Port and airport to work in tandem:

Hambantota, an ideal transshipment hub

By Shirajiv Sirimane

The Magam Ruhunupura Mahinda Rajapaksa Port (MRMRP) is not like the Pettah Bus Stand where one could see many buses running to different destinations, said the Project Minister of Highways, Ports and Shipping Rohitha Abeygunawardana.

He said shipping companies have to re-program new routes and act according to the requirements of the country.

"However, ships are now coming to the harbour, and the Opposition is saying that the harbour needs additional staff and that recruitment has not being carried out. This shows that whatever good that is happening at the MRMRP is being played down by them," the Minister said.

While the criticism is going on, Minister of Investment Promotion Lakshman Yapa Abeywardane said two companies from Malaysia and Thailand are considering setting up assembly plants at the Hambantota port, targeting mainly re-exports.

Manufacturing plants

China's number three car manufacturer, Geely will establish an assembly and manufacturing plant in Hambantota. Geely entered the Fortune Global 500 list at 475 last July and is considered one of China's fastest growing car-makers. Apart from China, it also has production bases in Russia, Ukraine and Egypt.

Cars unloaded at the port

Work under way

A ship at the port

An artist's impression of the bunkering facility and tank farm project at the port

The administrative complex under construction

According to Geely Director Martin Xiang, Sri Lanka has become a key market, but more importantly, a manufacturing hub in South Asia for automobile manufacturers. He has said that initially, they are considering an assembly line with US$ 20 million in shared investments with Micro Cars Limited. The establishment of the factory will start in the middle of next year. The first phase is to be completed by the end of 2014 and the first car will be rolled out in January 2015.

He said Sri Lanka's advantages and attractive location on the main East-West shipping route convinced them to invest in the island. The harbour in Hambantota will be geared to support international and domestic sea cargo transshipment. In conjunction with the Mattala Airport in Hambantota, the harbour will perform as an air-sea cargo transshipment hub.

Moreover, the harbour will be an alternative to the Colombo Port, which was the only international harbour in the country prior to the commissioning of the Mahinda Rajapaksa Port, the Project Minister said.

Key advantages

Investors are attracted to Sri Lanka because of several key advantages such as location, low operation cost and the enthusiastic and motivated labour force. Easy access to South Asia and many other regions, the open economy and the literate labour force are among its strategic advantages.

"Many foreign investors have noted that Sri Lanka's advantages make it a strong contender to be developed as an air-sea cargo transshipment hub. Considering this situation, the Ports and Highways Ministry took steps to declare the Hambantota Mahinda Rajapaksa harbour as a free port," Project Minister Abeygunawardana said.

In addition to these developments, the Cabinet of Ministers approved seven investment proposals, subsequent to the recommendations by the Cabinet Appointed Negotiating Committee with the assistance of the Technical Evaluation Committee. Accordingly, three investors, Thatta Cement Company (Pvt) Ltd., Hambana Petrochemicals Ltd. (HPL) and Lanka Sugar Refinery Company (Pvt) Ltd. have already commenced construction following successful business venture agreements with the Sri Lanka Ports Authority (SLPA).

Hayleys Advantis Ltd. (fertiliser bagging plant), McLarens Holdings Ltd. (warehousing), Agalawatta Plantations PLC (warehousing) and ACE Distripaks (Pvt) Ltd. (warehousing) are among the other Cabinet-approved investors who have expressed their enthusiasm to commence business at the MRMRP.

The construction of a fuel terminal at the port was commenced in 2009 by Hunan Oil Engineering in China at a cost of US$ 76 million to provide bunkering facilities to ships, making the port record additional revenue.

Under the project, 14 tank farms are being constructed with a full capacity of 80,000 m3. Eight of these tanks were dedicated for ship oil, three for aircraft oil and another three for LP Gas. This project is to be opened in a few months.

Administrative complex

To monitor these developments and facilitate and coordinate the unloading of cars, which is now happening in a big way, an administrative complex was a crying need.

The new administrative complex, 'SayuruPaya' bordering the port, was opened by President Mahinda Rajapaksa early this month. The building consists of 14 storeys, comprises an area of 100,000 sq.ft., is 200 feet high and is considered to be the tallest building in the South.

The new administrative building has been constructed at a cost of one billion rupees.

With the opening of the new building, all customers at the MRMRP will be able to get their requirements attended to at this one-stop centre. The administrative building at the site commenced construction as a part of the main project in 2009.

The Hambantota Port has enabled the reduction of congestion at the Colombo Port, introducing a quicker clearance system with Sri Lanka Customs where the document processing could be done in either Hambantota or Colombo without any delay, and promote transshipment business with a dedicated automobile handling terminal facility at the Magam Ruhunupura Mahinda Rajapaksa Port.

As at October 27, 2013, the port has received 139 RO-RO vessels and has handled nearly 28,500 domestic units and more than 38,000 transshipment units, once again proving wrong the Opposition claims that the MRMRP is a white elephant. Deputy Director, Confederation of Indian Industry, R. Sivakumar, a logistics expert from India who was in Sri Lanka recently, said the state of Tamil Nadu has three international ports and the fourth is being built by a consortium of private investors.

Due to the operation of three international ports, major global car assembly companies from China, South Korea, Japan, Germany, France, US and Malaysia have set up manufacturing plants along with other companies such as Nokia. "The main reason for them to select Tamil Nadu is the three international ports which these companies use to manufacture and re-export their products all over the world," he said.

Sivakumar, a key player in hosting the EXCON in Bangalore which is the third largest construction exhibition in the world, said this is already happening at the Hambantota Port.

This comment proves that the Hambantota Port is a long-term investment and returns on investments are already happening, judging by the number of investors who have set up business there.