The draft of the National Shipping Policy is in its final stages and the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) has recommended that a marketing strategy be incorporated into the policy.

"The shipping policy is welcome by the stakeholders in the shipping industry because it was a long felt need to give focus and direction to industry going no where. It is a timely move," said Sujeiva Samaraweera, Chairman, FCCSL sub-committee on Shipping, Aviation and Ports.

"The draft is going through its final stages of formulation and the FCCSL has suggested that a marketing strategy be included into it," he told the Island Financial Review.

"There has to be focused selling of port services available in Sri Lanka. There are times port authorities of other countries have marketed their services to Sri Lankan shippers. So while ports are being developed and new ones constructed, we have to formulate a marketing strategy to attract more business which will ensure Sri Lanka would be the regional hub for port services," Samaraweera said.

He said the shipping policy would spell out strategies for development of port infrastructure, services and logistics in Colombo and Galle and the construction of the Hambantota port.

"We could look at marketing Galle harbor as a tourism destination for water sport enthusiasts," Samaraweera suggested.

The shipping policy is expected to layout the responsibilities of shipping lines and Samaraweera said the government had called on them to formulate their own strategies.

"Another important aspect of the policy is that the training of seafarers and other industry personnel will be given emphasis," he said.

The policy formulation is done through consultation of various stakeholders in the industry.

Some of the problems facing the shipping industry is that local ship owners are not exempt from taxes when having their vessels repaired in Colombo unlike their foreign counterparts who are exempt and Sri Lanka has also neglected building its shipping fleet because of a lack of policy direction.

According to a recent study carried out by shipping expert Jayantha Rathnayake, Sri Lanka’s ocean going cargo vessel fleet consists of 25 ships which has grown by only 8 ships during the last three decades, from 17 ships in 1989.

His study was highlighted in the Island Financial Review in March. We reproduce some of his recommendations made in this study in order to gauge some of the issues the shipping policy may try to tackle.

*Ship Financing – In this context, a fund should be established by the Government from which entrepreneurs can obtain loan facilities to acquire or build ships.

*The State should ensure that the Sri Lanka financial sector creates a ship finance portfolio at rates that compare favorably with international lending rates and accept vessels and crafts as collateral. Further, as practiced in other maritime nations, the govt. should make available subsidies for ship building.

*Investment relief to be provided for all capital invested in vessel ownership for a period of five years.

* Tax concessions- much more can be done in the sphere of tax administration by the State.

i) Provide tax concessions suitable to a pioneering industry for operators of shipping fleets who are engaged in international liner shipping services carrying local import and export cargo.

ii) The government should review the taxation policies on vessel owners and consider introducing the tonnage tax system as implemented in most of the maritime nations in place of current corporate tax system.

iii)Abolish the value added tax currently applied on purchase of vessels (and customs duty for imported new or secondhand)

iv)Exempt Sri Lankan seafarers from P.A.Y.E tax. The present position is that the Sri Lankan seafarers working on Sri Lankan registered companies or ships would pay income tax whilst Sri Lankan seafarers working on foreign ships pay no income tax.

*Incentive scheme or rebate through Colombo Dock Yard to Sri Lankan flag ships in entrusting repair work.

*Bunker subsidiary or a rebate system for Sri Lankan flag vessels.

*Promoting coastal shipping connecting North to South.

*Simplifying the procedure for registering foreign ships under flag of convenient concept in Sri Lanka. Utilize Shipping Development Fund (SDF) to launch a campaign to promote investment in ships in Sri Lanka with incentives as such a programme has never been done so far.

*Exempt profits earned from taxes.

* Exempt proceedings from sale of ships from taxes.

*Creating awareness among the entrepreneurs of the investment opportunities in fleet development and of possible high returns, using funds from SDF.

*Training of maritime personal to take charge of the various responsibilities of ship owning / operating industry simultaneously widening awareness of the job opportunities.

*Revitalizing Ceylon Shipping Corp, the national carrier by strengthening its balance sheet and restructuring the organization so that the operating cost could be reduced and further allowing CSC to operate independently without interferences thereby giving them an opportunity to compete in an liberalized environment.