ISSN: 1391 - 0531
Sunday, December 03, 2006
Vol. 41 - No 27
Financial Times  

Dedicated port for US exports

By Dilshani Samaraweera

The government is planning to set up a dedicated dry-port for US bound exports, to cater to US security concerns.

“The US concern is that terrorists may be able to access the US by routing cargo through Sri Lanka, or by re-exporting. So we are considering setting up a dedicated centre in Orugodawatte for port handling of US bound containers. All the security checking will take place there and a train will carry the sealed containers to the harbour for immediate loading,” said Secretary to the Ministry of Trade, Dr R.M.K Ratnayake.

Given that the US single handedly buys up nearly one third of Sri Lanka’s total export production, the government is thinking of converting the existing dry port in Orugodawatte into a dedicated facility for US exports.

The plan is to buy back the Orugodawatte dry-port from the current private operator at a cost of around Rs 400 million and then align its operations to US security requirements. The port will be operated as a public-private partnership. The Ministry of Trade hopes to call for tenders for private management of the complex by early next year.

Security talks
Sri Lanka and the US will also take up talks on trade related security issues in December. The discussions will focus on improving security measures for exports and transshipments heading for the US, from the port of Colombo.

“A senior team, dealing with border security and trade, will meet officials of the US State Department and other relevant US agencies in December to discuss their concerns,” said Dr Ratnayake.

The US is Sri Lanka’s single largest export destination and last year 31% of Sri Lanka’s US$ 6.3 billion export production went into the US. Ready-made garments are the biggest direct export from Sri Lanka worth about US$ 1.6 billion. The US is also the biggest buyer of Sri Lankan gem stones and is a large buyer of Sri Lankan rubber and ceramic products. Sri Lanka has also been trying to work out a free trade agreement with the US, mainly to safeguard the domestic ready-made garment export sector.
So to keep the country’s biggest customer happy, the port of Colombo has already invested in a massive security overhaul. To accommodate US security concerns the Colombo port invested in new scanning machinery and introduced new security checking procedures.

As a result of these efforts Sri Lanka is now the only country in the South Asian region to have the required scanning systems to become part of the US Container Security Initiative (CSI). CSI security measures can detect arms and weapons of mass destruction. Under another security scheme called the ‘Mega Port’ initiative, the US Energy Department provided the port of Colombo with equipment to detect nuclear and radio-active material.

“Based on intelligence and risk analysis, containers into the US are pre-scanned using container X-ray scanners. Transshipments are also scanned to prevent others from routing to the US, through Colombo,” said L M Nelson, Head of Customs Intelligence and CSI, at the port of Colombo.

Gains from pains
Sri Lanka Customs says the security upgrade is paying off in various ways.

“We have benefited because of the improved security. Right now only about 50 ports in the world are part of the CSI. In this region Colombo is the only port. So we are getting a lot of business because of this,” said Nelson.

Customs says CSI status is already attracting increasing volumes of US based transshipments. But the more significant impact of US security procedures is that they will eventually push US companies into buying from CSI-geared countries.

“In time to come the US government will not accept cargo that has not originated from a CSI port. The clearance procedures at the US-end are also much faster when the goods are from CSI ports.

So US buyers will tend to place orders in countries that have CSI ports,” Nelson added. Because of these trade implications China has already converted a number of ports to SCI standards and India has earmarked the port of Bombay for CSI status. Countries like Singapore, Hong Kong, Thailand and Korea have also upgraded to CSI standards.

 
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Copyright 2006 Wijeya Newspapers Ltd.Colombo. Sri Lanka.