbroking firms have their headquarters in the United

Kingdom and expend their services and operations internationally. The cluster impact creates a multiplying effect for related businesses and attracts talent.

Despite the lack of an established major hub port in the United Kingdom, and limited local ownership and shipping activity com-pared with big ports such as Rotterdam, Hamburg and Shanghai, London has managed to remain a key maritime node in the world. A stable business environment, rule of law and geography attract many operations to the country, which aims to continue building a vibrant and influential transport services sector. However, Brexit and a number of bottlenecks such as corporation tax and the high relative cost of doing business in London make it more feasible to locate high added value businesses in the United Kingdom.

Box 2 : Singapore : on the way to developing a global integrated logistics hub

Having grown successfully as a maritime centre over the past few decades, Singapore is a very efficient maritime hub with strong assets in ports, operators, and technical and business services.

One of the key success factors is a supportive government aim-ing to be the global leader in all segments. Other factors include strategic geographic port location; skills; good infrastructure and a pro-business environment including political, economic and social stability; a strong legal system; a favourable tax structure; and a number of bilateral and multilateral free trade agreements. Singapore has good connectivity to major trading hubs and manufacturing bases by air and sea. Major shippers and logistics service providers have their regional headquarters there and a large number of com-modities traders have their chartering desk in Singapore.

The Singaporean maritime ecosystem comprises over 5,000 estab-lishments employing more than 170,000 people and contributes about 7 % to gross domestic product. Home to about 140 of the world’s top shipping groups, Singapore offers a rich diversity of

maritime products and services. It is also fast becoming Asia’s hub for maritime law and arbitration and is one of the top global players in the offshore and marine engineering industry.

The Maritime and Port Authority, established in 1996, promotes Singapore as a premier global hub port and international maritime centre, facilitates port operations and growth, expands clusters of maritime ancillary services, and promotes maritime research and development ( R&D ).3 It has also established the Maritime Cluster Fund to support manpower and business development efforts, and to drive productivity improvements.

Singapore does face several constraints, namely a small domestic market, relatively high cost of operations ( land rental and wages ), limited space and fragmentation, with limited scale presented by the majority of small and medium-sized companies. These factors and growing competition in the region resulted in the Maritime and Port Authority road map : International Maritime Centre 2030.

7

[ SRI LANKA : AN IMPORTANT REGIONAL TRANS-SHIPMENT AND COMMERCIAL HUB ]

SRI LANKA : AN IMPORTANT REGIONAL TRANS-SHIPMENT AND COMMERCIAL HUB

Sri Lanka has a unique selling proposition to develop a world-class logistics hub and enter the global sup-ply chain industry, which is rapidly digitalizing and cre-ating a new generation of consumers. According to the Government, logistics services contribute 2.5 % of gross domestic product, which represents around US $ 2 billion. Logistics services include container trucking, warehousing, ports and shipping, but exclude domestic transport of pas-sengers, fisheries and interregional domestic cargo trans-portation. The total share of logistics in national exports is estimated at 7 %. The industry provides full-time direct em-ployment to over 40,000–50,000 people. The size of com-panies varies between 5 and 1,000 employees. Around 70 % of registered companies are national and the rest are multi-national. Currently there are 130 shipping agencies and 120 freight forwarders in associations, and 500+ companies reg-istered with the Merchant Shipping Secretariat ( MSS ), which includes clearing agents.

With reasonably well-established air and sea connectivity, Sri Lanka offers varied logistics services. Logistics refers to a series of services and activities – such as transporta-tion, warehousing and brokerage – that help to move goods and establish supply chains across and within borders.7 In Sri Lanka there is a wide range of facilities and services involving logistics : shipping, freight forwarding and logis-tics operations, ports and inland container depots / dry ports, bonded zones and warehousing, domestic transportation, free zones and commercial hub activities.

7.– World Bank ( 2016 ). Connecting to compete 2016 – trade logistics in the global economy, June 28. Available from www.worldbank.org/en/news/feature/2016/06/28/connecting-to-compete-2016-trade-logistics-in-the-global-economy.

Strategically located in South Asia at the crossroads of the fastest-growing region in the world, Sri Lanka is close to many emerging markets and is already an important trans-shipment hub for the region. Previous sector devel-opment was mainly concentrated on hard infrastructure, with many Government policies and support from interna-tional partners including Mahinda Chinthanaya, the Urban Transport Master Plan for Colombo Metropolitan Region and Suburbs, mega-projects like the development of the Mattala Rajapaksa International Airport and Hambantota Port, and national master plans for ports, railways and roads.


http://www.worldbank.org/en/news/feature/2016/06/28/connecting-to-compete-2016-trade-logistics-in-the-global-economy



8


Figure 3 : Shipping density in the indian Ocean

Source : Marine Traffic Density Map ( 2017 )

Yet the country has not fully tapped the growing opportu-nities in trans-shipment and e-commerce. Improvements in TF have been ongoing for many years and the World Trade Organization Trade Facilitation Agreement is speeding up the TF reform agenda. TF initiatives are coordinated by the National Trade Facilitation Committee. However, there has

not been a specific policy, project or initiative focusing on the quality of logistics services. A national policy for the maritime and logistics sector is currently being formulated. One has been developed several times before but has never been approved by Parliament.

Box 3 : Strengths, weaknesses, opportunities and threats analysis for Sri Lanka logistics

Strengths

• Located on busy East-West maritime trade links• Trans-shipment hub for India• Modern port facilities to handle large container vessels ( >9,000 TEUs )• Availability of land

Weaknesses

• Port capacity limited by facilities and equipment• The airport, Jaya Container Terminal and South Asia Gateway Terminal

are operating at maximum capacity• Outdated road and rail infrastructure• Non-transparent Customs and tax regulations

Opportunities

• E-commerce hub for South Asia• Ability to offer higher value chain activities in global trade• Growth in vessel size and consolidation of shipping lines• Belt and Road initiatives, able to act as hub for South Asia for trade

to Africa, the Middle East, Europe and Asia• Indian growth

Threats

• India is revamping its port operations and the Indian Government has worked to reduce the reliance of Indian shippers on Colombo

• Unstable utility supply• Malaysia and Singapore are improving their port infrastructure and services

9


Logistics can become a driver of the Sri Lankan econo-my and the country has huge potential for growth in lo-gistic services but ports are already reaching maximum capacity. Colombo Port was the twenty-third largest port in the world in 2016, handling 5,734,000 TEUs.8 Port ser-vices consist mainly of handling containers, trans-shipment and cargo. Trans-shipment of cargo has been the main ser-vice of Colombo Port and 75 % of traffic over the last five years has been that from trans-shipment cargo ( see fig-ure 4 ). However, three terminals in Colombo Port are already reaching maximum capacity.

Sri Lanka is the main trans-shipment hub for the indian subcontinent, mainly to India ( see figure 5 ). Colombo Port

8.– World Shipping Council ( 2017 ). Website. Available at www.worldshipping.org/.

focuses on container trans-shipment largely for the textile industry. There are three types of trans-shipment :

� Hub-and-spoke ( hub/feeder ) – between deep-sea and feeder;

� Interlining/intersection – between deep-sea and deep-sea along shipping routes;

� Relay – between deep-sea and large deep-sea as inter-face between shipping routes along the same maritime range but servicing different ports of call.

Magampura Mahinda Rajapaksa International Port in Hambantota provides services mainly for vehicle trans-shipment ( roll-on / roll-off operations ). Japanese, Korean and Indian carmakers use this port for trans-shipping vehicles built in India, Thailand, Japan and China to markets in Africa, the Middle East, Europe and the Americas.

Figure 4 : Marine freight for Colombo Port ( container traffic type in thousand TEUs ), 2012–2016

0

1000

2000

3000

4000

5000

6000

7000

2012 2013 2014 2015 2016

Transhipment Container Total Container Traffic

Source : SLPA

Photo: (cc) jgmorard, Colombo Port.

http://www.worldshipping.org/

10


Figure 5 : Trans-shipment volume of containers for india ( million TEUs )

0

0,2

0,4

0,6

0,8

1

1,2

Singapore Port Klang Colombo Jebel Ali Others

2014-2015 2015-2016

Source : Indian Ministry of Shipping

Sri Lanka’s target of becoming a multimodal logistics hub providing integrated services and facilities requires phys-ical and information technology infrastructure to ensure a seamless flow from one mode of transportation to an-other. To attract multimodal transport and logistics opera-tors and maximize the potential of air and sea links to entice more goods to flow through Sri Lanka, rail, air and sea con-nectivity around the country must be improved in order to expand logistics services.

However, the absence of an integrated logistics policy impedes cross-sector development and public–private coordination. The first shipping policy document was pre-pared in 1997 and later committees created new drafts in

2003 and 2006 respectively, but the document stayed with the Ministry of Ports and Shipping ( MoPS ) and was never approved by Cabinet. In 2009, the Presidential Committee on Maritime Affairs was created. Recently, the Minister has requested a new committee to be formed under the SLPA Chair to go through earlier reports and develop a policy to be approved by Cabinet. A national policy for the maritime and logistics sectors is currently being drafted. Once the draft is finalized as a national policy, it should be available for public comments and should be submitted to the Ministry of National Policies and Economic Affairs [ MoNPEA – Prime Minister’s Office ( PMO ) ], which will call for comments from relevant line ministries for further observation prior to ratifi-cation by parliament.

Strategically located in South Asia, at the crossroads of the fastest-growing region in the world, Sri Lanka is close to many emerging markets and is already an important logistics hub for the region. Having modern port facilities to handle large container vessels, be-ing an important trans-shipment hub for India and being situated on the One Belt and One Road Initiative give Sri Lanka many competitive

advantages in the region. Yet it has not fully tapped the growing opportunities in trans-shipment and e-commerce, and has a unique opportunity to develop a world-class logistics hub and enter the global supply chain industry that is rapidly digitalizing and evolving with a new generation of consumers.

11


Because of its position on the main east-west shipping corridor and north-south corridor connecting Asia to Europe and Africa, Sri Lanka has not diversified its busi-ness model to attract other types of ships and related services. The country is known mainly as a container ship-ping hub in South Asia. For the foreseeable five-year period, Colombo Port will be the major trans-shipment hub of South Asia. Sri Lanka will service all types of ships and provide ship-related services : for example, crew changes, supply-ing and replenishing victuals and water through its network of major ports in the west, east and the south connecting the international east-west shipping route and increasing trans-shipment business through ports of Sri Lanka. The upcoming enhanced free trade agreement with India and the new free trade agreements with China, Singapore and Bangladesh provide many opportunities for developing trad-ing activities and SCM services for the whole of South Asia and even East African emerging markets.

Providing efficient inbound / outbound logistics and ware-housing services for domestic suppliers is essential to ensure swift transportation of perishable fruits, veg-etables and processed food products. There are 138 Customs bonded locations around the country, which in-clude Government and private bonds areas. Most logistics companies ( 80 % ) are located in the Western Province. There are 12–15 container depots that operate as dry ports and there are a number of cold storage facilities, mostly related to the fisheries industry and a few for food and medical prod-ucts. For perishable fruits, vegetables, processed food and other products which require special conditions, storage and transportation facilities are limited.

Box 4 : Commercial hub activities in Sri Lanka

Setting up free ports and bonded areas to facilitate import and export of goods and services through the Commercial Hub Regulation of the Finance Act provided investment oppor-tunities to carry out specific business activities. Colombo and Hambantota declared Free Ports, and Katunayake and Koggala Export Processing Zones ( EPZs ) declared as bonded areas. Currently, turno-ver is estimated at around US $ 150 million to US $ 175 million for four commercial hub companies in operation. They cover activities

in entrepot trade, logistics services ( bonded warehouses or MCC ), front-end services to clients abroad, and offshore business and headquarters operations of leading buyers for management of the finance supply chain and billing operations. Facilities in free ports and bonded areas offer important advantages in terms of product storage facilities, shared warehousing, equipment, delivery time, support facilities and effective management.

Key critical points that attract multimodal transport and logistics operators are cost of operations and turnaround time. The World Bank Logistics Performance Index ( LPI ) ranked Sri Lanka eighty-ninth in 2014. This index includes efficiency of the clearance process, the quality of trade- and transport-related infrastructure, the overall level of compe-tence and quality of logistics services, and some other criti-cal factors. Sri Lanka lags behind its regional competitors on these indicators ( see table 1 ).

12


Table 1 : Detailed Logistics Performance index rankings of Sri Lanka and regional peers in 2014

Singapore Malaysia Thailand india Pakistan Sri Lanka Myanmar

LPi rank 5 25 35 54 72 89 145

LPi components

Customs 3 27 36 65 58 84 150

Infrastructure 2 26 30 58 69 126 137

International shipments 6 10 39 44 56 115 151

Logistics quality and competence 8 32 38 52 75 66 156

Tracking and tracing 11 23 33 57 86 85 130

Timeliness 9 31 29 51 123 85 117

Figure 6 : Container throughput in millions ( TEUs ) for Sri Lanka and regional peers, 2008–2014

0 5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000

2008 2009 2010 2011 2012 2013 2014

India Malaysia Pakistan Singapore Sri Lanka

Source : World Development Indicators.

Compared with regional peers, Sri Lanka’s LPi rank-ing and performance in values is lower than Singapore, Malaysia and india ( see figure 6 ). However, there is sta-ble growth of container throughput handling for Colombo Port. Total container handling in 2016 increased by 10.6 % to 5.7 million TEUs from 5.2 million TEUs handled in 2015.9 The only port to register double-digit growth was Port Klang, Malaysia with 10.8 % growth in 2016 to 13.2 million TEUs. That put it in twelfth position globally.

9.– Central Bank of Sri Lanka ( 2016 ). Annual Report 2016.

Despite stronger economies and currencies, Malaysia and Singapore are both able to perform better than Sri Lanka in terms of lower shipping costs and time. While the cost of shipping is higher in Sri Lanka compared with Malaysia and Singapore, it has a very strong advantage compared with India ( see figure 7 ). The time required to ship contain-ers is higher in Sri Lanka compared with South-East Asian countries and it has a slight advantage compared with India ( see figure 8 ).

13


Figure 7 : The average cost incurred to import and ex-port one TEU for Sri Lanka and regional peers ( US $ )

$1.462

$560

$440

$760 $690

$1.332

$525 $460 $595 $560

$-

$200

$400

$600

$800

$1.000

$1.200

$1.400

$1.600

India

Malays

ia

Singap

ore

Thaila

nd

Sri Lan

ka

Cost to Import (US$ per container) Cost to Export (US$ per container)

Source : World Bank

Figure 8 : The average time taken to import and export one TEU for Sri Lanka and regional peers

21

8

4

13 13

17

11

6

14 16

-

5

10

15

20

25

India Malaysia Singapore Thailand Sri Lanka

Time to Import (days) Time to Export (days)

Source : World Bank

• Because of its position on the main east-west and north-south shipping corridors connecting Asia to Europe and Africa, Sri Lanka has not diversified its business model to attract other types of ships and related services, and 75 % of freight in Sri Lanka is trans-shipment.

• Three terminals in Colombo Port are already reaching maxi-mum capacity.

• Warehousing and transportation services for domestic sup-pliers of perishable fruits, vegetables, processed food and other products are limited.

• Setting up free ports and bonded areas to facilitate import and export of goods and services through the Commercial Hub Regulation of the Finance Act provided investment op-portunities to carry out specific logistics business activities.

• To attract multimodal transport and logistics operators and investors, key points – namely the cost of operations and turnaround time – must be considered.

Photo: (cc) Anushka Wijesinha

15

[ LOGISTICS SERvICES MAP ]

LOGISTICS SERvICES MAP

The logistics industry includes various services provided to domestic and international clients. The map of the logistics services industry ( see figure 9 ) consists of four components : inputs, inbound logistics, operations and outbound logistics. The map’s analysis enables a better understanding of the specific processes of logistics operations. Understanding the dynamics of logistics services is essential for identifica-tion of the issues affecting industry performance.

Figure 9 includes three main types of services provided in Sri Lanka : overall logistics operation, trans-shipment and commercial hub activities. Even though the nature of activi-ties for each of them is the same, each type of service has its own specificities and constraints.


16


Figure 9 : Logistics services mapIn

put

Inbo

und

logi

stic

s

LOGI

STIC

S OP

ERAT

IONS

Oper

atio

nsOu

tbou

nd lo

gist

ics

Dist

ribut

ion

Fina

ncia

l ser

vice

s, s

uch

asco

llate

ral m

anag

emen

t and

insu

ranc

e br

oker

ing

Tech

nica

l tes

ting

Docu

men

tatio

n/ c

ompl

ianc

e

Qual

ity in

spec

tion

Carr

iage

Carr

iage

Carr

iage

Carr

iage

Asse

mbl

y an

dpr

oces

sing

Conv

ersi

on

Pack

agin

g

Pack

agin

g

(Re-

)pac

kagi

ng

(Re-

)pac

kagi

ng

Ship

ping

Ship

ping

Ship

ping

Asse

mbl

y an

dm

inor

pro

cess

ing

Conv

ersi

on

Cust

oms

form

aliti

es a

ndot

her o

rder

adm

inis

tratio

n

Afte

r mar

ket

serv

ices

, e.g

.re

vers

e lo

gist

ics,

retu

rn a

nd re

pairs

Outs

ourc

ed c

all

cent

er (e

.g.

tech

nica

l and

war

rant

y en

quiri

es)

Cust

oms

form

aliti

es a

ndot

her o

rder

adm

inis

tratio

n

Cust

oms

form

aliti

es a

ndot

her o

rder

adm

inis

tratio

n

War

ehou

sing

War

ehou

sing

War

ehou

sing

Orde

rpr

oces

sing

Orde

rpr

oces

sing

Cons

olid

atio

n

Cons

olid

atio

n

Labe

lling

Labe

lling

Mat

eria

lsha

ndin

g

Inve

ntor

y co

ntro

l

War

ehou

sing

Info

rmat

ion

serv

ices

, inc

ludi

ng tr

ack

and

trace

Arra

ngem

ent o

f tra

nspo

rt o

pera

tions

Sele

ctio

n an

d in

tegr

atio

n of

mul

tiple

car

riers

Lead

logi

stic

s pr

ovis

ion

Logi

stic

s co

nsul

ting

and

supp

ly c

hain

des

ign

Man

agem

ent o

f sup

ply

chai

n (in

clud

ing

trans

port

, war

ehou

sing

and

inve

ntor

y)

Oper

atio

n of

sup

ply

chai

n

Proj

ect l

ogis

tics

Lege

nd

Natio

nal

Natio

nal a

nd/o

rin

tern

atio

nal

Requ

ired

only

for e

xpor

t

Mat

eria

lsha

ndin

g

Inve

ntor

y co

ntro

l

Logi

stic

s se

rvic

es p

rovi

der

Logi

stic

s se

rvic

espr

ovid

er

Logi

stic

s se

rvic

es p

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der

Logi

stic

s se

rvic

es p

rovi

der

Logi

stic

s se

rvic

es p

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der

Logi

stic

s se

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espr

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Logistics servicesprovider

Logi

stic

s se

rvic

espr

ovid

er

Logi

stic

s se

rvic

espr

ovid

er

TRAN

SSHI

PMEN

T

COM

MER

CIAL

HUB

ACT

IvIT

IES

Carr

iage

17


Figure 10: Long list of constraints faced by the logistics industry

Lim

ited

capa

citie

s of

airp

orts

and

por

t ter

min

als

limits

vol

ume

grow

th o

f ind

ustry

: •

Lim

ited

acce

ss to

land

in c

oast

al a

reas

•Ab

senc

e of

ade

quat

e M

CC fa

cilit

ies

•

Inef

ficie

ntt d

e-st

uffin

g of

LCL

car

goes

•

Unav

aila

bilit

y of

a m

ulti-

user

faci

lity

for b

uyin

g/st

orag

e/pr

oces

sing

of f

resh

pro

duce

•

Cont

aine

r ter

min

al in

the

Port

of C

olom

bo is

reac

hing

max

imum

cap

acity

•

Air c

argo

faci

litie

s ar

e lim

ited

•No

plu

g an

d pl

ay s

olut

ions

ava

ilabl

e al

ong

the

logi

stic

s co

rrid

ors

or a

t the

por

ts

Wea

k co

ordi

natio

n am

ong

stak

ehol

ders

hin

ders

logi

stic

s in

dust

ry d

evel

opm

ent:

•

Lack

of a

n in

dust

ry- le

d m

echa

nism

to s

uppo

rt an

d tra

ck in

dust

ry g

row

th

•Lo

w p

ublic

-priv

ate

colla

bora

tion

and

no re

gula

r ind

ustry

roun

d-ta

ble

disc

ussi

on

A nu

mbe

r of o

utda

ted

law

s an

d ac

ts co

ncer

ning

logi

stic

s ac

tiviti

es im

pede

indu

stry

gro

wth

: •

No p

rope

r gui

delin

es fo

r int

egra

ted

elec

troni

c so

lutio

ns (e

-pay

men

t, e-

sign

atur

e, e

-doc

umen

ts) t

hrou

gh o

ne w

indo

w fo

r Cus

tom

s fo

r all

com

mer

cial

ban

ks

•Aw

aitin

g am

endm

ent t

o th

e re

gula

tion

for c

omm

erci

al h

ub a

ctiv

ities

•

Lack

of c

ompe

titiv

e ta

riffs

and

law

s en

cour

agin

g M

CC

•Ne

w C

usto

ms

Act d

rafte

d bu

t not

sub

mitt

ed to

the

Gov

ernm

ent

•Fo

r e-c

omm

erce

impo

rts, t

he C

usto

ms

Ord

inan

ce d

oes

not h

ave

a de

min

imis

(un

der U

S$80

0 a

Cust

oms

decl

arat

ion

is n

ot n

eede

d), w

hich

lim

its e

-com

mer

ce re

turn

s as

they

are

taxe

d as

an

impo

rt

Lim

ited

mar

ketin

g an

d pr

omot

ion

of S

ri La

nka

as a

logi

stic

s hu

b in

Asi

a hi

nder

s in

dust

ry

expa

nsio

n an

d in

vest

men

t attr

actio

n

•Li

mite

d ef

forts

in fo

reig

n m

issi

ons

•Li

mite

d in

vest

or ta

rget

ing

•

No c

oord

inat

ed p

rom

otio

n ca

mpa

ign

by

EDB,

BO

I, FC

CISL

, MoF

and

DoC

Ab

senc

e of

a c

old

chai

n m

anag

emen

t sys

tem

and

lim

it ed

faci

litie

s fo

r

valu

e ad

ding

act

iviti

es a

long

the

logi

stic

s co

rrido

rs a

nd in

the

regi

ons

dim

inis

hes

oppo

rtuni

ties

for e

xpor

t exp

ansi

on:

•

Hig

h ca

pita

l exp

endi

ture

requ

ired

to d

evel

op t

hese

kin

ds o

f fac

ilitie

s

Lim

ited

data

on

value

of e

xpor

ts an

d la

ck o

f cen

traliz

ed d

ata

in tr

ansp

ort,

logi

stic

s an

d sh

ippi

ng in

Sri

Lank

a:•

No c

entra

l sta

tistic

al re

posi

tory

for t

he lo

gist

ics

sect

or

•Cu

rrent

dat

a is

onl

y fro

m b

alan

ce o

f pay

men

ts a

nd n

o da

ta is

ava

ilabl

e fo

r the

com

mer

cial

and

inte

rnal

lo

gist

ics

sect

or

Curre

nt m

odel

of p

ort s

truc

ture

is n

ot a

ppro

pria

te to

faci

litat

e an

d su

ppor

t shi

ppin

g bu

sine

ss o

pera

tions

in a

hig

hly

com

petit

ive

glob

al s

hipp

ing

indu

stry

: •

SLPA

act

s as

regu

lato

r, op

erat

or a

nd la

ndlo

rd a

t the

sam

e tim

e •

Lack

of a

uton

omy

of S

LPA

dela

ys d

ecis

ion-

mak

ing

•

Ther

e is

no

sing

le m

inis

try o

r ins

titut

ion

in c

harg

e of

ove

rsee

ing

the

who

le lo

gist

ics

sect

or

re

sults

in li

mite

d pa

rtner

ship

and

no

alig

n men

t to

serv

e in

dust

ry n

eeds

:

btai

n re

leva

nt p

ract

ical

exp

erie

nce

Insu

ffici

ent d

ialo

gue

betw

een

acad

emia

and

indu

stry

•Li

mite

d aw

aren

ess

of p

rofe

ssio

nal o

ppor

tuni

ties

in th

e in

dust

ry

•Ab

senc

e of

R&

D pr

ogra

mm

es to

car

ry o

ut fe

asib

ility

stu

dies

for i

ndus

try g

row

th

•Fe

w in

tern

ship

opp

ortu

nitie

s an

d tra

inin

g pr

ogra

mm

es fo

r stu

dent

s to

o

Insu

ffici

ent n

umbe

r of r

eefe

r tru

cks

and

tran

spor

t veh

icle

s doe

s no

t res

pond

to th

e ne

eds

and

qual

ity re

quire

d of

a g

row

ing

fresh

pr

oduc

e im

port

and

expo

rt se

ctor

: •

Two-

way

traf

fic is

not

util

ized

and

truck

s tra

vel e

mpt

y •

Insu

ffici

ent n

umbe

r of e

lect

rical

pow

er

poin

ts to

pow

er re

efer

truc

ks

Rail

netw

orks

are

unde

ruse

d

for t

rans

porta

tion

of c

onta

iner

s an

d re

efer

con

tain

ers,

and

inte

grat

ed m

ultim

odal

co

nnec

tivity

net

wor

ks a

re m

issi

ng

•No

des

igna

ted

stat

ions

and

no

equi

pmen

t at l

oadi

ng a

nd u

nloa

ding

poi

nts

•No

dry

por

t con

nect

ions

to p

orts

Lim

ited

FDI i

n th

e lo

gist

ics s

ecto

r affe

cts

long

-te

rm g

row

th:

•No

hea

dqua

rters

of b

ig c

ompa

nies

in S

ri La

nka

Inpu

tIn

boun

d lo

gist

ics

Oper

atio

nsOu

tbou

nd lo

gist

ics

Ente

rpris

e pe

rform

ance

issu

esRe

gula

tory

and

pol

icy

issu

esIn

stitu

tiona

l iss

ues

Lege

nd:

18


FOCUSING ON THE MOST PRESSING ISSUES

Extensive stakeholder consultations, field visits and review of literature have revealed a number of constraints in the logis-tics sector that challenge its short- and medium-term growth. In order to ensure the Strategy is efficient and precise, only the most critical bottlenecks are detailed below.

Constraints are identified along three dimensions – policy, institutional and enterprise.

� Policy constraints refer to legislative and regulatory bot-tlenecks that limit effective functioning of the trade sup-port function in line with international best practice.

� institutional constraints refer to supply-side issues re-lated to trade and investment support institutions’ ( TISIs ) service delivery to enterprises; specifically in terms of the capacities and resources available to institutions to achieve effective service delivery.

� Enterprise constraints refer to demand-side issues re-lated to logistics infrastructure.

POLICY ISSUES

Current model of port structure does not enable industry development

The current port structure does not facilitate and support shipping business operations in a highly competitive glob-al shipping industry. SLPA is the state-owned operator that controls commercial ports in Sri Lanka and is responsible for the shipping operations of Jaya Container Terminal. SLPA does not receive financial allocation from the Government and operates on its own revenue. However, it lacks autono-my in decision-making even for small operations and a re-quest must go to the Cabinet. More autonomy must be given to SLPA to facilitate independent decision-making for TF and finance activities in order to compete with other terminals lo-cally and globally. The creation of an independent regulator for ports is strongly recommended to build a fair and com-petitive environment in port services and to stop anti-com-petitive practices ( including anti-dumping ). The Government needs to limit its management of logistics to creating an enabling environment for direct competition in the business of shipping and terminal operations. The landlord model is prevalent in almost all hubs and the Government can in-vest up to 33 % in different businesses in the national in-terest, plus introduce a transparent tax regime for revenue purposes. The management of commercial shipping, ports and logistics currently fall under MSS. SLPA acts as regula-tor, operator and landlord at the same time.

There is no industry apex body and no single ministry is in charge of overseeing the logistics sector. MSS, under MoPS, and Airport and Aviation Services ( Sri Lanka ) Limited, part-ly fulfil this role but there is little coordination with other agencies.

An independent unit of the Government should be creat-ed to facilitate the expansion of logistics activity and cover not only ports but the maritime sector as a whole. This unit would coordinate shipping and logistics services between land, rail, air and sea transport to support Sri Lanka’s de-velopment into a leading logistics hub with physical and vir-tual excellence. A panel of independent personnel will be needed to strategize and continuously adapt the latest and best practices to set up the logistics industry with reliability and speed. The Singapore model of a maritime authority to facilitate the maritime economy can serve as an example.

These constraints are addressed in PoA : 1.1.1, 1.1.2.

Inadequate policies and outdated regulations concerning logistics activities impede the development of shipping business operations

Regulatory stability and predictability will enable an efficient business environment, allowing Sri Lanka to develop into a leading global integrated logistics hub. There are a number of bottlenecks in Sri Lankan legislation that hinder the ex-pansion of the industry, as listed below.

� A policy for liberalizing MCC / LCL was presented in the last budget but the issuing of the relevant Gazette and guidelines amendments has been delayed.

� The Customs Ordinance is outdated. The proposed new Act, which has been drafted to facilitate trade in line with World Trade Organization Trade Facilitation Agreement commitments, needs to be adopted as a priority. The overall result would be reduced transaction costs, in-creased speed and a paperless environment with maxi-mum automation through a national single window.

� The Commercial Hub Regulation of the Finance Act gives Sri Lanka as opportunity to connect its services to re-gional and global value chains. The legislation provides an avenue to increase exports out of Sri Lanka. Because the law is new, operators have encountered practical dif-ficulties increasing business activity and from time to time have requested amendments to the guidelines to expand the overall business climate for hub operators. It is strategically very important to strengthen this sector and accommodate the reforms proposed by operators as a priority. One of the key issues is to retain the current

19


tax structure relevant to operators at 0 %, as originally es-tablished and intended.

� An e-commerce platform for imports and exports should be facilitated – taking into consideration industry require-ments – to achieve the lowest transaction costs and fast-est clearance in order to enhance B2C activity.

� Due to inadequate refinery capacity, Sri Lanka currently has to import bunkers, which results in a cost disadvan-tage. A call to international investors to build new stor-age tanks for crude oil and other petrochemicals to be stored and distributed to the region should be promoted as FDI. The whole petroleum industry should be liberal-ized to promote refinery building and offshore distribution for global operators.

� Strengthen antitrust laws and increase transparency through competition laws, where there are gaps for anti-competitive behaviour. Reforms should ensure fair com-petition in an open-market economy, which will support the export and manufacturing sectors.

� Sri Lanka is a member nation of the International Maritime Organization and there are a number of gaps in laws in relation to international conventions that the country has committed to but have not been fully ratified by the parlia-ment and annexed to national laws. As a result, legislation is ad hoc and does not reflect a fully fledged maritime nation’s needs. This must be rectified to ensure ship op-erators increase their services through Sri Lankan ports and territorial waters

� To ensure an enabling and efficient business environment for logistics sector development, it is crucial to maintain consistency in the laws that govern ports, free zones and commercial hubs to encourage more capital inflows and to attract more FDI.

These constraints are addressed in PoA : 1.1.3, 1.1.6, 1.1.7, 1.1.8, 1.1.9, 1.1.10, 1.1.11, 1.1.12, 1.1.13, 1.1.14, 2.2.3.

Absence of proper guidelines for the Electronic Transactions Act delays use of integrated electronic solutions

Even though the Electronic Transactions Act of 2006 author-izes e-payments, e-signatures, e-documents and tracking, institutions have not been using the system. The reasons are an absence of proper guidelines from the Ministry of Telecommunication and Digital Infrastructure ( MoTDI ), lim-ited awareness and lack of capacities to follow the proce-dures of integrated electronic solutions. Government and Customs payments improved in July 2017 when e-payment gateways were launched. Proper guidelines for the Electronic Transactions Act need to be implemented, including facilita-tion of B2C transactions and the regulator enabling institu-tions to use integrated electronic solutions.

These constraints are addressed in PoA : 1.1.5.

INSTITUTIONAL ISSUES

Weak coordination among stakeholders and lack of an industry-led mechanism to support logistics hinders logistics industry development

The Association of Container Transporters is an organiza-tion whose members include the major container transport companies in the country. However, it does not encompass all players in the sector. Only 25 % of logistics small and medium-sized enterprises ( SMEs ) are organized under this Association. Its main function is to encourage and promote professional conduct in the container transport industry and to improve the quality of container transport services,10 and it currently focuses on problems and solutions for con-tainer transport in Sri Lanka. Another association, SLFFA, brings together freight forwarders under one umbrella. The Sri Lanka Shippers’ Council and the Hub Operators Association of Sri Lanka connect shippers and commercial hub operators. Nevertheless, logistics operators / stakehold-ers are not organized in any form for collective marketing or promotion activities.

There is no formal public–private dialogue or collaboration between different industries and various components of the logistics industry. This impedes the development of the sec-tor. Policies and coordination need to be aligned among all stakeholders to ensure that the needs of the logistics sec-tor are met. Strengthening the governance of the industry to improve public–private coordination is vital.


Insufficient dialogue between academia and industry results in limited partnership and no alignment to serve industry needs

Lack of cooperation between academia and industry results in a shortage of professional competencies and absence of practical experience and training. Logistics manage-ment staff lack sufficient capacities in analytical and strate-gic thinking for industry development. There is also limited awareness of industry professional opportunities. Students are not aware of careers in logistics and there is a limit-ed number of training programmes for them during their studies. Building strong links between academia and indus-try will increase outreach to youth and young profession-als and raise awareness about professional opportunities in logistics.

These constraints are addressed in PoA : 2.1.1, 2.1.2, 2.1.3.

10.– Association of Container Transporters ( 2017 ). Website. Available at www.actsrilanka.com/.

http://www.actsrilanka.com/

20


Rail networks are underused for transportation of containers and reefer containers, and integrated multimodal connectivity networks are missing

The inadequate railway infrastructure results is low use of rail for transportation of containers and reefer containers. There are no designated stations for freight and no equip-ment at loading and unloading points. The type of slepers which could take the weight of laden containers are also lacking and there are no dry port connections to ports. MoMWD is planning to connect dry ports to Colombo Port in five years within the framework of the Western Region Megapolis Master Plan Project. The Ministry of Transport and Civil Aviation ( MoTCA ) is not aware of the opportunities for industry development.


Limited data on value of exports and lack of centralized data on transport, logistics and shipping in Sri Lanka

There is no central statistical repository for the sector and there is minimal data available on the logistics and shipping industry. Lack of information and statistics makes it difficult to analyse and plan industry development, as well as de-terring investors. An R&D and data centre for shipping and logistics will help identify the bottlenecks that inflate logis-tics costs, simplify processes and reduce overall logistics costs. University-level inputs for R&D as well as transparent data for Government should be established with the CBSL Statistics Division.

A proper information portal will give both Government and the private sector the ability to allocate resources, funding and international donor assistance to develop both interna-tional and domestic requirements to strategically expand and provide logistics services. Information will create a conducive environment for businesses to expand invest-ment / volumes that can be moved via Sri Lanka as a base. Without proper data management, Sri Lanka will find it dif-ficult to compete successfully in the long run.

The market intelligence unit to be established under the Department of Census and Statistics and CBSL should re-flect demography, population density, per capita incomes of probable markets, consumer choices, current trading vol-umes and products, etc. to facilitate logistics services. For example, the data for South Asia alone must be looked at. This can give answers on how to service different states in India, where the five southern states alone have a gross do-mestic product of US $ 500 billion.


Limited marketing and promotion of Sri Lanka as a logistics hub in Asia hinders industry expansion and investment attraction

Insufficient promotion of Sri Lanka as a logistics hub has been highlighted as one of the many factors restricting in-dustry growth. The country has not actively marketed its strengths by promoting, advertising and organizing road shows in a planned manner except for a few private sec-tor efforts. Stakeholders also noted limited efforts in foreign missions to promote logistics services to freight forwarders and logistics companies abroad. Moreover, there is no co-ordinated promotion campaign by EDB, BOI, Federation of Chambers of Commerce and Industry Sri Lanka ( FCCISL ), MoF, the Department of Commerce ( DoC ) and other relevant agencies to attract investment.

Even at national level, there is limited awareness about lo-gistics services provided in the country. Local exporters, students and professionals are not aware of the commercial hub and other logistics operations opportunities to store or to provide value added services.

The Government will need to position the country as the leading re-exporting centre in South Asia, which is a huge business for logistics. Action will be needed to develop and enhance connectivity capabilities to be on a par with other regional hubs in the business of re-export. Increasing aware-ness and promoting the strengths of the Sri Lankan logistics industry globally is necessary to attract global logistics com-panies to locate and establish a regional hub for distribu-tion and value added service in Asia and beyond. This can be achieved by attracting and anchoring high profile global networking and conference events in Sri Lanka annually to market the country and build its image as a new destination for logistics and as a platform for leading logistics solutions for global customers.

All Government websites relating to trade / logistics should be upgraded with more information, including processes, forms, applications and frequently asked questions with help desk links. These should be managed by dedicated staff and monitored quarterly for gaps in information by a body like EDB.

These constraints are addressed in PoA : 3.1.1, 3.1.2, 3.1.3.

21


ENTERPRISE ISSUES

Limited capacities of port terminals limits volume growth

There is huge potential for growth in logistics services but the three terminals in Colombo Port are already working at maximum capacity. The overriding issues that need to be resolved are as follows.

� The decision about West Terminal of Colombo harbour has not been taken. Expanding the terminal capacity in Colombo Port is critical to attract trans-shipment busi-ness. Large container vessels experience delays – in some cases up to eight hours – as the deep draught capacities of the Colombo International Container Terminal, South Asia Gateway Terminal and Jaya Container Terminal are almost full.

� There are not enough good MCC facilities, as evidenced by the lack of modern warehouses at the port. According to stakeholders, there is only one warehouse with ade-quate facilities. This issue partly stems from no land being made available for the private sector to operate closer to Colombo Port. There is no reclaimed land adjacent the Colombo International Container Terminal or at produc-tive areas around Colombo Port. The logistics corridor between Colombo Port and the international airport in Katunayake has a number of suitable locations that can be developed for this purpose but the land bank proposed by the Government is to identify logistics services areas and MoMWD has already identified the proper land in the Megapolis plan, implementation of which will start from 2018. According to stakeholders, land is available on the northern side of Colombo Port and several facilities and institutes can be easily relocated there in the short term.

� LCL de-stuffing and handling time is long, which af-fects import-related charges. It can take up to 3–7 days or more to unload a consignment due to current inad-equacies within the port. Problems range from lack of infrastructure and equipment to both shortages and overstaffing of labour, to limited automation and labour allocation, and productivity inefficiencies. Pilferage and damage due to organized sabotage is also a serious problem for inbound consignees that depend on import-ed inputs for manufacturing and processing. As a result, export processing is delayed and clearing costs increase.

� There is no multi-user facility for buying/storage/process-ing of fresh produce. There are no bonded logistics cen-tres and existing facilities are not always well connected. A feasibility study by Expolanka determined there is no clear need for such facilities since private operators are using their own facilities and transport using dry ice. However, no clear market demand to develop such fa-cilities is explained by limited information and statistics to support the development of a cold chain industry and the absence of a detailed study on the need to establish such facilities.

� No plug and play solutions are available for new players to easily establish their operations. Global players need to be attracted to start operations and distributions im-mediately. Therefore, identified locations should be al-located quickly, with infrastructure such as rail and road connectivity so cargo clearance and movements can be performed fast and at low cost. Such plans should be amalgamated with the Megapolis project and other re-gional development plans.

One of the root causes of the above-mentioned issues is the limited availability and the cost of land near the Port of Colombo. There is no clarity on allocation of land in Colombo and Katunayake EPZ from the Government, so a land bank and an attractive price should be available for lo-gistics investors. In coastal areas, the land is owned by three organizations : the Ports Authority ( MoPS ), Ceylon Fishery Harbours Corporation and the Sri Lanka Navy ( Ministry of Defence ). For commercial hub activities, a new Government provision on allocation of land has not yet been implemented ( 5 km radius to convert existing land and warehouses in the free zone for anybody having more than 50m2 ). It is crucial to allocate land to set up operations within ports and airports corridors and attract investment to expand capacity.

These constraints are addressed in PoA : 1.1.8, 2.2.2, 2.2.4, 3.2.2, 3.2.3, 3.2.4, 3.2.5.

The limited capacities of airports reduce the number of logistics operations

Air cargo facilities are limited. Traffic into BIA is increas-ing and more cargo and passenger arrivals are expected. There is a higher frequency of connections, including rap-id growth to Indian destinations. As a result, air craft belly capacity / space is expanding, which will increase trans-shipment and e-commerce business. To make use of this development, the Government should encourage more hub companies and local companies to set up warehouses and operation zones for businesses to move to Sri Lanka to cre-ate distribution services and air / sea operations via Colombo Port. The ground handling monopoly should also be re-ex-amined and competition created, with at least two opera-tors, as the current cost is one of the highest in the region.


22


Absence of a cold chain management system and limited facilities for value adding activities along logistics corridors and in the regions diminishes opportunities for export expansion

Existing cold storage facilities are insufficient for fisheries products and there are no major cold storage facilities in the country for perishables storage in key locations at the regional level, which leads to high postharvest losses : ap-proximately 30 % loss of fresh produce and 60 % of export products. Assuring consistent temperature as a product moves through the value chain or during its transportation is a fundamental part of ensuring basic health and safety as well as compliance with international regulations. Without re-liable temperature-controlled facilities and appropriate value adding services along logistics corridors, it will be impossi-ble to increase exports for sectors that require special con-ditions for storage and transportation.

High capital expenditure is required to develop these kinds of facilities. They are required in the Northern Province, North Central Province, Eastern Province, Central Province and Southern and Sabaragamuwa regional centres. A proper supply chain study is important to identify volumes and the best locations to set up facilities to collect perishable items for storage and processing. In addition, there is very limited land provided by the Government for lease to develop these facilities ( 99-year lease model at a discount rate ) and no tar-geted incentives to drive development of such facilities. A public–private partnership or build-operate-transfer ( BOT ) model is needed. BOI does not have clear direction on the provision of such a support mechanism from the Ministry of Finance ( MoF ), even though the lack of cold chain facilities is a public utility and health issue.

There is also low capacity utilization of vehicles and reefer trucks to transport frozen food. Because they are not used to return fresh food from Jaffna to Colombo and they travel empty, the cost to operate these trucks is high. Moreover, there are not enough electrical power points for reefer trucks. In addition, transporters need to use plastic containers for transportation of fresh foods because of a Government di-rective. However, using these plastic crates drops load ca-pacity and taking the empty crates back to the provinces is

an additional logistics cost. This results in produce losses of 30 % or more, especially when in transit.


Limited FDI in the logistics sector affects long-term growth

The bottlenecks in the business environment described above and the political, economic and regulatory instability make it difficult to attract big companies to install their main or secondary office in Sri Lanka. Relocating headquarters of shipping and logistics companies to Sri Lanka will be the catalyst for growth and build confidence in the coun-try. It will also benefit the country’s trading environment and help exports with greater choice, more services and price competitiveness.


Most of the issues identified in the logistics industry are related to institutional and regulatory frameworks. They highlight the urgency of amending current regulations based on best international models and investment needs to create an enabling environment to allow industry growth.

With Sri Lanka in a favourable geographical position and well-connected with aviation, sea and land transport capabilities, it is possible to develop the county into a leading global integrated logistics hub that can support the national economy and global trade.


23

[ DEvELOPING SRI LANKA INTO A GLOBAL LOGISTICS HUB ]

DEvELOPING SRI LANKA INTO A GLOBAL LOGISTICS HUB

Logistics stakeholders created the following industry vision to bring Sri Lanka to the next level of logistics industry per-formance and sophistication :

‘ Sri Lanka : The Indian Ocean maritime, logistics and distribution hub providing all services and facilities for integrated connectivity ”THE FUTURE OF THE INDUSTRY

Unlocking the potential of Sri Lanka’s logistics industry will require fostering an adequate regulatory environment and implementing enabling procedures and guidelines for pro-vision of efficient logistics services. This will help to create the conditions for the private sector to lead development of the logistics sector, attract the necessary investment to install the proper facilities across the country ( cold stor-age solutions and multi-user facilities ), and provide value

added services through MCC, LCL de-stuffing and com-mercial hub activities. The targeted efforts detailed in the Strategy PoA will address the constraints identified earlier. The future logistics service map will be characterized by an enabling regulatory framework and increased market devel-opment, improved overall coordination and governance, and enhanced forward planning and promotion.

• Creating a conducive business environment for industry expansion by providing efficient logistics services through operational procedures and guidelines is the main priority.

Strategic objective 1: To create an enabling and efficient business

environment driven by technology and public-private coordination

• Creating conditions (land, logistics zones) for the private sector to lead development of cold storage solutions and multi-user facilities across the country and attracting skilled labour will allow industry capacity to expand.

Strategic objective 2: To ensure adequate facilities and availability of a

qualified labour force

• Increasing market outreach and building the country's image will help build awareness of the country's locational advantages and attract more FDI.

Strategic objective 3: To promote the image of Sri Lanka as a logistics hub

worldwide

24


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26


Sri Lanka aims to transform itself into South Asia’s leading maritime, logistics and distribution hub that will support the national economy and global trade. Existing logistics services provide many opportunities for intraregional mar-kets, e-commerce and services for integrated connectivity.

Box 5 : Existing services to existing and new markets

Description of the service Rationale Target market

Trans-shipment and relay services

• Geographic location• Competitive pricing and timing• Connecting feeder services and mother vessel to mother vessel• High level of port productivity• Existing container handling facilities for over 7 million TEUs and can

be expanded to 12 million TEUs within three terminals in Colombo Port

• The only port in South Asia capable of handling deep draught ultra-large crude carriers

South AsiaEast AsiaAfricaMediterranean EuropeMiddle EastUnited States of America ( east coast )

• Entrepot trading

• MCC cargo handling

• LCL handling

• Geographic location• Increased trans-shipment volumes will reduce handling costs• Increased main line callers/services will attract more feeder services

and frequency for reworking of container cargo in South Asia

South AsiaEast AsiaEast AfricaMediterranean EuropeMiddle East

Maritime services :

• Ship supplies

• Bunkers and maritime security services

• All other ancillary services including dockyard facilities

• Proximity to the east-west shipping route and regional high traffic ( locational advantage can increase and attract more vessels to both inshore and offshore value addition to ships )

• Two-thirds of world energy ships, one-third of bulk cargo ships and 50 % of container traffic passes through the sea lanes adjacent to Sri Lanka

East-west shipping routes and north-south ship traffic corridors

• E-commerce

• Storage and distribution centres

• Connects with speed to the fastest-growing economies, a growing middle class and increasing purchasing power in Asian countries

• Increasing industrial production in the region requires raw materials and accessories for on-time manufacturing

• Rapidly expanding Internet access• Online buying population in China – 411.7 million, India – 53.8 million,

Japan – 73.2 million, Indonesia – 51 million, Viet Nam – 31 million• Existing offering of e-commerce hub operations and value added

services near BIA• Strong location for sea-air operations and increasing regional air traf-

fic connectivity

South AsiaIndia

End-to-end logistics solutions through commercial hubs

• Strong and growing infrastructure to facilitate speedy turnaround times

• Focused policy to create better TF• Availability of hardware : product storage facilities, shared warehous-

es, shared equipment• Effective management and know-how in SCM, product design and

development, marketing and sales• Short delivery time : better logistics connectivity time to the port and

reduction in Customs clearance time• Various services are already provided by commercial hubs : inbound

operations, break-bulk, sorting, knitting, cross-docking and global distribution

• Located within the main shipping routes connecting east and west

United StatesEuropeSri LankaChinaIndonesiaViet NamMalaysia

27


INSTITUTIONAL ADJUSTMENTS

TiSis are crucial to supporting companies’ efforts to ex-pand their performance and to export. TISIs assist SMEs to improve their competitiveness and help them connect to value chains.11 They provide essential intelligence on trade

11.– International Trade Centre ( 2017 ). SME Competitiveness Outlook 2017 : The Region – A Door to Trade. Geneva. Available from www.intracen.org/publication/SME-Competitiveness-Outlook-2017---The-region-A-door-to-global-trade/.

development and support enterprises through training, tools and assistance to find adequate market entry channels and international partners. The quality of a country’s business ecosystem hinges on the quality of each of its TISIs.

These institutions, presented in box 6, are divided into four main categories : policy support, trade services, business services, and academia and civil society. They are the driv-ers for future logistics industry growth but certain issues of capacity and resources must be addressed to ensure their efficient support of the sector.

Box 6 : TISIs supporting logistics industry

Policy support • MoTCA• MoPS• Ministry of Higher Education and Highways• Ministry of Industry and Commerce ( MIC )• MoDSIT• Ministry of Local Government and Provincial Councils

Trade support • Road Development Authority• Civil Aviation Authority• SLPA• Central Provincial Council• Sri Lanka Railways• Sri Lanka Customs• Exchange Control Department ( Current Commercial Transactions Division )• Department of Import and Export Control• MSS

Business support • Sri Lanka Shippers’ Council• SLFFA Cargo Services Ltd• Association of Container Transporters• SLFFA• Ceylon Association Of Shipping Agents• Sri Lanka Association of Air Express Companies• Hub Operators Association of Sri Lanka• Sri Lanka Institute of Packaging• Ceylon Chamber of Commerce• Ceylon Shipping Corporation Ltd

Academia and civil society

• Shippers’ Academy Colombo• Chartered Institute of Logistics and Transport Sri Lanka• Department of Transport and Logistics Management of the Faculty of Engineering

at the University of Moratuwa• Department of Logistics and Transport of the Colombo International Nautical

and Engineering College• Institute for Higher Education of the Faculty of Management Studies and Commerce

at the University of Sri Jayewardenepura• Institute of Supply and Materials Management• Institute of Chartered Shipbrokers – Sri Lanka• Sri Lanka Society of Transport and Logistics

http://www.intracen.org/publication/SME-Competitiveness-Outlook-2017---The-region-A-door-to-global-trade/



28


Some key institutional adjustments will be required to unlock sector growth. These changes are crucial in the areas of sector coordination and regulatory adjustment.

Box 7 : Institutional adjustments

institutional adjustment How to implement?

Strengthen governance of the industry

Successful implementation of the Strategy, as well as industry growth, relies on the ability of all stakeholders to jointly coordinate activities to support industry development. Regular public–private dialogue is essential to set priorities and monitor the progress of industry growth. Currently, no single ministry is in charge of overseeing the logistics sector, nor is there an industry-led mechanism to track industry development. Logistics is a complex industry that provides trade support functions for various activities, which is why there is a need for public–private collaboration among different associations, including those for fruits, vegetables and the food processing sector; spices; and electronics and other manufacturing industries.

improve cooperation between academia and the industry

The education system does not cater to the rising needs of the logistics industry. Lack of cooperation between academia and industry results in a lack of awareness about industry needs and opportunities for graduates. There is limited education available for areas such as supply chain, logistics and international trade at vocational and tertiary institutes. There should be an annual dialogue between academia and the industry to identify skills gaps and industry demand. More internship and sponsorship programmes should be supported to provide training programmes for students to obtain relevant education and practical experience in logistics and international trade.

Enhance use of technologies and develop skills to use integrated e-solutions

Use of modern technologies and electronic solutions needs to be improved to provide timely and efficient services. Currently, integrated e-solutions such as e-payment, e-signature and e-documents are lacking. The Electronic Transactions Act of 2006 authorizes these types of e-solutions* but institutions are not aware of them and do not use them. Proper guidelines for the Act must be provided, including facilitation of B2C transactions. Implementation of the guidelines must be completed through MoTDI to build capacities of public servants and enable institutions to use integrated electronic solutions.

Restructure the institutions relevant to logistics to provide adequate support for industry

Providing adequate support for logistics operators is crucial to facilitate operations and boost industry growth. In order to achieve this, a number of adjustments need to be made to the structure of TISIs. MSS and SLPA should be restructured through revision of their processes and systems. SLPA’s autonomy to make decisions on terminal management for TF and finance activities needs to be increased. An independent ports regulator should also be established. Specific divisions within MSS in areas such as logistics, boat services and ship services should provide supportive services to logistics companies.

* See more details in the business environment constraints section above.

REGULATORY AMENDMENTS

The regulations governing the conduct of the logistics in-dustry and its structure are interrelated and influence market performance. Regulation serves to establishing institution-al frameworks to ensure effective operation of the logistics sector, guiding the logistics sector towards safe, energy-ef-ficient and environmentally friendly operations and reducing negative externalities, and developing appropriate policies to address areas where market mechanisms may not work

effectively.12 For Sri Lanka, creating an enabling environ-ment by updating regulations and infrastructure is a key element of logistics industry development. The key adjust-ments to be carried out are summarized in box 8.

12.– International Trade Centre ( 2017 ). Reforming logistics services for ef-fective trade facilitation. ITC, Geneva. Available from http ://www.intracen.org/ uploadedFiles/intracenorg/Content/Publications/Executive_summaries/Logistics %20and %20trade %20facilitationFinal_Low-res %20with %20cover.pdf

http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/Executive_summaries/Logistics and trade facilitationFinal_Low-res with cover.pdf



29


Box 8: Regulation adjustments

Regulation adjustmentPurposeNumber of regulation

increase the decision-making autonomy of SLPA

To facilitate independent decision-making to grant more autonomy for terminal management for TF and finance activities to compete with other terminals locally and globally.Sri Lanka Port Authority Act No. 51 of 1979Merchant Shipping Act No. 52 of 1971Merchant Shipping ( Amendment ) Act No. 36 of 1988

Restructure the administrative and regulatory framework of the port structure model

To change the current port structure by restructuring the administrative and regulatory framework to serve the sector in a more effective and efficient manner and best suit future demand from the maritime and logistics industry. Specific divisions should to be created by MSS in areas such as logistics, boat services and ship services.Sri Lanka Port Authority Act No. 51 of 1979Merchant Shipping Act No. 52 of 1971Merchant Shipping ( Amendment ) Act No. 36 of 1988

implement the proposed amendments to the Customs Ordinance and establish new regulations and operational procedures

To simplify processes through the inclusion of a new automated system as required by the Trade Facilitation Agreement. In order to facilitate international trade and improve the competitiveness of Sri Lankan exports, it is important to ensure that the Customs Ordinance facilitates logistics operations, encourages operators and contains the following points :• Modern paperless transactions are included for Customs services/BOI;• The Customs service station is fully equipped and interconnected and document submission is

possible through the introduction of digital signatures;• All end users, including other Government institutions, are provided with Customs interfaces

and infrastructure to avoid duplication.Customs Ordinance No. 17 of 1869

implement guidelines for e-payment through one window for Customs through all commercial banks

Consolidation of various fees through a single window electronic payment system will facilitate cross-border transactions and improve sector competitiveness.Electronic Transactions Act of 2006

Publish all proposed amendments to the Commercial Hub Regulation in the Gazette

MoF has finalized a number of requirements which were proposed in 2015 / 16 and awaiting amendment to the regulation and Gazette publication. The guidance for commercial hub activities, if not included in the amendment, should be revised and include :• The minimum balance required to set up Commercial Hub activities : currently there is imbal-

ance between working capital and fixed assets requirements, which are valued at US $ 5 million each;

• Allow free movement for the products to be shipped to domestic territory based on demand : currently only 20 % of enterprise export turnover is allowed to be shipped for domestic con-sumption;

• Allow shipping of capital goods to Sri Lankan duty-free BOI projects for storage, to attend to supply chain demand within a short time frame;

• Allow goods to be sent to the Free Zone for finishing or adding value and shipping back or do some manufacturing inside the Free Zone ( which is currently restricted to Mirijjawila Zone );

• Allow pre-clearance of hub cargo;• Recognize activities in hubs as export-related;• Avoid double handling fees.Finance Act, No. 12 of 2013Finance Act – Commercial Hub Regulation No. 1 of 2013

Amend the Petroleum Products Act to liberalize offshore and storage and distribution of bunker and crude oil

To provide adequate oil refinery and refuelling services to attract more ships. Right now Sri Lanka has to import bunkers, which results in a cost disadvantage. If more crude oil can be refined in key ports such as Hambantota / Trincomalee, more port calls can be attracted and increase offshore ship bunkering.The Petroleum Products ( Special Provisions ) Act No. 33 of 2002 and Ceylon Petroleum Corporation Act No. 28 of 1961

Enact an antitrust law To prevent cartelization, monopoly and anti-competitive practices by international shipping lines, introduce legislation in conformity with international best practices.Consumer Affairs Authority Act No. 9 of 2003

BOi investment Law The BOI Investment Law needs to be updated in order to attract more FDI. The shipping and logistics ( freight forwarding ) restrictions come from the Merchant Shipping Act issued by two separate Gazettes for shipping agencies and freight forwarders.Board of investment of Sri Lanka Law No. 4 of 1978 and amendments up to 2012; Board of investment of Sri Lanka ( Amendment ) Act No. 3 of 2012

30


INvESTMENT OPPORTUNITIES

investment in key strategic areas will be needed to expand logistics infrastructure capacity. The following are foreseen as key investment focus areas to achieve industry growth.

Box 9 : Investment opportunities in the logistics sector

investment opportunity Description

Allocating a start-up fund for R&D to establish domestic logistics centres, increase distribution efficiency and create a credible data centre for strategic decision-making purposes

Why? To provide proper understanding and guidance to support exporters, domestic distribution and collection of cargo ( such as perishable vegetables, fruits and fisheries products ). This can be achieved by :• Establishing R&D centres at university level;• Creating a data-collection department within the CBSL Statistics Division;• Setting up logistics centres, including modern dry ports, to lift standards and reduce time and

wastage in the current logistics supply chain.

How? Incorporate into the CBSL Monetary Law Act No. 58 of 1949Sources of financing : Government, MoF

Building storage and distribution centres

Why? To provide appropriate storage facilities for perishable productsHow? Through targeted promotions to attract investorsSources of financing : FDI

Expanding the capacity of BiA

Why? To expand capacity ( cargo and passenger handling services )How? Following the Japan International Cooperation Agency feasibility study, and through a BOT concept, allocate land around BIA to install additional infrastructureSources of financing : FDI

Making the second international airport functional

Why? With increasing tourist arrivals and a growing volume of trans-shipment and e-commerce business, to increase capacity to make Sri Lanka a regional turnaround location for air cargoHow? Government to encourage more hubs and local companies to set up warehouses and business operation zones for distribution services and air operations.Sources of financing : FDI

Building and expanding the West Terminal of Colombo harbour

Why? To attract trans-shipment business activities, increase port capacity and diversify shipping beyond containerized cargoHow? Finalize the tendering process for West Terminal to identify the winnerSources of financing : FDI

improving railway connectivity for transportation of cargoes

Why? To provide services through existing and new railways connecting the three main ports and proposed dry portHow? Through targeted promotion to attract investorsSources of financing : FDI

installing logistics-related equipment manufacturing

Why? To expand supply of cranes and other transportation and shipping equipmentHow? Promote FDI to locate assembly and manufacturing of equipment and parts for logistics-related cranes in Sri LankaSources of financing : FDI

31

[ MOvING TO ACTION ]

MOvING TO ACTION

THE STRATEGIC FRAMEWORK

The strategic objectives define the main thrusts that will guide Strategy implementation to achieve the vision laid out by the industry. The PoA will respond to the vision by

addressing the sector’s constraints and leveraging opportu-nities in a comprehensive manner. To this end, particular ef-forts will be made along the following strategic orientations.

To create an enabling and efficentbusiness environment driven bytechnology and public-private

coordination

Implement keyregulations to

expand industrygrowth

Strengthen thegovernance of the

industry to improvepublic-private

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industry needs

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operations

Build a strongmarketing campaignto stimulate export

growth of thelogistics sector

Increase marketouttreach to attract

investment

To ensure adequate facilitiesand availability of qualified

labour force

To promote the image of Sri Lankaas a logistics hub worldwide

STRATEGIC OBJECTIVE 1 : TO CREATE AN ENABLING AND EFFICIENT BUSINESS ENvIRONMENT DRIvEN BY TECHNOLOGY AND PUBLIC–PRIvATE COORDINATIONThe greatest priority for industry expansion is urgent im-plementation of operational procedures and guidelines for provision of efficient logistics services to create a condu-cive business environment. Predictability of regulations and procedures is vital to manage operations efficiently and re-duce costs of doing business. Industry development should be governed by a strong and active formal public–private governance mechanism to plan, coordinate and track the progress of implementation of this strategic orientation. This strategic objective is composed of two operational objectives :

� Implement key regulations to expand industry growth. � Strengthen governance of the industry to improve pub-

lic–private coordination.

STRATEGIC OBJECTIVE 2 : TO ENSURE ADEQUATE FACILITIES AND AvAILABILITY OF A QUALIFIED LABOUR FORCEWhile the policy and institutions framework needs strength-ening, logistics capacity should be expanded. Labour-force skills need to be improved and awareness must be raised about opportunities in the logistics industry. To provide ef-ficient logistics services, it is crucial to install bonded logis-tics centres to provide value added services through MCC and LCL de-stuffing. It is important to create the conditions ( land, logistics zones ) for the private sector to lead the de-velopment of cold storage solutions and multi-user facilities across the country. This strategic objective has two opera-tional objectives :

� Attract skilled labour to satisfy growing industry needs. � Provide adequate facilities to increase the number and

quality of logistics operations.

32


STRATEGIC OBJECTIVE 3 : TO PROMOTE THE IMAGE OF SRI LANKA AS A LOGISTICS HUB WORLDWIDEIt is important to improve collection, analysis and dissemina-tion of information at regional and international level in order to understand market opportunities and promote Sri Lankan logistics services. This strategic objective will focus on build-ing Sri Lanka’s image to attract FDI and raise awareness of the country’s locational advantage. This strategic objective is composed of two operational objectives :

� Build a strong marketing campaign to stimulate export growth of the logistics sector.

� Increase market outreach to attract investment.


Photo: ITC

33

[ IMPLEMENTATION FRAMEWORK ]

IMPLEMENTATION FRAMEWORK

The strategic development of the logistics industry in Sri Lanka aims to transform the country into a leading mar-itime, logistics and distribution hub in the Indian Ocean. Achieving this ambitious objective will depend heavily on the ability of the industry to implement the activities defined in this Logistics Strategy. As a primary intervention to struc-ture sector development, it is recommended that the follow-ing interventions be implemented with priority :

� Urgently implement operational procedures and guide-lines for provision of efficient logistics services ( amend-ments to the Commercial Hub Regulation under the Finance Act, Customs Ordinance, Electronic Transactions Act ); and

� Create the conditions ( land, logistics zones ) for the pri-vate sector to lead development of cold storage solutions and multi-user facilities across the country and provide value added services through MCC, LCL de-stuffing and commercial hub activities.

These immediate quick win activities are necessary to initi-ate Strategy implementation successfully and to create rapid industry growth.

MANAGING FOR RESULTS

It is the translation of priorities into implementable projects that will achieve the substantial increase in export compet-itiveness and export earnings envisaged by the Strategy. These goals will be achieved by reforming the regulatory framework, optimizing institutional support to exporters and strengthening private sector capacities to respond to market opportunities and challenges. The allocation of human, fi-nancial and technical resources is required to efficiently co-ordinate and implement, and monitor overall implementation.

Successful execution of activities will depend on the abil-ity of stakeholders to plan and coordinate actions in a tacti-cal manner. Diverse activities must be synchronized across public and private sector institutions to create sustainable results. Hence, it is necessary to foster an adequate envi-ronment and create an appropriate framework for Strategy implementation.

Key criteria for achieving the targets will be to coordinate activities, monitor progress and mobilize resources for im-plementation. To that effect, industry representatives rec-ommended that a public–private ‘advisory committee’ for the logistics industry be rapidly established, operational-ized and empowered. The logistics advisory committee is to be responsible for overall coordination, provision of policy guidance and monitoring of industry development along the strategic orientations.


34


Figure 13 : institutional framework for logistics industry development

“Advisory committee” on Logistics

Private: Ceylon Association of Shipping Agents (CASA), Shippers’ Council, Shippers Academy Colombo,

Sri Lanka Freight Forwarders’ Association (SLFFA), Sri Lanka Air Cargo Association (SLACA), HUB operators Association, Colombo

International Nautical and Engineering College (CINEC), Joint Apparel Association Forum (JAAF),

representatives of express companies

Public: Sri Lanka Ports Authority, Board of Investment of Sri Lanka, Sri Lanka Customs, Ceylon Shipping Corporation Ltd.,

Airport and Aviation Services Sri Lanka Ltd., Ministry of Megapolis and Western Development,

National Trade Facilitation Committee

Investment and private sector initiatives aligned to strategic

priorities

Implementation through national institutions and

national budget

Development partners projects

MoDSIT

EDB act and coordination

LOGISTICS ‘ADvISORY COMMITTEE’

The Export Development Act ( 1979 ) grants EDB : ‘On advice from the Board, the Minister may by Order in the Gazette, establish advisory committees for the development and pro-motion of certain products, product groups and commodi-ties as well as functional aspects of trade’. Additionally, ‘each such advisory committee shall have the power to fix and reg-ulate its own procedure, including the power to determine the number of members necessary to form a quorum at its meeting’. The advisory committees are ‘to advise the Board on any or all of the matters which the Minister considers nec-essary for the purposes of giving effect to the principles and provisions of this Act’.

A logistics advisory committee was established by the Minister of MoDSIT in February 2018, and effectively organ-ized by EDB to enable the industry to strategically steer its development. The logistics advisory committee is composed of the following members:

� Representatives of private companies � Ceylon Association of Shipping Agents (CASA) � Shippers’ Council � Sri Lanka freight Forwarders’ Association (SLFFA) � Joint Apparel Association Forum (JAAF) – Logistics

committee � Ceylon Shipping Corporation Ltd � Sri Lanka Port Authority � Board of Investment � Sri Lanka Customs � Airport and Aviation Services Sri Lanka Ltd � Ministry of Megapolis and Western Development � Sri Lanka Air Cargo Association (SLACA) � Colombo International Nautical and Engineering College

(CINEC) � Ministry of Development Strategies and International

Trade � Sri Lanka Export Development Board

35

[ IMPLEMENTATION FRAMEWORK ]

The advisory committee is empowered to meet quarterly and implement the following functions :

i. Create a shared understanding of key market challenges and opportunities facing the sector;

ii. Set goals and targets that, if achieved, will strengthen the sector’s competitive position and enhance Sri Lanka’s overall capacity to meet the changing demands of markets;

iii. Propose key policy changes to be undertaken and pro-mote these policy changes among national decision makers;

iv. Support the coordination, implementation and monitor-ing of activities in the sector by the Government, private sector, institutions or international organizations to en-sure alignment to goals and targets; and, as required, contribute to resource identification and alignment.

KEY SUCCESS FACTORS FOR EFFECTIvE IMPLEMENTATION

The presence of the advisory committee to oversee the im-plementation of the Strategy is a key success factor but it is not sufficient to effectively fulfil its assigned functions.

Private sector support and participation in implementation

The private sector clearly expressed its willingness to con-tribute, directly or in partnership with public institutions, to implementation of the Strategy. Their implementation ef-forts can range from providing business intelligence to in-stitutions to contributing to project design, promotion and branding, policy advocacy, etc. In brief, the private sector’s practical knowledge of business operations is essential to ensuring the Strategy remains aligned to market trends and opportunities.

Proactive networking and communication

The key implementing institutions detailed in the PoA need to be informed of the content of the Strategy and the impli-cations for their 2018–2022 programming. This networking and communication is essential to build further ownership and provide institutions with the opportunity to confirm the activities they can implement in the short-to-long term. It will be important for EDB, MoDSIT and members of the ad-visory committee to reach out to relevant institutions nation-ally to create awareness and support for logistics industry development.

Resources for implementation

The advisory committee, in collaboration with EDB and NES Management Unit at MoDSIT, will need to leverage addition-al support for efficient implementation. Effective planning and resource mobilization is indispensable in supporting Strategy implementation. Resource mobilization should be carefully planned and organized.

As the logistics industry is a priority of the National Export Strategy, the Government of Sri Lanka should define annual budget allocations and support to drive industry growth. This commitment will demonstrate clear engagement in strength-ening the sector and encourage private partners to sup-port development. In addition to national budget support, resource identification will require BOI to effectively target foreign investors in line with the priorities of the Strategy such as capacity expansion of Colombo Port and BIA, and improvement of a rail network between ports, airports and commercial hub zones. Investment flows to Sri Lanka should also be considered as a valuable driver of Strategy imple-mentation and overall industry development.

The various implementation modalities detailed will deter-mine the success of Strategy implementation. However, high-level support from the Government, in collaboration with strong championship by the private sector, will be the real driver of successful implementation.


36


To achieve the vision and strategic objectives discussed, a robust, actionable and realistic strategic PoA is required. This is provided in the section below and constitutes the heart of this Strategy.

The PoA is structured along the three strategic objectives and the operational objectives described above. For each objective, the PoA outlines detailed activities and their implementation modalities, which include :

• Priority level : Priority 1 being the highest and 3 the lowest.• Start/end dates : The desired time frame of the activity.• Targets : Quantifiable targets that allow completion monitor-

ing of each activity during implementation.

• Leading implementing partners : One single account-able lead institution per activity. ( The institution may also have a technical role or may have solely an oversight and coordination role. )

• Supporting implementing partners : Any institu-tion that should be involved at any stage of the activity’s implementation.

• Existing programmes or potential support : Existing initiatives ongoing in the specified area of the activity.

• Cost estimation ( US $ ) : An estimate of the activity’s cost for the total implementation period.


PLAN OF ACTION 2018-2022

38


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latio

ns fo

r pro

cess

es re

late

d to

logi

stic

s op

erat

ors.

Are

as

for a

men

dmen

t are

:

• Fi

nanc

ial a

uton

omy:

pre

sent

ing

a la

ndlo

rd m

odel

to

prom

ote

FDI a

nd jo

int v

entu

res;

• M

CC a

nd L

CL: t

o pr

omot

e M

CC/L

CL c

argo

han

dlin

g by

up

grad

ing

and

inve

stin

g in

new

infra

stru

ctur

e to

com

pete

in

the

new

liber

alize

d po

licy

fram

ewor

k.

101

/04/

2018

31/0

3/20

19SL

PA A

ct N

o. 5

1 of

19

79 a

men

ded;

• M

erch

ant S

hipp

ing

Act N

o. 5

2 of

197

1 an

d Ac

t No.

36

of

1988

am

ende

d

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Min

istry

of

Fina

nce;

Exp

orte

rs A

ssoc

iatio

n of

Sri

Lank

a; S

ri La

nka

Logi

stic

s &

Fre

ight

For

ward

ers

Asso

ciat

ion

(SLF

FA);

Ceyl

on A

ssoc

iatio

n of

Sh

ippi

ng A

gent

s; S

ri La

nka

Ship

-pe

r's C

ounc

il; C

eylo

n Ch

ambe

r of

Com

mer

ce (C

CC);

Natio

nal

Cham

ber o

f Exp

orte

rs o

f Sri

Lank

a (N

CE);

Prim

e M

inis

ter's

Offi

ce

–

1.1.

2 Re

stru

ctur

e th

e ad

min

istra

tive

and

regu

lato

ry fr

ame-

work

to b

est s

uit f

utur

e de

man

d fro

m th

e m

ariti

me

and

logi

stic

s in

dust

ry to

ser

ve th

e se

ctor

in a

mor

e ef

fect

ive

and

effic

ient

man

ner,

base

d on

glo

bal m

odel

s su

ch a

s th

e M

ariti

me

Port

Auth

ority

of S

inga

pore

:

• Ch

ange

the

curre

nt p

ort s

truct

ure

by e

stab

lishi

ng a

n in

depe

nden

t reg

ulat

or (m

ariti

me

and

port

auth

ority

) ba

sed

on th

e Si

ngap

ore

mod

el;

• Cr

eate

spe

cific

div

isio

ns u

nder

the

mar

itim

e an

d po

rt au

thor

ity in

are

as s

uch

as lo

gist

ics,

boa

t ser

vice

s an

d sh

ip s

ervi

ces.

101

/04/

2018

31/1

2/20

20SL

PA A

ct N

o. 5

1 of

19

79 a

men

ded;

• M

erch

ant S

hipp

ing

Act N

o. 5

2 of

197

1 an

d Ac

t No.

36

of

1988

am

ende

d;•

Mar

itim

e Po

rt Au

thor

ity c

reat

ed

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Min

istry

of F

i-na

nce;

Prim

e M

inis

ter's

Offi

ce

–

1.1.

3 Re

view

the

prop

osed

fina

l dra

ft of

the

new

Cust

oms

Act a

nd h

ave

MoF

sub

mit

it to

Par

liam

ent t

o en

sure

the

Act

faci

litat

es lo

gist

ics

oper

atio

ns a

nd e

ncou

rage

s op

erat

ors,

na

mel

y:

• M

oder

n pa

perle

ss tr

ansa

ctio

ns a

re in

clud

ed fo

r Cus

tom

s se

rvic

es/B

OI;

• Th

e Cu

stom

s se

rvic

e st

atio

n is

fully

equ

ippe

d an

d in

terc

onne

cted

and

doc

umen

t sub

mis

sion

is p

ossi

ble

thro

ugh

the

intro

duct

ion

of d

igita

l sig

natu

res;

• Al

l end

use

rs, i

nclu

ding

oth

er G

over

nmen

t ins

titut

ions

, ar

e pr

ovid

ed w

ith C

usto

ms

inte

rface

s an

d in

frast

ruct

ure

to a

void

dup

licat

ion.

Polit

ical

lead

ersh

ip th

roug

h PM

O is

ess

entia

l to

succ

ess-

fully

impl

emen

t pap

erle

ss, d

igita

l tra

de s

ubm

issi

ons.

101

/04/

2018

31/0

3/20

19•

Cust

oms

ordi

nanc

e 17

of 1

869

and

its

amen

dmen

ts w

ill b

e re

vis

ited

to fa

cilit

ate

trade

.

Min

istry

of F

i-na

nce

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try o

f In

dust

ry a

nd C

omm

erce

; Min

istry

of

Dev

elop

men

t Stra

tegi

es a

nd

Inte

rnat

iona

l Tra

de; S

ri La

nka

Cust

oms;

Exp

ort D

evel

opm

ent

Boar

d; D

epar

tmen

t of C

omm

erce

; Na

tiona

l Tra

de F

acili

tatio

n Co

m-

mitt

ee

–

1.1.

4 La

unch

the

info

rmat

ion

porta

l tha

t is

bein

g de

velo

ped

by D

oC a

nd C

usto

ms

(und

er th

e W

orld

Trad

e Or

gani

zatio

n Tr

ade

Faci

litat

ion

Agre

emen

t pro

ject

). Th

is p

orta

l is

ac-

coun

tabl

e an

d le

gally

bin

ding

. It s

houl

d be

tri-l

ingu

al a

nd

will

prov

ide

data

to e

nabl

e tra

ders

to g

et a

ccur

ate,

real

-tim

e in

form

atio

n

101

/04/

2018

31/1

2/20

18In

form

atio

n po

rtal

laun

ched

M

inis

try o

f In

dust

ry a

nd

Com

mer

ce

Min

istry

of F

inan

ce; S

ri La

nka

Cust

oms;

Dep

artm

ent o

f Com

-m

erce

; Prim

e M

inis

ter's

Offi

ce;

Natio

nal T

rade

Fac

ilita

tion

Com

-m

ittee

50,

000

1.1.

5 Im

plem

ent p

rope

r gui

delin

es fo

r the

Ele

ctro

nic

Tran

s-ac

tions

Act

, inc

ludi

ng fa

cilit

atio

n of

B2C

tran

sact

ions

, and

en

able

inst

itutio

ns to

use

inte

grat

ed e

lect

roni

c so

lutio

ns

thro

ugh

the

regu

lato

r (e-

paym

ent,

e-si

gnat

ure,

e-d

ocu-

men

ts, t

rack

ing)

.

101

/04/

2018

31/1

2/20

18Gu

idel

ines

for E

lec-

troni

c Tr

ansa

ctio

n Ac

t of

200

6 pr

ovid

ed

Min

istry

of T

el-

ecom

mun

ica-

tion

and

Digi

tal

Infra

stru

ctur

e

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; C

entra

l Ban

k of

Sri

Lank

a; M

inis

try o

f Fin

ance

; Ex

port

Deve

lopm

ent B

oard

; In-

form

atio

n an

d Co

mm

unic

atio

n Te

chno

logy

Age

ncy

(ICTA

)

–

39

[ PLAN OF ACTION 2018-2022 ]

Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

1: T

o cr

eate

an

ena

blin

g an

d ef

ficie

nt

busi

ness

en

viro

nmen

t dr

iven

by

tech

nolo

gy a

nd

publ

ic-p

rivat

e co

ordi

natio

n.

1.1:

Ado

pt k

ey

regu

latio

n to

ex

pand

indu

stry

gr

owth

.

1.1.

6 Am

end

the

Gaze

tte 1

818/

30 C

omm

erci

al H

ub R

egu-

latio

ns b

y am

endm

ent t

o th

e Fi

nanc

e Ac

t 12/

2012

& 2

013.

Ba

lanc

e m

inim

um re

quire

men

ts fo

r set

ting

up C

omm

erci

al

Hub

activ

ities

sho

uld

be re

vise

d to

faci

litat

e en

try o

f new

op

erat

ors.

101

/04/

2018

31/1

2/20

18•

Fina

nce

Act,

No. 1

2 of

201

3•

Fina

nce

Act

Com

mer

cial

Hub

Re

gula

tion

No. 1

of

2013

am

ende

d

• De

partm

ent

of F

isca

l Po

licy

MoF

Min

istry

of D

evel

opm

ent S

trate

-gi

es a

nd In

tern

atio

nal T

rade

; M

inis

try o

f Tra

nspo

rt an

d Ci

vil

Avia

tion;

Boa

rd o

f Inv

estm

ent

(BOI

); Sr

i Lan

ka C

usto

ms;

Exp

ort

Deve

lopm

ent B

oard

–

1.1.

7 Ke

ep th

e ta

x stru

ctur

e re

leva

nt to

com

mer

cial

hub

op

erat

ors

at 0

% a

s or

igin

ally

est

ablis

hed

and

inte

nded

(in

case

14%

is a

pplic

able

as

of 1

Apr

il 20

18, h

ave

the

Min

is-

ter o

f Fin

ance

am

end

the

Act).

101

/04/

2018

31/1

2/20

180%

rate

for C

omm

erci

al

Hub

activ

ities

kep

t •

Depa

rtmen

t of

Fis

cal

Polic

y M

oF

Min

istry

of D

evel

opm

ent S

trate

-gi

es a

nd In

tern

atio

nal T

rade

; HUB

Op

erat

ors

Asso

ciat

ion

Of S

ri La

n-ka

; Inl

and

Reve

nue

Depa

rtmen

t

–

1.1.

8 In

clud

e lo

gist

ics

oper

atio

ns in

the

prop

osed

land

ba

nk:

• Id

entif

y th

e lo

catio

ns to

be

allo

cate

d fo

r int

erna

tiona

l di

strib

utio

n co

mpa

nies

with

in th

e lo

gist

ics

corri

dors

and

op

erat

ing

area

s of

inte

rnat

iona

l por

ts a

nd a

irpor

ts;

• Ca

ll fo

r exp

ress

ion

of in

tere

st to

attr

act i

nves

tors

to

set u

p op

erat

ions

with

in p

orts

and

airp

orts

cor

ridor

s de

velo

ped

by W

este

rn M

egap

olis

pro

ject

and

the

Sout

hern

Dev

elop

men

t pro

ject

201

/04/

2018

31/1

2/20

18W

ithin

six

mon

ths

to

gaze

tte s

elec

ted

land

s an

d ca

ll fo

r EOI

s

Min

istry

of

Meg

apol

is a

nd

Wes

tern

Dev

el-

opm

ent

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try o

f De-

velo

pmen

t Stra

tegi

es a

nd In

tern

a-tio

nal T

rade

; Min

istry

of L

ands

and

Pa

rliam

enta

ry R

efor

ms

–

1.1.

9 Cr

eate

the

ecos

yste

m to

attr

act m

ore

FDI a

nd h

ead-

quar

ter o

pera

tions

of m

ultin

atio

nal c

orpo

ratio

ns to

be

loca

ted

in S

ri La

nka.

The

curre

nt re

gula

tion

rest

ricts

equ

ity fo

r for

eign

shi

ppin

g an

d lo

gist

ics

com

pani

es. T

he G

over

nmen

t nee

ds to

re-

mod

el b

ased

on

best

inte

rnat

iona

l mod

els

and

inve

stm

ent

requ

irem

ents

.

The

Gove

rnm

ent n

eeds

to s

tudy

the

requ

irem

ents

to a

t-tra

ct g

loba

l ope

rato

rs to

Sri

Lank

a in

ord

er to

cre

ate

the

ecos

yste

m n

eede

d to

dev

elop

por

ts a

nd a

irpor

ts b

eyon

d a

trans

-shi

pmen

t loc

atio

n. E

quity

, tax

and

oth

er c

onst

rain

ts

shou

ld b

e re

mov

ed to

enc

oura

ge m

ore

capi

tal i

nflo

ws fr

om

oper

ator

s to

Sri

Lank

a.

101

/04/

2018

31/1

2/20

19Cu

rrent

regu

latio

ns

are

unde

r Min

istry

of

Ports

and

Shi

ppin

g.Ga

zette

s, re

gula

tions

, an

d gu

idel

ines

issu

ed

by M

erch

ant S

hipp

ing

Divi

sion

, BOI

and

Cen

-tra

l Ban

k of

Sri

Lank

a sh

ould

be

amen

ded

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Min

istry

of

Deve

lopm

ent S

trate

gies

and

In-

tern

atio

nal T

rade

; Boa

rd o

f Inv

est-

men

t (BO

I)

–

1.1.

10 D

evel

op a

nd s

treng

then

ant

itrus

t law

s re

late

d to

m

ariti

me

and

logi

stic

s m

atte

rs to

stre

ngth

en S

ri La

nka

as

a m

ariti

me

natio

n an

d in

trodu

ce le

gisl

atio

n in

con

form

-ity

with

inte

rnat

iona

l bes

t pra

ctic

es. A

ntitr

ust p

rovi

sion

s sh

ould

als

o be

incl

uded

in m

ariti

me

polic

y.

101

/04/

2018

31/1

2/20

21Fr

amew

ork

with

in 6

m

onth

s by

lega

l tea

m

to b

e de

velo

ped;

• On

ce fr

amew

ork

is

done

, dra

fting

of t

he

rele

vant

pro

visi

on

com

plet

ed

Min

istry

of P

orts

an

d Sh

ippi

ngPr

ime

Min

iste

r's O

ffice

–

40


Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

1: T

o cr

eate

an

ena

blin

g an

d ef

ficie

nt

busi

ness

en

viro

nmen

t dr

iven

by

tech

nolo

gy a

nd

publ

ic-p

rivat

e co

ordi

natio

n.

1.1:

Ado

pt k

ey

regu

latio

n to

ex

pand

indu

stry

gr

owth

.

1.1.

11 R

atify

con

vent

ions

that

Sri

Lank

a ha

s al

read

y co

m-

mitt

ed to

in re

latio

n to

the

Inte

rnat

iona

l Mar

itim

e Or

gani

za-

tion

and

othe

r tra

nspo

rt co

nven

tions

:

• Ai

r Pol

lutio

n (In

tern

atio

nal C

onve

ntio

n fo

r the

Pre

vent

ion

of P

ollu

tion

from

Shi

ps A

nnex

6);

• Ba

llast

Wat

er M

anag

emen

t;•

Lim

itatio

n of

Lia

bilit

y on

Mar

itim

e Cl

aim

s;•

Bunk

er C

onve

ntio

ns o

n m

arin

e fu

el s

uppl

ies;

• Oi

l Pol

lutio

n Pr

even

tion;

• Ha

zard

ous

Noxio

us S

ubst

ance

s pr

otoc

ol;

• Th

e M

ontre

al C

onve

ntio

n (th

e Co

nven

tion

for t

he U

nific

a-tio

n of

Cer

tain

Rul

es fo

r Int

erna

tiona

l Car

riage

by

Air).

The

follo

wing

ste

ps a

re re

quire

d:

• M

SS to

upd

ate

the

Min

iste

r of P

orts

and

Shi

ppin

g on

the

stat

us o

f cur

rent

con

vent

ions

.•

A ro

ll-ou

t pla

n wi

th ti

mel

ines

in p

riorit

ized

orde

r for

co

nven

tions

to b

e ra

tifie

d by

Par

liam

ent i

s pr

opos

ed.

001

/04/

2018

31/1

2/20

22IM

O an

d ot

her i

nter

na-

tiona

l tra

nspo

rt co

nven

-tio

ns w

hich

are

hav

ing

shor

tfalls

in la

w sh

ould

to

be

ratif

ied

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Prim

e M

inis

-te

r's O

ffice

–

1.1.

12 F

inal

ize S

ri La

nka

mar

itim

e an

d lo

gist

ics

polic

y,

whic

h is

bei

ng p

repa

red

now,

and

sub

mit

it fo

r Cab

inet

ap

prov

al.

All p

revi

ous

regu

latio

n am

endm

ents

sho

uld

be in

clud

ed

and

are

depe

nden

t on

the

prop

osed

mar

itim

e po

licy,

whi

ch

has

to b

e fin

alize

d by

31

Mar

ch 2

017.

101

/04/

2018

31/1

2/20

18Dr

afte

d M

ariti

me

and

Logi

stic

s po

licy

docu

-m

ent t

o M

inis

try o

f Po

rts a

nd S

hipp

ing

head

ed b

y De

c 20

17

to b

e su

bmitt

ed fo

r ap-

prov

al o

f Cab

inet

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Prim

e M

inis

-te

r's O

ffice

–

1.1.

13 R

emov

e ex

istin

g ba

rrier

s to

priv

ate

sect

or in

vest

-m

ents

and

ope

ratio

ns in

railw

ay n

etwo

rks

and

enco

urag

e PP

Ps in

rail

mas

ter p

lan

desi

gn a

nd im

plem

enta

tion

of p

ro-

gram

s fo

r im

prov

ed ra

il tra

nspo

rtatio

n ( n

etwo

rk e

xpan

sion

, m

aint

enan

ce a

nd m

anag

emen

t)

101

/04/

2018

31/1

2/20

20•

Set o

f gui

delin

es fo

r PP

P pr

ojec

ts•

Calls

for p

ropo

sal o

f PP

Ps c

ompl

eted

To b

e fin

alize

d by

Min

istry

of

Tran

spor

t and

Ci

vil A

viat

ion

Min

istry

of P

orts

and

Shi

ppin

g;

Depa

rtmen

t of N

atio

nal P

lann

ing;

Pr

ime

Min

iste

r's O

ffice

; Sri

Lank

a Ra

ilway

s; E

xtern

al R

esou

rces

De

partm

ent

100

,000

1.1.

14 E

nabl

e ar

eas

with

in in

tern

atio

nal a

irpor

ts a

nd p

orts

au

thor

ized

by S

ri La

nka

Cust

oms

to re

ceiv

e/ho

ld/d

eliv

er/

impo

rt ca

rgo

to b

e al

lowe

d to

car

ry o

ut E

ntre

pot r

elat

ed

activ

ities

, whi

ch is

cur

rent

ly re

stric

ted

to th

e se

a po

rt of

Co

lom

bo a

nd c

omm

erci

al h

ub o

pera

tors

.

201

/01/

2019

31/1

2/20

22•

Regu

latio

n am

ende

d an

d ci

rcul

ated

,•

Depa

rtmen

t of

Fis

cal

Polic

y M

oF

Min

istry

of D

evel

opm

ent S

trate

-gi

es a

nd In

tern

atio

nal T

rade

; M

inis

try o

f Tra

nspo

rt an

d Ci

vil

Avia

tion;

Min

istry

of P

orts

and

Sh

ippi

ng; S

ri La

nka

Cust

oms;

HU

B Op

erat

ors

Asso

ciat

ion

Of

Sri L

anka

10,

000

41


Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

1: T

o cr

eate

an

ena

blin

g an

d ef

ficie

nt

busi

ness

en

viro

nmen

t dr

iven

by

tech

nolo

gy a

nd

publ

ic-p

rivat

e co

ordi

natio

n.

1.2:

Stre

ngth

en

the

gove

rnan

ce

of th

e in

dust

ry

to im

prov

e pu

blic

-priv

ate

coor

dina

tion.

1.2.

1 Ho

ld q

uarte

rly m

eetin

gs o

f the

logi

stic

s Ad

viso

ry

com

mitt

ee c

haire

d by

the

priv

ate

sect

or, i

nclu

ding

pub

lic

sect

or s

take

hold

ers

to:

• Co

nfirm

stra

tegi

c or

ient

atio

n of

the

indu

stry

;•

Plan

ann

ual i

mpl

emen

tatio

n of

the

stra

tegi

c or

ient

atio

ns;

• Tr

ack

impl

emen

tatio

n pr

ogre

ss b

y le

ad im

plem

entin

g pa

rtner

s;•

Asse

ss th

e ne

ed to

est

ablis

h ad

equa

te s

uppo

rt m

echa

nism

s (p

olic

y, re

gula

tions

, ins

titut

ions

, etc

.).

105

/04/

2018

31/1

2/20

22•

Quar

terly

mee

tings

he

ld;

• M

inut

es a

vaila

ble

Expo

rt De

velo

p-m

ent B

oard

Min

istry

of I

ndus

try a

nd C

om-

mer

ce; M

inis

try o

f Dev

elop

men

t St

rate

gies

and

Inte

rnat

iona

l Tra

de;

Min

istry

of T

rans

port

and

Civi

l Av

iatio

n; M

inis

try o

f Fin

ance

; M

inis

try o

f Por

ts a

nd S

hipp

ing;

Sr

i Lan

ka L

ogis

tics

& F

reig

ht

Forw

arde

rs A

ssoc

iatio

n (S

LFFA

); Ce

ylon

Ass

ocia

tion

of S

hipp

ing

Agen

ts; S

ri La

nka

Ship

per's

Cou

n-ci

l; M

inis

try o

f Meg

apol

is a

nd

Wes

tern

Dev

elop

men

t

5,0

00

1.2.

2 Es

tabl

ish

a tw

ice

year

ly a

dvis

ory

roun

d ta

ble

betw

een

MoM

WD

and

MoN

PEA

spec

ifica

lly to

def

ine

a co

mm

on

plan

for ‘

supp

ly c

hain

sol

utio

ns’ a

nd lo

gist

ics

deve

lop-

men

t, al

loca

tion

of la

nd a

nd P

PPs.

201

/04/

2018

31/1

2/20

22Bi

-ann

ual m

eetin

g he

ld

Min

istry

of

Meg

apol

is a

nd

Wes

tern

Dev

el-

opm

ent

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try o

f In-

dust

ry a

nd C

omm

erce

; Min

istry

of

Deve

lopm

ent S

trate

gies

and

Inte

r-na

tiona

l Tra

de; M

inis

try o

f Tra

ns-

port

and

Civi

l Avi

atio

n; M

inis

try

of P

orts

and

Shi

ppin

g; M

inis

try o

f La

nds

and

Parli

amen

tary

Ref

orm

s;

Prim

e M

inis

ter's

Offi

ce; C

entra

l En

viro

nmen

t Aut

horit

y

10,

000

2: T

o en

sure

th

e ad

equa

te

faci

litie

s an

d av

aila

bilit

y of

qu

alifi

ed la

bor

forc

e.

2.1:

Attr

act

skille

d la

bor t

o sa

tisfy

gro

win

g in

dust

ry n

eeds

.

2.1.

1 St

reng

then

the

link

betw

een

acad

emia

and

indu

stry

to

dev

elop

the

partn

ersh

ip a

nd b

ette

r alig

nmen

t to

serv

e in

dust

ry n

eeds

, nam

ely

by:

• Tr

ansf

er S

hipp

ing

and

Avia

tion

Rese

arch

Inst

itute

(SAR

I) to

Inst

itute

of P

olic

y St

udie

s (IP

S) to

con

duct

logi

stic

in

dust

ry re

sear

ch,

• De

velo

p pa

rtner

ship

with

Sin

gapo

re C

oope

ratio

n En

terp

rise

to g

et th

e te

chni

cal a

ssis

tanc

e an

d ex

perti

se

from

Sin

gapo

re’s

dev

elop

men

t exp

erie

nce,

• De

velo

p a

curri

culu

m o

n Su

pply

cha

in, L

ogis

tics

and

Tran

spor

t for

sel

ecte

d ed

ucat

ion

inst

itute

s,•

Asse

ss la

bour

requ

irem

ents

and

upg

rade

skil

ls o

f HR

at

inst

itutio

ns o

f MoT

CA.

201

/01/

2019

31/1

2/20

21•

Annu

al a

cade

mia

-in

dust

ry m

eetin

g he

ld•

R&D

prog

ram

me

deve

lope

d;•

Partn

ersh

ip w

ith

inte

rnat

iona

l Re

sear

ch in

stitu

te

esta

blis

hed;

• Sh

ippi

ng a

nd

Avia

tion

Rese

arch

In

stitu

te tr

ansf

erre

d to

Inst

itute

of P

olic

y St

udie

s•

Rese

arch

as

sess

men

ts

(indu

stry

, R&

D, H

R,

etc)

con

duct

ed.

To b

e fin

alize

d by

Min

istry

of

Tran

spor

t and

Ci

vil A

viat

ion

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try o

f Po

rts a

nd S

hipp

ing;

Dep

artm

ent

of N

atio

nal P

lann

ing;

Airp

ort

& A

viat

ion

Serv

ices

Sri

Lank

a Li

mite

d; E

xtern

al R

esou

rces

De-

partm

ent

150

,000

42


Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

2: T

o en

sure

th

e ad

equa

te

faci

litie

s an

d av

aila

bilit

y of

qu

alifi

ed la

bor

forc

e.

2.1:

Attr

act

skille

d la

bor t

o sa

tisfy

gro

win

g in

dust

ry n

eeds

.

2.1.

2 Un

der t

he P

PP w

ith th

e Sh

ippe

r's C

ounc

il, e

stab

lish

spon

sors

hip

prog

ram

mes

fund

ed b

y th

e in

dust

ry fo

r elig

i-bl

e un

derp

rivile

ged

yout

h.

Priv

ate

sect

or to

par

ticip

ate

and

fund

edu

catio

n fo

r tal

ente

d bu

t und

erpr

ivile

ged

stud

ents

, sel

ecte

d on

est

ablis

hed

crite

ria w

ho h

ave

done

wel

l in

exam

inat

ion

at o

rdin

ary

and

adva

nced

leve

l but

doe

s no

t get

sel

ecte

d to

uni

vers

ity o

r do

es n

ot h

ave

a fin

anci

al c

apab

ility

to d

o fu

rther

stu

dies

in

priv

ate

inst

itutio

ns o

r in

the

univ

ersi

ty.

A sc

hola

rshi

p pr

ogra

m to

be

crea

ted

with

priv

ate

indu

stry

fu

ndin

g fo

cuse

d on

the

sect

or w

ould

be

cons

ider

ed a

s Co

r-po

rate

soc

ial r

espo

nsib

ility

(CSR

) for

ass

ocia

tions

/sta

ke-

hold

ers

invo

lved

in th

e se

ctor

.

201

/01/

2019

31/1

2/20

21Sp

onso

rshi

p pr

o-gr

amm

es e

stab

lishe

d M

inis

try o

f Hi

gher

Edu

ca-

tion

and

High

-wa

ys

Min

istry

of I

ndus

try a

nd C

om-

mer

ce; M

inis

try o

f Dev

elop

men

t St

rate

gies

and

Inte

rnat

iona

l Tra

de;

Min

istry

of P

orts

and

Shi

ppin

g;

Expo

rt De

velo

pmen

t Boa

rd; S

ri La

nka

Ship

per's

Cou

ncil

100

,000

2.1.

3 Un

der t

he P

PP w

ith th

e Sh

ippe

r's C

ounc

il, p

rovi

de

inte

rnsh

ip o

ppor

tuni

ties

and

train

ing

prog

ram

mes

for s

tu-

dent

s in

the

supp

ly c

hain

, log

istic

s an

d in

tern

atio

nal t

rade

st

ream

to o

btai

n re

leva

nt e

duca

tion

and

prac

tical

exp

eri-

ence

.

This

can

be

achi

eved

thro

ugh

com

pani

es p

rovi

ding

pra

cti-

cal t

rain

ing

and

expe

rienc

e to

stu

dent

s in

the

subj

ect a

reas

on

a s

hort-

term

bas

is s

o th

at th

ey g

radu

ate

from

aca

dem

ic

inst

itutio

ns w

ith b

ackg

roun

d kn

owle

dge

and

gear

ed to

per

-fo

rm b

ette

r and

with

gre

ater

pro

duct

ivity

.

001

/04/

2018

31/1

2/20

20In

tern

ship

pro

gram

s es

tabl

ishe

dM

inis

try o

f Hi

gher

Edu

ca-

tion

and

High

-wa

ys

Min

istry

of D

evel

opm

ent S

trate

-gi

es a

nd In

tern

atio

nal T

rade

; M

inis

try o

f Skil

ls D

evel

opm

ent

and

Voca

tiona

l Tra

inin

g; E

xpor

t De

velo

pmen

t Boa

rd; S

ri La

nka

Ship

per's

Cou

ncil

100

,000

2.2:

Pro

vide

ad

equa

te

faci

litie

s to

in

crea

se

the

num

ber

and

qual

ity

of lo

gist

ics

oper

atio

ns.

2.2.

1 Es

tabl

ish

a sp

ecia

lised

uni

t for

dat

a ga

ther

ing

and

anal

ysis

on

logi

stic

s an

d sh

ippi

ng to

iden

tify

the

bottl

e-ne

cks,

sim

plify

the

proc

esse

s an

d re

duce

ove

rall

logi

stic

s co

st.

201

/01/

2019

31/1

2/20

21•

Unit

for d

ata

gath

erin

g an

d an

alys

is o

n lo

gist

ics

and

ship

ping

fu

nctio

nal;

• M

etho

dolo

gy

defin

ed;

• Da

ta a

vaila

ble

in

2019

Depa

rtmen

t of

Cens

us a

nd S

ta-

tistic

s

Cent

ral B

ank

of S

ri La

nka;

Min

is-

try o

f Dev

elop

men

t Stra

tegi

es a

nd

Inte

rnat

iona

l Tra

de; M

inis

try o

f Fi-

nanc

e; M

inis

try o

f Por

ts a

nd S

hip-

ping

; Exp

ort D

evel

opm

ent B

oard

; Sr

i Lan

ka P

ort A

utho

rity;

Sri

Lank

a Lo

gist

ics

& F

reig

ht F

orwa

rder

s As

soci

atio

n (S

LFFA

); Ce

ylon

As-

soci

atio

n of

Shi

ppin

g Ag

ents

100

,000

2.2.

2 Ca

rry o

ut a

feas

ibili

ty s

tudy

(priv

ate

sect

or e

xper

ts

and

Univ

ersi

ty o

f Mor

atuw

a) o

n th

e ne

cess

ity o

f ins

talli

ng

mul

ti-us

er fa

cilit

ies

to p

rovi

de te

mpe

ratu

re-c

ontro

lled

stor

-ag

e (b

onde

d lo

gist

ics

cent

res)

. Rel

ease

of r

eefe

r sto

rage

, us

ing

reef

er c

onta

iner

s in

por

ts a

nd c

reat

ion

of m

ulti-

user

fa

cilit

ies,

col

d st

orag

e, e

tc. w

ould

hel

p tra

nspo

rtatio

n an

d co

llect

ion

of p

eris

habl

es a

nd th

e fo

od p

roce

ssin

g se

ctor

, wh

ich

curre

ntly

suf

fers

a h

igh

perc

enta

ge o

f pos

t-har

vest

lo

sses

. Im

plem

ent r

ecom

men

datio

ns.

201

/06/

2018

30/0

6/20

19•

Feas

ibili

ty s

tudy

co

mpl

eted

;•

Reco

mm

enda

tion

impl

emen

ted.

;

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

; Min

istry

of F

i-na

nce;

Min

istry

of H

ighe

r Edu

ca-

tion

and

High

ways

50,

000

2.2.

3 Fo

rmul

ate

an a

ctio

n pl

an to

bui

ld s

cale

and

vol

ume

thro

ugh

key

perfo

rman

ce in

dica

tors

and

ens

ure

impl

emen

-ta

tion.

For

this

, all

Gove

rnm

ent i

nstit

utio

ns re

late

d to

TF

(SLP

A, M

oPS)

to d

evel

op a

nd m

aint

ain

key

perfo

rman

ce

indi

cato

rs to

mon

itor i

nstit

utio

ns’ p

erfo

rman

ce a

nd to

im-

prov

e th

e co

unty

's LP

I, Ea

se o

f Doi

ng B

usin

ess

and

Glob

al

Com

petit

iven

ess

Inde

x ran

kings

.

101

/05/

2018

31/1

2/20

22•

Actio

n pl

an

impl

emen

ted

• KP

Is in

dica

tors

de

velo

ped

unde

r ea

ch in

stitu

tion

Min

istry

of

Deve

lopm

ent

Stra

tegi

es a

nd

Inte

rnat

iona

l Tr

ade

Min

istry

of T

rans

port

and

Civi

l Av

iatio

n; M

inis

try o

f Fin

ance

; M

inis

try o

f Por

ts a

nd S

hipp

ing;

Sr

i Lan

ka P

ort A

utho

rity;

Pro

ject

M

anag

emen

t and

Mon

itorin

g (P

MM

)

30,

000

43


Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

2: T

o en

sure

th

e ad

equa

te

faci

litie

s an

d av

aila

bilit

y of

qu

alifi

ed la

bor

forc

e.

2.2:

Pro

vide

ad

equa

te

faci

litie

s to

in

crea

se

the

num

ber

and

qual

ity

of lo

gist

ics

oper

atio

ns.

2.2.

4 Es

tabl

ish

and

prom

ote

priv

ate

zone

s un

der t

he B

OI

regu

latio

ns in

ord

er to

cre

ate

logi

stic

s an

d wa

reho

usin

g ‘p

lug

and

play

’ fac

ilitie

s.

• BO

I to

allo

cate

zone

s wh

ere

inte

rnat

iona

l dis

tribu

tors

and

as

sem

bly

com

pani

es c

an s

et u

p op

erat

ions

to p

erfo

rm

valu

e ad

ditio

n;•

Prov

ide

basi

c ‘p

lug

and

play

’ inf

rast

ruct

ure,

whe

re

min

imum

tim

e an

d ef

fort

woul

d be

take

n fo

r com

pani

es

to s

tart

work

. Thi

s wi

ll in

clud

e bu

ildin

gs, e

lect

ricity

, wa

ter,

min

or a

ssem

bly

plan

ts a

nd tr

ansp

orta

tion

conn

ectio

ns;

• BO

I to

prom

ote

thes

e fa

cilit

ies

to in

vest

ors.

101

/04/

2018

31/1

2/20

18•

Zone

s fo

r “pl

ug

and

play

” lo

gist

ics

and

ware

hous

ing

oper

atio

ns a

lloca

ted;

• In

vest

men

t pr

omot

ion

activ

ities

ca

rried

out

Min

istry

of

Deve

lopm

ent

Stra

tegi

es a

nd

Inte

rnat

iona

l Tr

ade

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try o

f Fi-

nanc

e; B

oard

of I

nves

tmen

t (BO

I)

30,

000,

000

2.2.

5 De

velo

p a

Port

Com

mun

ity S

yste

m to

sha

re in

form

a-tio

n am

ong

diffe

rent

term

inal

s to

faci

litat

e tra

ns-s

hipm

ent

and

inte

r-ter

min

al tr

uckin

g. It

is a

lso

reco

mm

ende

d th

at

term

inal

s ha

ve c

ontra

cts

to o

ptim

ize s

hip

hand

ling

to m

ake

the

Port

of C

olom

bo m

ore

effic

ient

.

101

/04/

2018

31/1

2/20

20A

port

com

mun

ity

syst

em s

et u

p an

d op

-er

atio

n.

Sri L

anka

Por

t Au

thor

ityM

inis

try o

f Por

ts a

nd S

hipp

ing;

In

form

atio

n an

d Co

mm

unic

atio

n Te

chno

logy

Age

ncy

(ICTA

)

50,

000

3: T

o pr

omot

e th

e im

age

of

Sri L

anka

as

a lo

gist

ics

hub

in

the

wor

ld.

3.1:

Bui

ld

a st

rong

m

arke

ting

cam

paig

n to

st

imul

ate

expo

rt

grow

th o

f lo

gist

ics

sect

or.

3.1.

1 De

velo

p a

natio

nal l

ogis

tics

mar

ketin

g pl

an a

nd

prom

otio

nal m

ater

ials

to in

crea

se a

ware

ness

of t

he c

ount

ry

loca

tion

adva

ntag

e to

attr

act F

DI.

Follo

wing

ste

ps re

quire

d:

• Pr

epar

e a

natio

nal l

ogis

tics

and

ship

ping

mar

ketin

g pl

an

(as

a re

sult

of th

e fir

st A

dvis

ory

Com

mitt

ee m

eetin

g);

• Cr

eate

requ

ired

mar

ketin

g m

ater

ials

;•

Esta

blis

h co

untry

imag

e as

logi

stic

s hu

b (M

CC+

LCL

carg

o, w

areh

ouse

s, e

-com

mer

ce).

101

/04/

2018

31/1

2/20

18•

Mar

ketin

g pl

an

deve

lope

d (b

y fir

st

quar

ter 2

018)

;•

Mar

ketin

g m

ater

ials

cr

eate

d

Min

istry

of

Deve

lopm

ent

Stra

tegi

es a

nd

Inte

rnat

iona

l Tr

ade

Min

istry

of T

rans

port

and

Civi

l Av

iatio

n; M

inis

try o

f Por

ts a

nd

Ship

ping

; Min

istry

of F

orei

gn A

f-fa

irs; B

oard

of I

nves

tmen

t (BO

I);

Expo

rt De

velo

pmen

t Boa

rd; H

UB

Oper

ator

s As

soci

atio

n Of

Sri

Lank

a

50,

000

3.1.

2 Or

gani

ze in

tern

atio

nal h

igh

prof

ile M

ICE

even

ts to

in-

vite

glo

bal l

ogis

tics

and

ship

ping

com

pani

es to

sho

wcas

e th

e lo

catio

n an

d wh

at it

offe

rs in

term

s of

com

petit

iven

ess

and

to p

rom

ote

Sri L

anka

as

the

next

logi

stic

s hu

b, in

ter-

natio

nally

.

101

/04/

2018

31/1

2/20

222

maj

or M

ICE

even

ts

held

yea

rly

Expo

rt De

velo

p-m

ent B

oard

Min

istry

of D

evel

opm

ent S

trate

-gi

es a

nd In

tern

atio

nal T

rade

; Bo

ard

of In

vest

men

t (BO

I); D

e-pa

rtmen

t of C

omm

erce

100

,000

3.1.

3 Fo

rmul

ate

a m

arke

ting

budg

et a

nd tr

ade

prom

otio

nal

porta

l for

glo

bal b

rand

ing

of S

ri La

nka's

logi

stic

s in

dust

ry

in ta

rget

ed m

arke

ts (E

ast A

frica

, Sou

th E

ast A

sia,

Ban

gla-

desh

, Ind

ia, C

hina

, Pak

ista

n) a

nd to

org

anis

e a

road

sho

w in

UA

E (D

ubai

), UK

, Den

mar

k.

Posi

tioni

ng th

e co

untry

as

a le

adin

g re

-exp

ortin

g ce

ntre

in

Sou

th A

sia,

has

trem

endo

us p

oten

tial t

o at

tract

glo

bal

B2C

busi

ness

to S

ri La

nka.

Tota

l log

istic

s so

lutio

ns to

m

ultin

atio

nal c

ompa

nies

can

be

desi

gned

to s

uit d

iffer

ent

clie

ntel

e.

A m

arke

ting

and

a br

andi

ng c

ampa

ign

can

be s

egm

ente

d to

Eu

rope

, Afri

ca, M

iddl

e Ea

st, S

outh

and

Eas

t Asi

a,

101

/08/

2019

31/1

2/20

22•

Prom

otio

nal w

eb

porta

l lau

nche

d in

ta

rget

ed c

ount

ries;

• 2

road

sho

ws p

er

year

in s

elec

ted

coun

tries

org

anize

d

Min

istry

of

Deve

lopm

ent

Stra

tegi

es a

nd

Inte

rnat

iona

l Tr

ade

Min

istry

of I

ndus

try a

nd C

om-

mer

ce; M

inis

try o

f Fin

ance

; M

inis

try o

f For

eign

Affa

irs; E

xpor

t De

velo

pmen

t Boa

rd

1,0

00,0

00

44


Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

3: T

o pr

omot

e th

e im

age

of

Sri L

anka

as

a lo

gist

ics

hub

in

the

wor

ld.

3.2:

Incr

ease

m

arke

t out

reac

h to

attr

act t

he

inve

stm

ent.

3.2.

1 At

tract

inve

stm

ent t

o in

crea

se a

rail

netw

ork

betw

een

ports

, airp

orts

and

com

mer

cial

hub

zone

s to

faci

litat

e fa

st

trans

fer o

f sea

/air

carg

o an

d es

tabl

ish

an in

tegr

ated

mul

ti m

odal

con

nect

ivity

net

work

. PPP

can

be

set t

hrou

gh B

OT

mod

el w

hen

gove

rnm

ent r

elea

ses

the

land

and

lega

l cle

ar-an

ce a

nd p

rivat

e co

mpa

nies

inve

st in

har

d in

frast

ruct

ure.

Th

is c

an b

e ac

hiev

ed th

roug

h in

vest

men

t pro

mot

ion

activ

i-tie

s in

targ

eted

cou

ntrie

s (In

dia,

Chi

na, J

apan

).

Follo

wing

ste

ps re

quire

d:

• De

velo

p a

plan

with

trac

k al

loca

tion

initi

ally

bet

ween

Co

lom

bo p

ort a

nd B

IA c

argo

term

inal

;•

Prep

are

inve

stm

ent p

rofil

es fo

r inv

esto

rs in

targ

et

coun

tries

;•

Carry

out

inve

stm

ent p

rom

otio

n ac

tiviti

es in

sel

ecte

d co

untri

es in

clud

ing

road

show

s an

d B2

B m

eetin

gs;

• En

gage

fore

ign

repr

esen

tativ

es, d

iplo

mat

s an

d em

bass

y re

pres

enta

tives

to s

uppo

rt an

d pl

an p

rom

otio

nal v

isits

.

201

/04/

2018

31/1

2/20

22•

Inve

stm

ent p

rofil

es

prep

ared

;•

One

road

sho

w pe

r ye

ar in

targ

eted

co

untry

org

anize

d;•

B2B

mee

ting

with

5-

7 in

vest

ors

in e

ach

coun

try o

rgan

ised

pe

r yea

r

Min

istry

of

Meg

apol

is a

nd

Wes

tern

Dev

el-

opm

ent

Min

istry

of N

atio

nal P

olic

ies

and

Econ

omic

Affa

irs; M

inis

try

of Tr

ansp

ort a

nd C

ivil

Avia

tion;

M

inis

try o

f Por

ts a

nd S

hipp

ing;

De

partm

ent o

f Com

mer

ce; A

irpor

t &

Avi

atio

n Se

rvic

es S

ri La

nka

Lim

ited

1,5

00,0

00

3.2.

2 In

crea

se c

apac

ities

in th

e po

rt of

Col

ombo

to fa

cili-

tate

trad

e gr

owth

.

Follo

wing

ste

ps re

quire

d:

• Fi

nalis

e th

e te

nder

ing

proc

ess

of E

ast t

erm

inal

to id

entif

y th

e wi

nner

;•

Assi

st w

ith th

e be

ginn

ing

of a

dmin

istra

tive

proc

edur

es

for c

onst

ruct

ion

of th

e te

rmin

al.

The

Port

of C

olom

bo p

roje

ct h

as to

be

expe

dite

d as

con

-st

rain

s fo

r meg

a sh

ips

are

indi

cate

d wi

thin

the

next

twel

ve

mon

ths.

101

/04/

2018

30/0

6/20

19•

Deci

sion

abo

ut

allo

catio

n of

Co

lom

bo E

ast

Term

inal

take

n;•

Cons

truct

ion

of th

e te

rmin

al c

omm

ence

d

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Ind

ustry

and

Com

-m

erce

100

,000

3.2.

3 In

line

with

new

gov

ernm

ent p

olic

y on

furth

er e

xpan

-si

on a

nd o

peni

ng o

f the

logi

stic

s se

ctor

(bud

get 2

018)

, st

imul

ate

the

deve

lopm

ent o

f airp

orts

(dom

estic

and

in

tern

atio

nal)

thro

ugh

sust

aina

ble

busi

ness

mod

els,

incl

ud-

ing

PPPs

. As

requ

ired,

com

plet

e th

e ne

cess

ary

legi

slat

ive

amen

dmen

ts. P

rom

oted

inve

stm

ent f

or th

e co

nstru

ctio

n of

ca

rgo

hand

ling

(hub

ope

ratio

ns) i

n ke

y ai

rpor

t.

101

/04/

2018

31/1

2/20

22•

Plan

for a

irpor

t de

velo

pmen

t de

siug

ned

with

pr

ivat

e se

ctor

lo

gist

ics

oper

ator

s•

Civi

l Avi

atio

n Ac

t am

ende

d to

ena

ble

PPPs

• In

vest

or ta

rget

ing

com

plet

ed

To b

e fin

alize

d by

Min

istry

of

Tran

spor

t and

Ci

vil A

viat

ion

Min

istry

of F

inan

ce; B

oard

of

Inve

stm

ent (

BOI);

Dep

artm

ent o

f Na

tiona

l Pla

nnin

g; A

irpor

t & A

via-

tion

Serv

ices

Sri

Lank

a Li

mite

d;

Exte

rnal

Res

ourc

es D

epar

tmen

t

100

,000

Stra

tegi

c ob

ject

ives

Oper

atio

nal

obje

ctiv

esAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rs

Supp

ortin

g im

plem

entin

g pa

rtne

rsIn

dica

tive

cost

s (U

SD)

3: T

o pr

omot

e th

e im

age

of

Sri L

anka

as

a lo

gist

ics

hub

in

the

wor

ld.

3.2:

Incr

ease

m

arke

t out

reac

h to

attr

act t

he

inve

stm

ent.

3.2.

4 Di

vers

ify s

hipp

ing

beyo

nd c

onta

iner

ized

carg

o to

in

crea

se a

ctiv

ity o

f non

-con

tain

erize

d ca

rgo

in S

ri La

nkan

po

rts.

• Co

nduc

t a fe

asib

ility

stu

dy o

n th

e po

ssib

ility

of

deve

lopi

ng H

amba

ntot

a an

d Tr

inco

mal

ee p

orts

for b

ulk,

ro

ll-on

/roll-

off a

nd e

nerg

y se

rvic

es fo

r the

gro

wing

and

fa

st-d

evel

opin

g Ba

y of

Ben

gal r

egio

n;•

Carry

out

a fe

asib

ility

stu

dy o

n co

nver

ting

one

or tw

o po

rts to

turn

arou

nd p

orts

for c

ruis

e to

uris

m –

Colo

mbo

/Ga

lle;

• Ba

sed

on fe

asib

ility

stu

dies

, dev

elop

a p

lan

for

conv

ertin

g po

rts to

turn

arou

nds

ports

with

var

ious

non

-co

ntai

neriz

ed c

argo

act

iviti

es;

• An

noun

ce a

cal

l for

exp

ress

ions

of i

nter

est t

o in

stal

l the

fa

cilit

ies

in th

e se

lect

ed lo

catio

n.

The

over

all p

ort s

trate

gy s

houl

d wo

rk to

ward

s in

crea

sing

all

type

s of

shi

ps c

allin

g at

Sri

Lank

an p

orts

201

/01/

2019

31/1

2/20

22•

Feas

ibili

ty s

tudi

es

com

plet

ed;

• Bl

uepr

int t

hrou

gh

the

natio

nal p

orts

an

d sh

ippi

ng p

olic

y in

corp

orat

ed;

• Ca

ll fo

r exp

ress

ion

of

inte

rest

ann

ounc

ed

Min

istry

of P

orts

an

d Sh

ippi

ngM

inis

try o

f Nat

iona

l Pol

icie

s an

d Ec

onom

ic A

ffairs

150

,000

3.2.

5 At

tract

inve

stm

ent t

o in

crea

se re

finer

y ca

paci

ty in

or

der t

o br

ing

mor

e sh

ip a

rriva

ls. T

his

can

be a

chie

ved

thro

ugh

inve

stor

targ

etin

g an

d pr

omot

ion

of b

unke

r / c

rude

oi

l sto

rage

bot

h on

shor

e an

d of

fsho

re. F

or th

is a

ctiv

ity, o

ff-sh

ore

liber

aliza

tion

is im

porta

nt a

nd is

the

first

ste

p (li

nked

to

1.1

.10)

.

• Ca

rry o

ut in

vest

men

t pro

mot

ion

activ

ities

thro

ugh

road

show

s an

d B2

B m

eetin

gs in

targ

et c

ount

ries

(Indi

a,

Unite

d St

ates

, Jap

an, C

hina

, Gul

f cou

ntrie

s an

d So

uth-

East

Asi

a);

• An

noun

ce a

cal

l for

exp

ress

ions

of i

nter

est.

201

/04/

2018

31/1

2/20

22•

One

road

sho

w pe

r ye

ar in

targ

eted

co

untry

org

anize

d;•

5 in

vest

ors

in

sele

cted

cou

ntrie

s re

ache

d pe

r yea

r

Boar

d of

Inve

st-

men

t (BO

I)Ex

port

Deve

lopm

ent B

oard

100

,000

Photo: (cc) - Anushka Wijesinha

47

[ ANNExES ]

ANNExES

48


APPENDIX 1: LIST OF PARTICIPANTS IN THE PUBLIC-PRIvATE CONSULTATIONS

No. Name Designation Name of institution

1 Mr. K.V.P. Ranjith De Silva Vice Chairman Airport & Aviation Services (Sri Lanka) Limited

2 Mr. D.J.U. Purasinghe Senior Assistant Airport Manager Airport & Aviation Services (Sri Lanka) Limited

3 Mr. Kingsley Abeywickrama Managing Director APL Lanka (Pvt) Ltd

4 Mr. Nimal Ameresekere Chairman Association of Container Transporters (ACT)

5 Mr. Rezvan Rasheed Managing Director BAZ World

6 Mr. N.N. Kumaratunga Director - (Investment Appraisal) - Services & Utilities Sector

Board of Investment (BOI), responsible for EPZs and Commercial hubs (Commercial hub section)

7 Mr. Ananda K. Rajakaruna Senior Deputy Director Board of Investment (BOI)

8 Mr. Ruwan Waidyaratne Chairman Ceylon Association Of Shipping Agents (CASA)

9 Ms. Manori Dissanayaka Assistant Secretary General Ceylon Chamber of Commerce

10 Mr. Dinesh De Silva Chairman - Import Section Ceylon Chamber of Commerce

11 Ms. Chitra Jayasinghe Deputy General Manager Ceylon Shipping Corporation Ltd

12 Mrs. Yamuna Wettasinghe Assistant General Manager -Business Development & Marketing

Ceylon Shipping Corporation Ltd

13 Dr. E.K.D. Lalith Edirisinghe Associate Dean - Faculty Of Management, Humanities & Social Science

Colombo International Nautical & Engineering College (CINEC)

14 Dr. Dan Malika Gunasekera Legal Counsel/Legal Consultant Danmar

15 Mr. Dimithri Perera Country Manager DHL Keells (Pvt) Ltd

16 Mr. Harin De Silva Chairman Exporters Association of Sri Lanka (EASL)

17 Mr. E.R.C. Moraes Senior Advisor Finlays Colombo Limited

18 Mr. Amal Rodrigo Director Hayleys Free Zone

19 Mr. Sean Van Dort Director - Logistics & Digital Service Integration

MAS Capital

20 Rear Admiral. D.E.C. Jayakody Project Director - Maritime Cities Development Project

Ministry of Mega Polis & Western Development

21 Mr. Sanjeeva Abeygoonewardena Director/CEO Mountain Hawk Express (Pvt) Ltd (FedEx Express)

22 Mrs. Vijitha Weerasinghe Director/ Planning National Transport Commission

23 Mr. Kumar Senevirathna Manager Logistics Penguin Sportswear (Pvt) Ltd(Emjay Penguin)

24 Mr. S. Mahesan Director (Exports) Sri Lanka Customs

25 Mr. Dushmantha Karannagoda Past Chairman Sri Lanka Freight Forwarders' Association (SLFFA)

26 Mr. Jagath Pathirane Chairman Sri Lanka Logistics and Freight Forwarders Association (SLFFA)

27 Mr. Roshan Silva Vice Chairman Sri Lanka Logistic and Freight Forwarders Association (SLFFA)

28 Mr. H. D. A. S. Premachandra Managing Director Sri Lanka Ports Authority

29 Mr. Upali De Zoysa Director – Logistics Sri Lanka Ports Authority

30 Mr. Jayantha Perera Director- Ports Operation Sri Lanka Ports Authority

31 Mr. Suranga Walpola Manager (Logistic) Sri Lanka Ports Authority

32 Ms. Zavia Miskin Dy. Chief Operations Manager Sri Lanka Ports Authority

33 Mr. N.J. Chrisso De Mel Chairman Sri Lanka Shipper's Council


49

[ ANNExES ]

No. Name Designation Name of institution

34 Mr. Suren Abeysekara Vice Chairman Sri Lanka Shipper's Council

35 Mr. Clifford Rodrigo Cargo Sales Manager Sri Lankan Airlines Limited

36 Mr. Hiran Fernando Cargo Sales Executive Sri Lankan Airlines Limited

37 Eng. Nishal Samarasekara Senior Lecturer - Department of Transport & Logistics Management

University of Moratuwa

38 Capt. A Banerjee Managing Director ZIM

39 Mr. S.R.P. Indrakeerthi Director - Trade Facilitation & Trade Information

Export Development Board

40 Mr. M.K.S.K. Maldeni Director – Export Services Export Development Board

41 Ms. Dhanushka Ruwanpathirana Export Promotion Officer Export Development Board

50


APPENDIX 2 : CURRENT LOGISTICS INFRASTRUCTURE IN SRI LANKA

Road

Transport in Sri Lanka is based primarily on the road network and is centred around Colombo. Road transport accounts for about 93 % of land transport in Sri Lanka.13 A number of road networks remain in poor condition, while recent invest-ment has focused on major highways. Sri Lanka’s road net-work is dense and extensive, providing connectivity to the population and economic activity centres. The present net-work comprises about 12,000 km of national highways, 152 km of expressways, 15,500 km of provincial roads, 65,000 km of local authority roads and 24,000 km of roads owned or controlled by irrigation, wildlife and other authorities.14 The road density is among the highest in Asia and is about 5.19 km per 1,000 people, compared with 2.00 in Bangladesh and 1.69 in Pakistan. National roads are 100 % paved, pro-vincial roads 67 % and local authority roads 13 %. In recent years, expressways and national highways – as well as pro-vincial, district, and rural roads – have been built or up-graded with financial support from the Asian Development Bank.15 The National Road Master Plan 2008–2017, devel-oped by the Ministry of Highways and Road Development, aims to ensure that the road network will be planned, main-tained, constructed and developed to enhance national in-tegration and economic growth.

Rail

The rail network connects the main cities with Colombo and consists of 1,508 km of track. The Government took steps to develop railway transportation but most efforts were main-ly to support the rail network at basic level16 as the perfor-mance of Sri Lanka’s rail network weakened. Currently, only 1 % of the freight market is catered to by Sri Lanka Railways.17 The Government expects to increase the share of railway freight transport by 2020 through the Public Investment Programme 2017–2020.

13.– Asian Development Bank ( 2017 ). Sri Lanka : Railway Master Plan, project data sheet. Available from www.adb.org/projects/51108-001/main#project-pds.14.– Sri Lanka, Ministry of Highways and Road Development ( 2007 ). National Road Master Plan 2007–2017 : Executive Summary and the Investment Plan. Colombo. Available from www.rda.gov.lk/supported/noticeboard/publications/nrmp_executiveSummary.pdf.15.– Asian Development Bank ( 2015 ). Roads and highways in Sri Lanka, 27 January. Project Result / Case Study. Available from www.adb.org/results/roads-and-highways-sri-lanka. 16.– Asian Development Bank ( 2017 ). Sri Lanka : Railway Master Plan, project data sheet. Available from www.adb.org/projects/51108-001/main#project-pds.17.– Ibid.

inland water

In addition to road and rail, Sri Lanka has 160 kilometres of navigable waterways.18 With 103 natural river basins and total length of about 4,500 km,19 there are unused oppor-tunities for inland water freight transportation services. In 2016, MoMWD conducted a feasibility study that identified that a speedy transport system could be introduced through canals and reservoirs to connect Colombo East–West and North–South and Wellawatta–Battaramulla ( through canals ), Fort–Union Place ( across Beira Lake ), and Mattakkuliya–Hanwella ( through the Kelani River ).20

Ports

There are four deep-sea ports in Sri Lanka : Port of Colombo, Hambantota, Trincomalee Harbour and the Port of Galle. The port system is governed by SLPA. The main port services are container handling, trans-shipment and cargo. Container handling in Colombo Port is increasing year to year, main-ly supported by increased operations in the Colombo International Container Terminal and South Asia Gateway Terminal.21 Total container handling in 2016 increased by 10.6 % to 5.7 million TEUs, from 5.2 million TEUs handled in 2015.22

The performance of Hambantota Port has been weak, main-ly because of an absence of hinterland industries that can exploit the full potential of this industrial port. The activities of this port are concentrated on vehicle trans-shipments, roll-on / roll-off operations, bulk and gas shipping. Trincomalee Port, the second-best natural harbour in the world, serves passenger ships and also caters to bulk cargo and port-re-lated industrial activities including heavy industry, tourism and agriculture. The Port of Galle is currently a small port but SLPA plans to develop facilities to accommodate freight handling of international vessels, as well as develop a fully fledged yacht marina.

18.– Central Intelligence Agency ( 2017 ). The World Factbook. Washington, D.C. Available from www.cia.gov/library/publications/the-world-factbook/index.html.19.– United Nations Educational, Scientific and Cultural Organization ) and Ministry of Agriculture, Irrigation and Mahaweli Development ( 2006 ). Sri Lanka Water Development Report. Available from http ://unesdoc.unesco.org/images/0014/001476/147683E.pdf.20.– Sri Lanka, Ministry of Megapolis and Western Development Sri Lanka Land Reclamation and Development Corporation in collaboration with Western Region Megapolis Planning Project ( 2017 ). Pre-Feasibility Study Inland Water Based Transport Project ( Phase I ), Western Province.21.– Central Bank of Sri Lanka ( 2016 ). Annual Report 2016, chapter 3.22.– Ibid.

http://www.adb.org/projects/51108-001/main#project-pds


http://www.rda.gov.lk/supported/noticeboard/publications/nrmp_executiveSummary.pdf


http://www.adb.org/results/roads-and-highways-sri-lanka




http://www.cia.gov/library/publications/the-world-factbook/index.html


http://unesdoc.unesco.org/images/0014/001476/147683E.pdf


51

[ ANNExES ]

Figure 14 : Sri Lankan rail network

Source : http://dlca.logcluster.org.

Table 2 : Performance of port services, 2013–2016

Item 2013 2014 2015 2016 Growth rate ( % )2013 2014 2015 2016

1. Vessels arrived ( no. ) 3 976 4 264 4 728 4 998 -3.8 7.2 10.9 5.7Colombo 3 667 3 742 4 197 4 405 -5.2 2 12.2 5.0Galle 36 60 72 96 -47.8 66.7 20 33.3Trincomalee 134 127 164 216 -16.8 -5.2 29.1 31.7Hambantota 139 335 295 281 308.8 141 -11.9 -4.7

2. Total cargo handled ( thousand tons ) 66 243 74 410 77 579 86 519 2 12.3 4.3 11.5Colombo 63 482 70 794 73 718 81 879 2.9 11.5 4.1 11.1Galle 207 394 542 771 -50.9 90.3 37.5 42.4Trincomalee 2 435 2 748 3 027 3 514 -14.8 12.9 10.2 16.1Hambantota 119 474 293 355 495 298.3 -38.3 21.2

3. Total container traffic ( thousand TEUs ) 4 306 4 908 5 185 5 735 2.8 14 5.7 10.6

4. Trans-shipment container ( thousand TEUs ) 3 274 3 781 3 967 4 435 3.4 15.5 4.9 11.8

5. Employment ( number ) 9 886 9 598 9 550 9 651 -3.1 -2.9 -0.5 1.1

Source : SLPA.

52


Aviation

Sri Lanka’s aviation network is built around 17 airports, of which three are international : BIA, Ratmalana Airport and Mattala Rajapaksa International Airport. Most international traffic is routed through BIA, located 35 km north of the capi-tal. All three airports have cargo handling facilities. They are administrated by Airport and Aviation Services ( Sri Lanka ) Ltd. Total cargo handling at BIA increased 18.1 % in 2016.23 The airport has good connection with Katunayake EPZ and Colombo through the Colombo–Katunayake Expressway. Mattala Rajapaksa International Airport handled 916 aircraft movements in 2016, compared with 884 aircraft handled in the preceding year.24

To link logistics activities, minimize congestion and max-imize efficiency, a logistics corridor concept is current-ly being developed to accommodate trans-shipment facilities, storage, collection and local-level distribution of cargo. MoMWD proposes, through the Megapolis pro-ject, to develop logistics services focusing on four major corridors : Colombo–Hambantota, Colombo–Trincomalee, Colombo–Kandy and Colombo–Jaffna, and within Colombo Metropolitan Region. This will allow the development of spe-cific clusters to accommodate trans-shipment facilities, stor-age, collection and local-level distribution of cargo. Rail and expressway networks for freight handling will be built to minimize congestion and maximize efficiency for logis-tics services.

23.– Ibid.24.– Ibid.

To eliminate double handling and shorten the sea to air ( or vice versa ) turnaround time to maximize the bene-fits of transport, logistics and trading, a number of EPZs have been successfully created. EPZs in Sri Lanka have a long history. The first EPZ became operational in 1978 in Katunayake. Currently there are 14 EPZs around the country, covering different areas. They are managed by BOI, which provides assistance at each stage of the investment pro-cess. EPZs are meant to attract FDI and promote economic and industrial development, and also to generate exports, foreign exchange and employment through various fiscal and non-fiscal incentives offered to investors. The relevant legislation allows for exported items to be exempt from im-port duty on capital goods and raw materials, and from ex-change control. The incentives also include tax holidays and concessionary tax.

Figure 15 : Air passenger and air cargo handling in Sri Lanka, 2012–2016

109876543210

300

250

200

150

100

50

02012

PassengerHandling

CargoHandling(Right Axis)

TransitPassenger

milli

ons

MT

(000

)

2013 2014

Air Passenger and Cargo Handling

2015 2016

53

[ ANNExES ]

Figure 16 : Expressway network in Sri Lanka

Figure 17 : Locations of export processing zones in Sri Lanka

54


The Government plans to develop logistics centres and economic corridors, and to provide a full range of services for exporters. This will offer more opportunities to producers and processors by connecting with warehouses, logistics centres, cold storage facilities etc. and overall will maximize efficiency and enhance trade and economic development.

� The Western Region Megapolis Planning Project 2030, aside from infrastructure development and social infra-structure around Colombo for various industries, aims to establish a logistics city located close to Colombo Port and BIA. It is planned to connect the city through

expressways and a railway network for freight handling and transportation and to include distribution centre, warehousing, cold storage, dry port, cargo distribution and trans-shipment facilities.

� With assistance from the Asian Development Bank, SLPA is also preparing a master plan for national ports aimed at developing the port infrastructure in an optimal manner, given that it will cover all ports. This includes restructur-ing SLPA and addresses emerging business activities in oil and gas handling, and passenger and cruise ship op-erations as well as transport sector development plans.

Figure 18 : Concept Plan for Logistics Corridor of Western Region Megapolis Master Plan

Box 11 : Existing infrastructure and logistics development projects

Projects for logistics and infrastructure development :

• Western Region Megapolis Master Plan Project• Urban Transport Master Plan for Colombo Metropolitan

Region and Suburbs ( towards 2020, 2025 and 2035 )• National Road Master Plan 2007–2017• Maritime Cities Development Project

Financing infrastructure development projects :

• United States Agency for International Development support for a PPP framework as a tool for financing hard infrastructure

• Japan–Singapore study on Trincomalee Port development• Oil tank development project with India in Trincomalee• Railway development with India• Expansion of BIA – Japan International Cooperation Agency

55

[ ANNExES ]

REFERENCES

Alphaliner ( 2017 ). Website. Available at www.alphaliner.com.

Asian Development Bank ( 2017 ). Sri Lanka : Railway Master Plan, project data sheet. Available from www.adb.org / pro-jects / 51108-001 / main#project-pds.

Asian Development Bank ( 2015 ). Roads and highways in Sri Lanka, 27 January. Project Result / Case Study. Available from www.adb.org / results / roads-and-highways-sri-lanka.

Association of Container Transporters ( 2017 ). Website. Avail-able at www.actsrilanka.com / .

Central Bank of Sri Lanka ( 2016 ). Annual Report 2016, chap-ter 3.

Central Intelligence Agency ( 2017 ). The World Factbook. Washington, D.C. Available from www.cia.gov / library / publi-cations / the-world-factbook / index.html.

City of London Corporation ( 2016 ). The United Kingdom’s Global Maritime Professional Services : Contribution and Trends. London.

International Trade Centre ( 2017 ). Reforming logistics servic-es for effective trade facilitation. ITC, Geneva. Available from http : / / www.intracen.org / uploadedFiles / intracenorg / Con-tent / Publications / Executive_summaries / Logistics %20and %20trade %20facilitationFinal_Low-res %20with %20cover.pdf

International Trade Centre ( 2017 ). SME Competitiveness Out-look 2017 : The Region – A Door to Trade. Geneva. Available from www.intracen.org / publication / SME-Competitiveness-Outlook-2017---The-region-A-door-to-global-trade / .

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Sri Lanka, Ministry of Megapolis and Western Development Sri Lanka Land Reclamation and Development Corpora-tion in collaboration with Western Region Megapolis Plan-ning Project ( 2017 ). Pre-Feasibility Study Inland Water Based Transport Project ( Phase I ), Western Province.

United Nations Conference on Trade and Develop-ment ( 2017 ). Maximizing the development gains from e-commerce and the digital economy. ( Note by the Secre-tariat TD / B / EDE / 1 / 2 ). Available from http : / / unctad.org / meet-ings / en / SessionalDocuments / tdb_ede1d2_en.pdf.

United Nations Educational, Scientific and Cultural Or-ganization ) and Ministry of Agriculture, Irrigation and Ma-haweli Development ( 2006 ). Sri Lanka Water Development Report. Available from http : / / unesdoc.unesco.org / imag-es / 0014 / 001476 / 147683E.pdf.

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