Important role assigned and expected to play by sea transport in the economy of any nation, hardly warrants elaboration. Yet, have the countries in the Indian Sub-Continent such as Sri Lanka, Pakistan, Bangladesh, Maldives, India etc as countries in the Indian Sub-Continent (ISC) having access to the sea-belts, understood the multi-faceted benefits a country can acquire by a) developing sea transport ?. b) through the presence of a vibrant fleet of ships engaged in sea transport?.

In the case of Sri Lanka where annual international trade hovers around 45 million MT and where through her wharfs, close to 4 million containers annually pass ships’ rails, one may expect to see at least a couple of ships, plying the Lion flag in her main harbor at any given time , as one could see in the case of Sri Lankan air crafts when arriving at their main air port. However, one is going to be disappointed in this respect, as seeing a Sri Lankan own ship in the port of Colombo will be, in most of the cases , a chance one might strike once in a way as total Sri Lankan ocean going cargo vessel fleet is believed to be only 25 !1. In the case of Pakistan, the country possesses only 15 ships under it’s flag whilst Bangladesh is comparatively well ahead with 40 ships with Maldives trailing behind with 29 vessels. Out of all, India is better off with over 540 ships, by 2008. ( All these countries have a few more ships registered in foreign countries ,such as 10 ships of Bangladesh and 19 ships of Pakistan and a few belongs to Sri Lankan companies; but these ships have only a limited bearing on. the local import/export trade or shipping industry)

Except perhaps India, almost all other ISC had miserably failed in developing a vibrant merchant vessel fleet. Instead, one may say the countries such as Sri Lanka and Pakistan have regressed in comparison to the achievements made by some others in the same block such as India and the world fleet. For instance , in late 1960 s when Sri Lanka ( then Ceylon) decided to go for ship owning with the purchase of one second hand break bulk vessel called ‘Lanka Rani’ under Ceylon Shipping Corporation (CSC) , India was already in business . By 70 s, when Sri Lankan fleet went up to 8 ships, India had 76 ships. Today , after 30 years, India has 540 plus ships plying their flag whereas Sri Lanka has only 25 cargo ships.2 In the case of Ceylon Shipping Corporation, the national carrier, it was a case of anti-climax; having reduced just to 2 ships; a steep drop, having operated 17 ships until early 1990s !. When it comes to Pakistan, once mighty PNSC ( Pakistan National Shipping Corporation) which had 70 ships by 1970 and reduced to 56 over night in 1971, with the birth of a new nation called Bangladesh, has only 12 ships under her fold today !. Bangladesh Shipping Corp has similarly shrunk, but country as a whole has scored higher marks in the sphere of ship owning with 40 ships to her credit, standing next to India in ISC. Yet, on year to year basis, Bangladesh has reduced her fleet from 42 in 2007 to 40 in 2008 – 4 % minus growth.

Living in a wired environment of globalization under the formidable guardianship of WTO whose password is ‘ free trade’, should one talk about the relevance of having an own fleet of vessels by a country?. Would not the forces in the free market provide opportunities for any one to get optimum price?, solution ?. Would deployment of a colossal amount of money in acquiring ships is justified ?. What were the negative forces held back or reversed the growth momentum of ship owning industry in these countries?. What could be done to correct this position? These are a few questions one tends to ask when one talks about depleted national fleet of vessels in ISC.

Accordingly, this article tries to collate answers for some of these questions using data and information gathered through primary and secondary data sources and an opinion survey for an academic paper for the University Of Colombo

Almost all were respondents of the opinion survey were in agreement, that a country should have an own fleet and 87.5 % were of the opinion that Sri Lanka too does not have a sufficient number of ships . As for the reasons for owning a fleet, 66 % responded in saying that for the reasons of; a) be a catalytic agent for promoting international trade of a country b) building wealth for the nation through participation in cross trading ( carriage of cargo of other nations ) c) national security d) to be a buffer against the dominance of foreign vessel owners, they think that the country should have a strong fleet of ships.

On the question of the deterrent factors, which blocked the growth of a domestic vessel fleet, majority viz 46.8 % were of the opinion that:

a) Lackluster Government policies

b) Lack of proper financing mechanism in the State or formal sector

c) Lack of leadership by State sector

were the key issues among several other related web of problems..

Among the rest of the reasons, lack of cash rich local companies ( 17 %), inability to compete against foreign ship owing companies (9%) , problems with management skills (3%) etc featured high.

These ideas are reverberated almost in toto in the observations made by a committee appointed in 2004 to draft a National Port and Shipping Policy for Sri Lanka 3 wherein they have taken a holistic, albeit , limited view of the ISC position as well. This committee , inter alia, found following, in the main, to be obtrusive factors which were found to be common for the ISC rerion.

=Absence of a mechanism to promote a National Fleet here whilst, even the developed countries, through visible and invisible fiscal supports, do promote their fleet.

= Reluctance in the local banking sector to lend money for ship owning.

= No tax concessions for local ship building or acquiring . Instead even VAT is imposed on a ship purchase.

= Different kind of discrimination against local ships . For instance ,in the case of Sri Lanka, when carrying out repairs locally, Sri Lankan ships are liable to duties and taxes whereas foreign registered ships are exempted from those!.

Incidentally, presences of similar deterrent factors are reported from Pakistan in the growth of the domestic fleet. In presenting a paper at a work shop in 2004 on ‘ Marine and Maritime Development Of Pakistan’ Capt. Raffat Zaheer identified a few factors hindering the progress of ship owning industry of Pakistan . As per him, a) Ineffective policies of the Govt.Of Pakistan b) Negative attitude of officials c) Cumbersome bureaucratic procedures d) Regulatory costs e) Harassment at Govt. regulatory bodies including Customs, Immigration etc.4 were responsible for the regression of the Pakistan national vessel fleet; a replica of Sri Lankan situation.

Similarity of the causative factors of the two neighboring countries are quite striking !

Way out

In the survey mentioned above a clear majority of the respondents viz. 81.3 % are of the opinion that the State’s active participation with conducive policy regime including fiscal facilities and investment promotion could trigger growth of the ship owning industry.

Therefore, based on the experts’ opinions, previous research work on the subject, own observations and logical deductions, some key policy changes are identified for arresting the slow growth of vessel owning industry of ISC with a view to developing a strong regional fleet.

They are: Government sponsored fund from which entrepreneurs can obtain loan facilities to acquire or build ships; ensuring that financial sector creates a ship finance portfolio and maintain the interest rate competitive against rest of the banks, specially those in the West; providing

investment relief; Tax concessions and reforming the tax regime.