Hambantota port needs to be made commercially viable
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By Peter Barbut
The present government of Sri Lanka under the visionary leadership of President Mahinda Rajapaksa has now embarked on a very aggressive development plan to regain the country’s past glory as the first nation in the ISC-Region (India, Pakistan, Bangladesh, Nepal, Bhutan and Maldives) to have opened up the country to a market economy in 1977 and inviting foreign investors to participate in the free trade zones for manufacturing products for exports, which had resulted in several Asian and European investors having built and operated manufacturing plants in Sri-Lanka during the period 1977 to 2001.
Major apparel manufacturers had shifted the production capacities from Hong Kong, Taiwan, South Korea and Malaysia to Sri Lanka due to cost-effectiveness and efficient labor market conditions which had prevailed.
The island nation after having cleansed from terrorism in the northern and eastern parts of island, where the government forces were successful in a military win over the conflict is looking forward to serious of development projects and stabilize its economy in the coming years and to emerge as one of the most favourable countries in the south Asian region for foreign investment primarily in the services sector, shipping and logistics, knowledge and export manufacturing.
Sri Lanka is presently in the process of developing its second international port infrastructure and airport in the southern region of Hambantota, and looks forward to attract direct foreign investments in the manufacturing fields primarily should be catered for the planned Export Promotion zones.
The Hambantota port will also cater to the shipping and logistics services which will be an essential service for import/export products to and from duty free trade zones allocated in the south of Sri Lanka.
With this on-going development strategy, progress has to be inevitable for the Sri-Lankan economic health and sustainability. It will enhance the quality of life by generating employment opportunities to the masses who live in the eastern and southern regions.
Once this port is fully geared, It will be able to accommodate vessels up to a draft of 17-meters, and will also offer shipping lines an alternate port to Colombo, with vessel support services providing bunkering, ships stores, repairs and crew changes to vessels operators with the advantage of much shorter steaming time of less than an hour to reach this port for vessels from the largest international trade route from Far-east to Europe. At present time only automobile carrier’s trans-ship vehicles at the port of Hambantota, but it needs to develop more activities in the container trading areas.
If the Hambantota port can become fully operational by end of 2013, with container loading, handling, equipment installed, carriers can also have the option of considering trans-shipment of cargo to connect the eastern ports of India, Kolkata, Haldia, Paradeep , Vishakiyapatnam(Vizag) Valar Padam and Male (excluded). At presently the cargo traffic to and from these Indian ports move with more weekly frequency via Singapore-hub, Port-Kelang and Colombo port (NC,Med, US/EC) to connect mother vessels.
The primary advantage must be shorter transit-times to compliment the supply chain process/ Just-In-Time (JIT) production ability for the manufacturing process in India, as today many global brands are outsourcing major components in the automotive, engineering and hi-tech industries to India.
In this context, Sri Lanka also should be forward thinking, with the right technical manpower resources, establish manufacturing infrastructure for (e.g.) components for automotives, light machinery, with O.E.M’s (original equipment manufacturers) for outsourcing contracts for export. The Government must now give utmost priority to establish more technical/engineering educational institutions to have more qualified youth available to attract foreign investors in skilled fields of engineering/manufacturing.
Apart from break-bulk cargo, it is imperative container shipping must take place as 90 per cent of products are shipped in containers which will be demanded by foreign investors who will manufacture in the export zones in the south.
The Government should also seriously look at the additional options that it can provide to also creating a value adding logistics hub-port in the region, Asian economies will emerge as power houses in the coming decades for cost-effective manufacturing centres.
Hambantota, can play a major role if it can provide the required warehousing infrastructure, for inventory storing, kitting, assembling and distribution to the sub-continent region coupled with cheaper operational cost within the port parameter. It should also attract multinational corporations and logistics service providers who already have large global manufacturing companies as their customers, and participate in guiding Sri Lanka towards achieving this goal, as day by day trade is evolving towards market globalization, due to manufacturing is shifting from regions to region in search of cost effective manufacturing markets/origins.
Having the correct service advantages, Hambantota can strongly compete with Singapore and Dubai which today commands leadership as logistics hubs in our region, provided cost- effectiveness, efficiency, political transparency and accountability can be established, which are core fundamental principles, hub’s of Singapore and Dubai has made them emerge to be leaders in the region.
(The writer is Course Director Logistics and SCM Programmes, Faculty of Business and Financial Management, Aquinas University College, Colombo)
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