Strategic plan to increase shipping sector revenue

Sri Lanka is drawing up a strategic plan to make the shipping sector a billion dollar industry taking advantage of opening it to global shipping lines, Finance Ministry sources said.

The plan aims at increasing the cash flow in this sector from a current level of around US$50 million, a senior ministry official told the Business Times.

At present global shipping lines are represented as agents by Sri Lankan companies who retain 60 per cent of the profit while 40 per cent is repatriated to the shipping line.

Currently vessel owners remit around $800 million through the “Foreign Currency

Account for agents of Foreign Shipping/ Airline (FCAASA)” to local agents for necessary levies and chargers as well as for shipping service fares.

The profit of the shipping agent is 5 per cent of this money amounting to around $40 million. Under the present 60:40 ownership arrangement 60 per cent of the $40 million amounting to $ 24 million is retained in the country with the local agents.

The government’s strategic plan will promote competition and allow market determination of agency prices, the official explained adding that it could lead to reduce shipping costs, improve export competi- tiveness and bring down the price of imports.

According to the performance review of the Colombo Port, 316 container ships arrived during the month of September this year compared to 300 during the same month last year.

The new plan anticipates that the major shipping lines could attract more ships to call at the port and expand the overall freight market and increase the aggregate shipping and allied industries in Sri Lanka creating more jobs and new business opportunities, the official said. Local agents are objecting to the liberalization saying it would impact adversely on the sector.