Managing Director/CEO of Colombo Dockyard PLC Mangala P. B. Yapa said all stakeholders need to reach consensus if Sri Lanka is to take advantage of its geographic position and become a shipping hub and the Comprehensive Economic Partnership Agreement (CEPA) with India could help in this regard.

"Every single stakeholder has to blame for not making Colombo reach its potential as a regional hub. Shippers want low freight rates, ship agents want higher rates and the port too wants its share of revenue, so unless these stakeholders reach a consensus development will be slow. And this is true not only for the maritime sector but the entire economy," Yapa told the Island Financial Review.

More than 70 percent of total cargo handled by the Port of Colombo, more than 70 percent are transshipments to and from India.

According to analysts, Yemen and Salalah in Oman in West and Indonesia and Malaysia in the East are fast attracting transshipments to the Indian sub-continent away from Colombo where cost considerations are not very attractive in the recessionary global economic environment.

Colombo Dockyard PLC (CDP) specializes in ship repairs, shipbuilding, heavy engineering and offshore engineering.

In its annual report, the group recorded Rs. 8.8 billion in revenues during the 2007 financial year against Rs. 7.4 billion in 2006. In 2007, after tax profits stood at Rs. 1.1 billion as against Rs. 623 million it recorded the previous year.

Its order books area filled until 2011 but the global economic recession is expected to impact on its performance (see page 1).

"The company’s value addition is substantial. It is about 55 percent and we try to improve on this year to year. Professional labour is a significant contributor to this value addition and are entire core is made up of Sri Lankans who have specialized in related marine related fields with various qualifications," Yapa said.

"However we do need time and time again to enlist the services of marine architects, and other professional in shipbuilding as there is a dearth of such professionals in Sri Lanka," he said.

Yapa said many of these professionals come from India and CDP had made use of their services to benefit the company and generate foreign exchange for the country.

"Opening up professional services through CEPA is one area we can benefit from as it will regulate the manner in which professionals enter Sri Lanka because it provides a better framework. By not using this we are closing the doors on the opportunities that can be gained," he said.

Analysts have pointed that despite not having an agreement in place for the mobility of professionals companies who could afford it are not hampered from obtaining professional services from India.

The visa issued on arrival to Indian tourists is being used for commercial purposes.

CEPA therefore, provides guidelines and mechanisms that need to be adhered to by both countries.

"Until we fill our deficiencies we will need foreign professionals and CEPA could be used as a short term arrangement to acquire services in a regulated environment," Yapa said.

The existing free trade agreement with India had many obstacles that were enough to scare many in Sri Lanka about what a comprehensive agreement could do.

About 60 percent of CDP’s orders for new sea going vessels are from Indian companies despite the fact that India is a country competing with Sri Lanka in this sector.

"We experienced the roadblocks India put before us, but we saw the opportunities as well. Sri Lankan enterprises need to be proactive, need to build on their strategic strengths and build capacity if they are to succeed.

"Singapore developed as a regional port because of its close proximity to Japan and Indo-China. It built the necessary capacities to capitalize on its position and see where the country is today. The Middle East developed as shipping hub because of its oil.

"Both these had a wave they had ridden on to boost their shipping and economies. Sri Lanka’s wave is India. If Sri Lanka is to develop its economy we need to ride the wave of India’s emergence as an economic power. If we do not, it will be another lost opportunity," Yapa said.

When Sri Lanka was under British colonial rule, the port of Colombo had been ranked as the 7th best in the world, according to Yapa, and 5th best in the British Empire.

"Since then, the maritime industry had gone through several revolutionary changes and Sri Lanka has not been able to keep up," he said.

The initial CEPA document outlining its purpose was to be signed by the leaders of the two countries last year on the sidelines of the SAARC leaders’ summit in Colombo. The schedules were to be added on after subsequent negotiations.

The opponents of CEPA found their voices and were successful in stalling the agreement from being signed. Officials say CEPA is now in cold storage.

CDP hopes to venture into offshore engineering for which the company will look to India for opportunities.

"Several Indian companies have specialized in offshore activities such as oil exploration and extraction and we will offer our services to these companies," Yapa said.

CDP has orders for 10 ships for Indian companies and for several tug boats as well.

It is building specialized sea going vessels which will provide both passenger and cargo transport between India and dominion islands Andaman and Nicobar (to India’s east) and Lakshadweep (located near the Maldives).

Maldives is another country to acquire CDP’s professional services in shipbuilding.