22 July, 2018

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CASA – Colonial Cousins In Sri Lanka Shipping

By Sarath De Alwis

Sarath De Alwis

The Ceylon Association of Shipping Agents – CASA in its website informs us that it is the leading voice of the shipping industry in Sri Lanka.

The committee stage proceedings on the ports ministry demonstrated that it is indeed an indisputable claim. CASA in Sri Lanka shipping is as powerful as the American Rifle Association in the US Senate. CASA is as dogmatic on their exclusive preserve as the Mahanayake theros on the unitary state.

What geography has put together, let not CASA put asunder   

The Port of Colombo is mainly a transshipment port.  It is the pivotal point of entry to the Indian subcontinent. If it is to be developed as a mega port and a regional maritime hub it must break out from its protective cocoon that serves the short-term interests of ships agents who are the vestigial remnants of the colonial economy. 

CASSA opposes the budget proposal to open the Shipping sector for foreign investment. The Ports Minister Mahinda Samarasinghe opposes it. He complains that he was not consulted before the budget proposal was presented in parliament. He agrees with the former Project Minister of Ports Rohitha Abeygunwardene that CASSA represents ‘Deeshiya Viyaparikayo’ – indigenous entrepreneurs who have made and are making immense contributions to the nation’s economy. It is a fallacy that ignores the realities of contemporary global maritime commerce. It also ignores the genesis of CASA which will be discussed later in this missive.

The idea behind liberalizing the shipping sector is to make Sri Lanka a megaportal of maritime commerce in 21st century Asia.

There are ports that handle a lot of cargo but do not generate that much economic value. Colombo is a classic example. Colombo does not have trade clusters as in Singapore. It has no Industrial real estate as in Rotterdam. It has no thriving waterfronts as in Barcelona.

A mega port cannot survive servicing as island economy. It must rely on and serve a regional economy beyond our borders.

We must not allow CASA to put asunder what geography has put together.

A mega port according to industry experts has three dimensions; the cargo volume it handles, the economic value it represents, and the land and water surface it utilises. It is not sheer size of the port or its depth that matters. It is the economic force that it creates, that matters. 

Progress and continuity are not fellow travelers. 

Long years ago, this writer had his office located in the shopping arcade of the Ceylon Intercontinental hotel, the first International Chain to set up shop in Sri Lanka. The chain was owned by Pan Am Air lines now body remembers. In retirement there is no need for this writer to visit that part of the city. A rare visit prompted by the desire of a visiting offspring to taste crab in an unlikely placed called a Ministry allowed the writer to discover the former Intercontinental of the seventies refurbished and its façade totally altered and rebranded as the ‘Kingsbury’. A clever rebranding. Kingsbury is the manorial seat of Sir Robert Peel the Prime minster who famously said, “Public opinion is a compound of folly, weakness, prejudice, wrong feeling, right feeling, obstinacy, and newspaper paragraphs.”

Colombo port has developed its facilities in a slow crawl in to modernity over the years just as the old Intercontinental has metamorphosed in to the new Kingsbury. That pace of progress will not give us a mega port. Today the Shangri-La has dwarfed the Kingsbury. Progress moves on and waits for nobody. 

The analogy is made with a purpose. Recently it was the venue chosen by the Sri Lanka Ports Authority to host the 19th conference of the International Network of Affiliated Ports (INAP). Addressing the Conference Minister of Ports Mahinda Samarasinghe promised to up the ranking of the Colombo port. He also opposes the liberalization of the shipping sector. 

The leap Colombo port must make to be a mega port is more less the leap that the owners of the Kingsbury must make to match the Shangri-La!

Ports of the future

An expert in port terminal operations –  Dr Oscar Pernia, makes a concise assessment of ports of the future that will thrive in the foreseeable future. He says that ports must make a quantum leap in technology.  A proposition that is beyond the exaggerated capacity of CASA. 

The port of the future is not only about accommodating bigger vessels. The port must be a facilitator of broader carrier alliances. It must provide a hub and spoke network and be continuously engaged in evolving systems that reduce costs through capacity consolidation.

At the same time the port must attract increased investments that improve productivity and offer higher levels of service in the firm of value addition in transshipment.

Managing and improving productivity will require significant investment in new technology. It calls for radical changes in operational mindsets and use and deployment of technology.

Port operators of the future will be managing far more information technology than in the past. Futuristic ports will leverage cloud based networks to connect with far more shipping partners. It will process vast amounts of data to improve planning , controlling  and execution of their operations.

Leveraging Geography of Colombo

Making Colombo a mega port compels us to comply with a natural certitude that Anushka Wijesinghe the Chief Economist of the Ceylon Chamber of Commerce asserts with eloquent precession. In a June 2016 article in the Diplomat, he says, that we are “at the doorstep of a dynamic market – India. Already, 75 percent of Colombo port volumes are transshipments from India; the Indian middle class market alone is set to expand to 10 times the island’s entire population.

In addition, Sri Lanka has a free trade agreement with Pakistan, which is going to be expanded to cover services and investment, and will have an agreement with China soon. These developments together will make Sri Lanka unique in having preferential market access to India, Pakistan, and China — combined, these markets account for 2.7 billion people.”

If we disregard this reality and allow ourselves to be deluded by xenophobic shitheads and purblind profiteers, we do so at our own peril.

Geography has made India and Sri Lanka neighbours. History and necessity has made us reluctant yet interdependent allies. Fate and fortune commands us to be partners in exploring and exploiting maritime commerce of the Indian ocean in the 21st century. Let not CASA put asunder what nature has joined together. 

Genesis of CASA

We must now deal with the genesis of CASA –  Ceylon Association of Ship’s agents.

In its 200 years history, British imperialism in created what economic historians call the ‘grandest society of merchants in the universe’ – the British trading houses in their colonies.

Thrithankar Roy a Bengali born Economic Historian of the LSE, in his monumental work ‘India in the World Economy from Antiquity to the Present’ says that Colonial Indian territories which included Ceylon in the period 1757 -1947 witnessed a dramatic growth in long distance trade. The shipping tonnage handled in the colonial ports in the subcontinent increased from one hundred thousand tons to over six million tons between 1798 and 1914.

This is the fertile ground on which the ancestry of CASA is rooted. They are the colonial cousins who are bent on preserving the status quo.       

We call them agency houses. Their nameboards proudly announce the year of their founding in the 19th century and some even dating to the 18th century.

These agency houses were pioneered by mostly Scottish and routinely roguish innovators who developed an imperial port first in Galle where Charles P Hayley landed in 1878 and Patrick Gordon Spence landed in 1868.

Deshiya Viyaparika Prajava’ – the indigenous merchant class

These agency houses dominated the political and economic geography in the Indian ocean until the late sixties in the last century. During those years, the so called ‘Deshiya Viyaparika Prajava’ – the indigenous merchant class were in the bazar areas of the Pettah. The Agency House Sahibs were in the Fort.

In India and among Chinese in the straits Settlements there was an ancient tradition of international trade. The indigenous merchants of India and Peninsular Malaya- the Marawaris in Bombay, Bengali’s of Calcutta and Chinese in Hongkong and Singapore restructured their colonial agency houses immortalized by James Clavell in his novels Taipan and Nobel House.

In Sri Lanka the process was very different. They tycoons who came of age in post JR market economy by accessing state owned assets acquired ancient Scottish brands which they used to gain entry to the establishment.

The merchants of the Pettah bazar became the new sahibs in the fort. Continuity of the imperial order was guaranteed. To the upstart class, business skills and innovation was less important than skills in cricket and rugby.

Their new world lingered uncertainly until T.B.Illangaratne from the village of Thumpane in Kandy  infused 20th century common sense in to the tough craniums of the brown sahibs.

He impacted all sectors but strangely left shipping to muddle along. This time, Mangala Samaraweera from the village of Walpola in Matara, has decided to bring shipping in to the 21st century. 

State capture by Captor Firms

Though their antecedents differ, Mahinda Samarasinghe and Rohitha Anbeygunwardena are both adept practitioners of clientelist politics.  One is an elitist and the other a populist. CASS is a cartel for all seasons.

CASS represents an entrenched business class that survives on their ability to shape rules of the game to their very substantial advantage.

The phenomenon is not new. It is the most pernicious problem encountered in the political economy of meaningful reform. It is known as state capture. The powerful lobby groups are made of captor firms. Their resources even include the Buddhist clergy. This writer noted an eminent Buddhist monk describing ship agency firms as devout institutions, generously assisting the ‘Sasana’.

Friends in high places

Such captor firms are not a symptom but the fundamental malaise that cause poor governance. Such captured economies are trapped in a vicious circle in which, reforms of institutions and changes in policy are held hostage by powerful business interests. They have friends in high places.

Policies are not good for some people and bad for other people. They are on balance, either good for society in the long term or bad. What is good for the colonial cousins of CASA in the short-term is bad for the nation now and in the long term.

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Latest comments

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    Sarath De alwis: It looks just like the elephant hiding a little rock inside his mouth for some purpose, you also has some Grudge with buddhist monks. Why Mahanayaka’s do not have rights to talk about the country that they live. You write this so often. What is the Reason. You say you are retired. Are you living in the west and you feel attached to that now ?. On the other hand, Those Mahanayaka’s did not try to enforce their will in other countries as the Pope doe sit via the Church. As mullah’s they do not preach a cult foreign to us. what is hatred feeling.
    with respect to your description about the usability of the Colombo HArbour as a important Commercial port, then Mahinda Rajapakse’s Idea must be the best timely idea. Just after the war was over he built a second harbour which could be expanded easily and which could not be modern from the beginning. It is Ranil who behaved like a BULL In the CHINA SHOP and delayed it. Trained – -Lingerie Designer cum ex-foreign minister prepared the budget not for the Sri lankan Needs. It is public information, the budget is for the MCC (milliinium challenge coriproation) needs which they are giving funds for Port development, political changes and lad reforms. WE are behind the game with respect to harbours and logistics in shipping. Because, Malaysia developed their harbours and they took the most advantage of chinese containers. They can handle largest ships in the world. My opinion is the West (you know who) wants the large piece of the Pie. Avamangala is a pet doggy for the west. Once they touches head and pet him, he starts salivating out and does anything they want. I think, SL govt is taking a high interest loan from an american Surveying company to survey around Trincomalee. their aim is only flattening a mountain that covers the harbour. Sri lanka pay for it years to come to maintain the company’s wishes. that moutain covers ships there in hiding.

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    buddhist monks are not well informed about politics, they do not understand the repercussions of it and see now how many are waiting to discredit buddhist monks. Even it is well known, you may not know that as you were a journalist, that LTTE abused the charity of buddhist monks by getting their help to hide weapons inside the temple. But, no one highlighted it at that time. Now, you people want to criticize every questionable move of buddhist monks.

  • 1
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    Interesting comments since I am familiar with both global airline and shipping industries.

    I can remember Pan Am very well. In the 80’s I was involved in reviewing then Airlanka. We proposed the airline to define both Sri Lanka and South India as it’s own base (well before all these regional airlines came into the picture), convert the internal aircraft configuration to two class, economy and business, and expand the number of economy seats and increase utilisation of space (Airlanka first class was used primarily by govt officials/ministers and their ministries have sometimes never settled the airfares), enter into a strategic alliance with a strong airline such as an European or US based airline complementing each other networks and resources but not a direct competitor (I was opposed to management control or mergers type of alliances with direct competitors like Emirates), re-capitalise the airline more focused on being a strong regional player with some long range profitable routes than a global carrier (many global routes were operated primarily on the whims and fancies of political authorities).

    I have traveled across the world and visited many shipping ports especially in China (from Hong Kong in the South beyond Shanghai to the Northern ports along the coastal line) and can understand the logic & validity of many of the writer’s comments. Sri Lanka needs more urgent attention to the strategic scope of it’s ports because India is rapidly developing it’s port infrastructure which will threaten Colombo’s transshipment advantages, Pakistan is developing it’s port infrastructure with Chinese support under it’s Road & Belt initiative, Singapore continues to invest to maintain it’s pre-eminent position in the region etc.

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      Isn’t it interesting that the same individual owns the Kingsbury , Singer, Hayleys, and Aitken Spence among many other establishments? Of course it is his legitimate interest to oppose challenges to his monopoly.

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    The writer noted eminent buddhist monk,. describing ship agency firms as devout institutions generously assisting Sasana.
    .
    How true this statement .In a country where largest sausage making company
    celebrating Wesak in Grand style ably assisted by some Monks..Buddhist Upasaka and Upasikas throng in thousands to worship Sacred Relics exhibited by the assistance of Sausage maker.Year after year Wesak is celebrated with state participation assisting Sasana

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    A brilliant piece of writing , but quite predictably he felt compelled to take a shot at the buddhist clergy .

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    [Edited out] Comments should not exceed 300 words. Please read our Comments Policy for further details.

  • 1
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    Another addition to the ‘Opportunities Lost Tray’.
    The ‘Opportunities Gained Tray’ is empty.
    Opportunists proliferated but is now down to two home teams.

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