De-listing adds strength to economy

“Sri Lanka being de-listed from the war risk countries category by the Joint War Committee (JWC) of the maritime insurer Lloyd’s of London will strengthen the maritime sector and the entire economy of the country”, said Chairman, Shipping and Ports Committee, National Chamber of Commerce of Sri Lanka (NCCSL) Sujeewa Samaraweera.

The country’s war risk premium was 3.4 percent and after the end of the conflict in May last year it was reduced to 2.6 percent. The total removal is a great achievement for the sector and the economy as it will bring down the cost of imported goods and support the export sector to be more competitive as the charges per container will be reduced. JWC of Lloyd’s of London has scaled the war risks in the other South Asian countries, India - 3.1 percent, Pakistan- 5 percent and Bangladesh - 0.3 percent.

After the devastating attack on the BIA by the tigers in 2001 the JWC listed Sri Lanka as a high risk country and increased the war risk premium as they thought there will be a threat to the sea ports as well. During that period our country was also listed in the Global Cargo Watch List (GCWL) issued by the joint cargo committee.

These initiatives resulted in the cost of imports increasing due to foreign underwriters levying a surcharge on goods reaching Sri Lanka. In addition, when a country is listed by the JCC, it requires a special cover, the war risk premium of US $ 150-350 per twenty foot equivalent unit. This increase was affecting our import trade as the cost of freight directly results in increasing the product cost. Our exports were not competitive in the international market as additional charges were added which resulting in the price for exporting increasing. He said that in 2001 the war risk surcharge on import and export cargo increased and subsequently due to lobbying by the shipping sector it was reduced during President Mahinda Rajapaksa’s tenure as the Minister of Ports and Shipping.

The shipping sector is happy that the removal of the war risk surcharge was also carried out during his tenure.

This move will strengthen the shipping sector which is targeting a strong growth over the next few years. He said that shipping lines calling Colombo will benefit from the de-listing as they will not have to pay additional charges for underwriters.

This will benefit casual callers as well as the smaller shipping lines operating in the South Asia region.

“We are expecting more ships to call on Colombo after the removal,” said Samaraweera.

SG