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14th June 2013

43rd Annual General Meeting – Sri Lanka Shippers' Council 2013-2014

Speech By Mr. Dinesh De Silva – Chairman, SLSC

Mr. Dinesh De Silva – Chairman, SLSC

Our Chief guest Dr. Priyath Wickrama, Members of the head table, past Chairmen, Committee Members, distinguish guests, ladies & gentleman.

Firstly I would like to convey my sincere thanks to all present this evening and we are indeed honored and privileged to have you with us on this special occasion. Also wish to thank the Committee for placing confidence in me continuing as the Chairman of this prestigious organization for the year 2013/2014.

Ladies & Gentlemen, we all know that our industry is continuously changing due to changes in Global Commerce. During this world worst economic crisis, several factors began to interfere with our daily life. Economic turmoil result in rapid increases in fuel prices as well as staple products and services, higher unemployment rates in countries, major stock market losses and other market changes. I think these are happening at an alarming rate in many parts of the world.

This means new challenges for the industry. These are not certainly easy to handle as some are local but complicated, some are regional & the rest is Global.. So when we analyze some are controllable & some are long beyond our reach, we as professionals in the industry should be able to manage all of them efficiently & profitably. Therefore, I strongly believe that we should have a feel for that and be flexible to deal with the situations. However our Private sector Shippers & Importers are already doing their business under difficult conditions to be competitive in the global markets. The question is “Is the export / import sector of this country is really getting support from the authorities to do business with ease?” I think the answer is we are still working towards it. Then the question is when is the dead line? When will this become a reality ?

Ladies & gentlemen Central bank has projected the GDP growth rates as 7.5% for 2013, 8% for 2014 & 8.3% for 2015. We were at 6.4% in 2012. Then, our government’s future vision is for a steady progress towards a US$ 4,000+ per capita income and for a US$ 100 billion economy…

This tells the full story and it is clear. We have to grow fast. We have to control cost & we have to take sustainable approaches towards the final goal. For growth, increase in Exports & investments in to the country is a must. So the trade needs enablers from the authorities to grow. Infrastructure improvements, full automation & trade facilitation should happen very rapidly. What we did in the past will not be valid for the future. We have to play this game differently. Sri Lanka has to become the most shining star in this part of the world and I am sure we have the capability to do that.

I would like to take a practical view on our immediate challenges. Today sellers or shippers want to ship their cargo ASAP and get their funds. On the other hand buyers or Importers want faster clearance of goods to sell and get their funds. Local producer or manufacture wants his goods speedily to the market. So in all of these, we can see one common requirement which is SPEED.

This means how fast you serve the customer. Speed in all what you do to serve a customer. Also our thinking has to be fast & that gives us quick decisions and solutions. finally Speed is the currency today.

Ladies and gentlemen we all are part of this economy. We work in different capacities & in different levels in very important work places. So we should know that every small action you take makes a big difference to your customer.

There is eternal battle in Trade facilitation. What to allow & what not to allow or what level to allow? From our view, the answer should be “Seamless” The controls should not harass the Importers or the Exporters. Therefore an attitude change is required across the trade.

While the private sector demands for seamless facilitation, there are allegations that the Trade does not comply with regulations & don't make use of the available facilities.

In my view, we need to apply the SUPPLY & DEMAND theory in to this. In other words we must facilitate according to the market demands or create or shift demand with encouraging benefits to customers.

Few examples.

Online line transactions – One card for credit, shopping, debit (Multiple facilities) & should be able to use anywhere 24/7 – 365 days no restrictions.

Some restaurants have happy hours. This is to encourage customers to visit during non peak hours by trying to shifting demand.

In supermarkets they have large number of payment counters to handle peak hours & they adjust to the customer needs. Because they are fully customer focused and they don't want to lose a single customer due to stiff competition.

In sports, Cricket changing its style to the shorter version and the market demand is for 20/20 today. They have indentified where the demand is & this is a result in identifying the customer needs. IPL is the classic example. This has even changed the way you play the game as well. Earlier when a batsman scored 70 runs in 150 balls in every match would have called a good player. Today you need to do it much faster. 70 runs in probably 30 balls. Therefore, now this game needs match winning players who can turn the game to a victory all the time.

I can give many other examples like this but, the fact remains that all stake holders in this industry starting from the Government level should have a conscious effort to facilitate the trade seamlessly in all areas & I am sure if you do that the country will get the benefits faster. In this process I urge the authorities to pay special attention to the Exporters & Importers of this country and address their constrains in every sector without delay. When the trade develops, the country will be on track to the required GDP levels.

Further our industry still awaiting single window concept, full automation of Government authorities including Customs, SLPA. Industry is aware that there are tireless efforts put by Customs & SLPA in these areas to automate fully. Trade expect these projects to fully complete soon and to have only online operation in a paperless environment. These initiatives will certainly support our country’s vision to become a Logistics HUB in Asia in 2015.

We are aware that the government has taken initiatives on developing infrastructure which are very beneficial to our industry. Especially the developments in the road network, Ports, airports & Information Technology developments in government institutions are commendable. However Rail connectivity for freight transportation, connecting Ports & air ports with ICD’s should be developed in this country soon & they cannot wait for tomorrow.

Also the industry has the challenges in handling the rising operational cost, fuel prices, unfair trade practices, higher freight rates & exorbitant 3p service provider’s charges. However some can be resolved through commercial decisions and some by using proper terms ( specially INCO terms). However these are operational barriers for the trade. Globally, we need to be fully aware about the changes in buying patterns, trade shift & buying power moving from west to east, emerging markets in other parts of the world, volatility in freight rates/ surcharges, new ultra large vessels entering the current fleet, slow steaming of vessels, etc to make the right business decisions as every one of these elements can adversely affect your business.

In this context, we believe Shippers Council has a major role to play in protecting Shippers’ interest and also to maintain a very cordial relationship with our most important service providers. I believe we have to work positively with the relevant stake holders to resolve these issues and look forward to handle these challenges efficiently & effectively within the coming years. Also, we look forward to work closely with SL Customs, SL Ports Authority & other government institutions to handle our trade related issues more efficiently.

It is important for all of us to remember, that we have always unresolved matters which are directly impacting import, export business & shipping. We as the shippers’ Council is committed to take up these matters with the relevant authorities and strongly feel that should make progress as otherwise these will remain as barriers to the trade.

Dear members, Finally, I expect all our members to highlight the operational constrains and I wish to assure you that the council will take up all trade related issues with the relevant authorities ensuring a level playing field and will do our best to bring the industry to the next level and hope that these will finally add value to our community.

Before I conclude, I wish to thank my Vice chairmen, Sean for all the support & assistance given to me during the year, Past chairmen, Product associations, members, Chamber of Commerce, Mr. Harin Malwatte Secretary General, Mrs Alikie Perera deputy Secretary General, efficient secretaries for their Secretarial work, and for the numerous services provided by the Chamber during the year.

Also a special word of thanks to our secretaries, Manori Dissanayeka and Manjula Maldeniya for the enthusiasm and for the perseverance shown, towards their secretarial functions during the year. They have been a great strength to our council activities.

Thank you and have a nice evening.

Speech By Dr. Wickrama, Chairman – SLPA (Chief Guest)

Dr. Wickrama, Chairman – SLPA

Chairman and the members of Sri Lanka Shippers Council

Distinguish Invitees

Ladies and Gentlemen

Let me thank Chairman and the Members of the Sri Lanka Shippers Council for inviting me to deliver the key note address on the theme of “Sri Lanka’s Strengths and avenues for unprecedented opportunities for accelerating growth in diverse sectors due to the intra-Asia trade“.

I think the topic suggested by you is timely because SLPA and Sri Lanka is transforming itself to a potential as maritime and logistics hub in this region. Enhancing infrastructure investments in emerging economies would have positive spin-off for rebalancing global demand. It would result in positive investment with tangible growth.

Euro zone countries have fallen into a recession. Europe has to adjust its large deficits. Strains within the Euro zone have threatened rebuilding is an ailing recovery. The Euro zone crisis could have collateral effects and spillover effects around the world. The actions by Europe policy makers have been criticized as merely “kicking the can down the road” or postponing a true solution.

We are aware that the United States has a long term project for rectifying structural dents in its economy that have been building up for two decades. It seems restoration of America’s economic dominance will take more time because the American economy has been effected by high unemployment and they are struggling to recover. The United States is making an attempt to re-establish the manufacturing status. However, the current global scenario in regard to manufacturing stability has unfavouarble environment in the United States and Europe.

Japan is the first Asian country which became a manufacturing economy. Subsequently South Korea and Taiwan also became manufacturing economies. Now almost all countries in Asia have become manufacturing economies. China and India are the leading manufacturing Asian economies today. Growth dynamics in these countries have been impressive in the recent past and such growth will have important spillovers for other countries in the region, particularly through demand for commodities. A remarkable transformation in Asian economies has taken place over the past few decades and the region has become the engine of world growth.

Asia is in a stronger position to tackle headwinds from the unsettled global economy provided that the region continue with structural reforms and embrace greater integration to meet its potential. Asia may be better able to withstand risks today than it was in the past. We strongly believe that Asia could continue with the developing pace if steps are taken with regard to increasing innovation, improving governance, promoting services, strengthening social safety nets. China and India being the main assembly hubs, other countries could produce intermediate parts and the assembly could be done in low income countries in Asia to ensure low cost manufacturing economies. We are of the view that some lower value added exports could move towards South Asia. In the long term, we should focus on adjusting to rapidly changing demographic structure and reversing the tide of rising in equality through a greater emphasis on inclusive growth to fulfill Asia’s growth for the global economy.

By beginning of 2013, there were 354 trade agreements in-force as notified to World Trade Organization and Asia has surged to account for nearly half of the global trade agreements. This increase of trade agreements is driven both by Asian economies trying to tap each other’s markets, as well as non-Asian economies attempting to expand in Asia’s large and growing consumer markets. This means Asia is fast closing in, on the developed countries in terms of its share in global trade.

Growing domestic consumption, infrastructure investment, and trade within Asia is supporting the region’s economies.

The economic growth in the South Asian region has picked up in 2013 and Sri Lankan economy is poised to grow over 6 percent. The regional GDP growth has been projected to rise to 5.7 percent in 2013 and to 6.6 percent in 2015, supported by an improvement in the global demand for South Asia’s exports. India has brought in policy reforms with stronger investment activity and improvement in agricultural production.

Whether the United States/Europe or Asia becomes the manufacturing hub, Sri Lanka has to play an important role. We are the centre of trade between Asia and the United States/Europe. It is up to Sri Lankans to embrace this ideal opportunity to develop all sectors of the economy.

The Government of His Excellency Mahinda Rajapaksa has introduced development oriented policies such as tax holidays for new companies to enhance the total market capitalization, permitting Sri Lankans working overseas, living abroad and small time investors, to directly invest in unit trusts, a depreciation allowance for machinery and accessories used in apparel and other manufacturing industries, exemption of SME sector from NBT and VAT etc.

The Government has taken all steps to support and encourage the business and entrepreneurial efforts of the Investors. We should not relax because some competitive policy decisions have been made in various parts of the world. We have to highlight the country’s post-war emergence as the most dynamic investment destination in the region and we have to maximize Sri Lanka’s positioning as a stable and profitable investment choice in Asia. With the end of the 30 year war stable government and the launch of an ambitious infrastructure plan by the government, there has been a tremendous upsurge in interest from high potential investors, both local and foreign.

It is opportune for the private sector to follow suit as both the public sector and private sector have to work hand in hand to achieve desirable results. The transport and logistics sector is important in and economy as it impacts much of a country’s economic activity. The efficiency and effectiveness of this sector can translate into an increase in productivity of the economy and facilitate faster economic growth. With stimulated economic activity in post-war Sri Lanka and the rapid increase in investment in infrastructure development island-wide, there is no doubt that all sectors of the economy including logistics sector have to play a key role in supporting the growth.

In the circumstances, Sri Lanka Ports Authority and Agencies in the Aviation Sector as service providers have to introduce unprecedented reforms particularly to face the challenges in the competitive regional and the world market.

Sri Lanka Ports Authority having identified the tremendous potential for container cargo in Colombo Port, a decision was made to build capacities with latest technologies and formulated a mega development project under the Colombo Port Expansion Project. The Port development strategy has been transforming ports from mere interface between maritime transport and land transport into hub of seamless logistics chain and logistics value creator. Our aim is to attract triple e class ships to Colombo Port to service the entire Indian sub continent with this possible shift in shipping routes in the future.

The policy of the Sri Lanka Ports Authority is to keep abreast of the latest technological avenues in shipping and port industries so as to ensure that trade facilitation and cargo movement through ships occur efficiently and rapidly thus helping in global services in the most efficient and secure manner. This is the reason for us to assign priority and importance towards expeditious development of necessary infrastructure and service requirements.

We are taking all steps to ensure continuity and dedication towards realizing the goal of making Sri Lanka, the most competitive and preferred maritime and logistics centre in the region.

Mahinda Rajapaksa Port in Hambantota will cater to the shipping and logistics services which will be an essential service for import and export products to and from Duty Free Trade Zones. The Port provides support services such as bunkering, ships stores, crew changes to vessel operators. The primary advantage for the investors in Hambantota is the shortest transit times to complement the supply chain process.

We have undertaken Port development projects in Galle, Trincomalee, Oluvil and KKS as well since there would be opportunities available to Sri Lanka to develop as a maritime nation owing to the geo-strategic location of the Island.

Regrettably, few members of the industry have negative attitudes towards the possibility of servicing trade between the East and West through our seaports. At a recently held maritime forum a so-called senior shipping

personnel casted doubt as to whether manufacturing hub would remain in Asia or shift back to the United States and Europe in future.

This was clearly shown when a local firm sold its stake in Colombo’s new terminal in 2012 arguing that it was not profitable. A senior personality dealing with logistics, at a recently held diplomatic forum mentioned of the impossibility of Sri Lanka’s transformation into a maritime hub. It’s a very embarrassing situation when at a time many countries have voiced optimism over our motherland’s economic development. When you look at the forecast for the global migration of the middle class population to the Asian region, one would envisage that Asia would be a big consumer market in future and Indian Subcontinent and Intra-Asia region will have better stability in shipping. In this scenario, we, as a hub will play a significant role irrespective of the shift of manufacturing base. This further affirmed by major shipping lines, pledging their confidence and booking their berths well in advance at our terminals. They are waiting till we are ready. Everybody will see the change that will take place in Sri Lankan Shipping and Logistics sector with the commencement of the augmented Colombo Port operations.

Investor sentiment is expected to remain stable and better positions could be built in the medium to long term. Hence, we could develop port and shipping related services, manufacturing, assembling, tourism, service provider for Gas and Oil exploration etc. etc. in addition to servicing the transshipment requirements.

From a marketing point of view each one of us should be able to contribute something to our motherland. We could invite our friends overseas to visit Sri Lanka. We can encourage them to accompany some of their colleagues. There are colleagues here in the audience who can bring investors to Sri Lanka. Be a true ambassador. Be confident and say Sri Lanka is one of the most peaceful places in the world today and is one of the most beautiful places on earth. But don’t just say and stop. Explain opportunities available them to embark on business, enormous opportunities to invest in various sectors of the economy. Concessions afforded by the Government. Find ways for them to make their travel easy. Make arrangements for them to experience true picture of Sri Lanka. We have already experienced interest shown by foreign investors to invest massive sum of money approximately US$ 2 Billion through Mahinda Rajapaksa Port.

Sri Lanka Shippers Council which is the first national Shippers Council in Asia has made a yeomen service to the export trade in particular and to the national economy in general. Your council has come forward to look after the interest of the shipping community. Shippers work with almost all institutions involved with international trade such as seaports, customs and regulatory institutions.

I believe that Sri Lankan Shippers are educated, skillful and equip with necessary tools, to cope with the contemporary changes. I am confident that your members will add value for fast growing shipping business in Sri Lanka.

Let us get together, work as a team to face challenges ahead of us and ensure development of all sectors of the economy for the benefit of each and every citizen of Sri Lanka.

Thank you

DailyFT – Article on 15th July 2013
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The Sunday Leader - Article on 30th June 2013
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DailyFT – Article on 24th June 2013
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The Sunday Leader - Article on 23rd June 2013
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The Nation - Article on 23rd June 2013
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Sunday Observer - Article on 23rd June 2013
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