Development of physical infrastructure without proper co-operation between the public and private sector and the development of systems to increase efficiency will likely hinder Sri Lanka’s efforts to develop itself as a logistics hub, according to the Chairman of the Sri Lanka Freight Forwarders Association (SLFFA),Mohan Mohanadas.

In that context, Mohanadas asserted that the development of a comprehensive Electronic Data Interchange (EDI) for the logistics sector would play a pivotal role.

Speaking at the Association’s Annual General Meeting, Mohanadas said: “We have made good progress in physical infrastructure development in terms of roads, ports and airports but that alone does not make us efficient. We must have proper systems in place to go with physical infrastructure. In this regard, we are very late. We as a country are far behind in terms of EDI compared to what is happening around us.”

“What we are doing, we are doing in isolation and in bits and pieces without co-ordination. We are more concerned in addressing day-to-day issues that are looking at the bigger picture. We still lack a comprehensive platform to bring all the stakeholders and effectively roll out a complete EDI or Tradenet. We need to have a clear road map on all of this to be able to achieve a comprehensive EDI platform with a definitive timeline.” Mohanadas said.

Touching on recent regulations imposing a limit on foreign ownership of freight forwarding companies, Mohanadas stated that whilst foreign participation in the industry was to be welcomed, it would also require strict regulations and monitoring in order to protect local stakeholders.

“It is my view and also that of many members in the industry that opening up the industry reciprocally for foreign ownership will no doubt help Sri Lanka in its march towards the hub and free port status, and help more Sri Lankan companies to venture out. However, before we embark on such an ambitious change in the foreign investment policy in this sector, we must have in place, the required standards and regulatory framework.” Mohanadas said.

“As it is, we see a serious lack of proper monitoring controls. Going ahead with it, without proper controls would cause more damage to the local entrepreneurs and human resources than the benefits it would gain,” he added.

Mohanadas stated that lack of a proper regulatory framework and monitoring had, in the past, resulted in several instances of Board of Investment approved companies shutting down operations in Sri Lanka overnight, defaulting customers, local banks, vendors, service providers and employees.

“These are clear examples of the loopholes and poor controls that we have. We do not want such a situation in our industry. Countries which have opened up foreign investment successfully in different sectors have strict criteria for investment and employment, and have an efficient monitoring process, thus protecting the local industry and human resources while enjoying the benefit of international participation. We must study them and take a leaf out of their experience and put in place a proper legal framework and controls,” Mohanadas said.

Citing improvements by Sri Lanka in the World Bank Logistics Index from a rank of 133 out of 155 countries to its current rank of 81, Mohanadas said: “While we have made good headway in the last year or two in improving our logistics excellence, in my view, we are still a long way off to being considered an efficient hub.”

He added that if Sri Lanka was to achieve hub status then it would need to enter the Top 20 in the Logistics Performance Index, within the next two years.