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Deputy Minister Eran Wickramaratne

Sri Lanka’s Deputy Minister of State Enterprise Development, Eran Wickramaratne today said that the island’s soft infrastructure, which may often be more important than physical infrastructure for increasing trade, looks archaic in comparison to competing nations and improving the soft infrastructure is a matter of priority for the present government.

“Certainly, the government has an important role to play in developing that soft infrastructure. However, it is the private sector that should drive the process and flag to the government the priorities for action. For instance, the customs and ports in Sri Lanka need to fully adopt, as a matter of urgency, electronic document processing to increase the accuracy, speed and integrity of the logistics process,” Wickramaratne said delivering the keynote speech at the Chartered Institute of Logistics and Transport (CILT) International Conference 2015.

Noting that due to the absence of electronic processing, Sri Lanka’s logistics has not been as competitive as it could have been on the global scale, the Deputy Minister asserted that although the island nation had tried to make the transition to electronic processing for more than 20 years, people who are beneficiaries of the incumbent system had generally blocked it.

“We know the term ‘paper trail’ is associated with accountability, but the problem is that physical papers can go missing too! With electronic document processing, you create a more durable footprint that is vital for good governance within the private sector and the public sector. Keeping it electronic helps us to also deal with corruption problems that are endemic in this sector. This is not unique to Sri Lanka. Across the world, many people think that corruption- such as a bribe- can grease the wheels of the system. People in logistics might not think there is a problem in making payments to get things done- something as basic as getting a document. However in the long term, corruption is also sanding the wheel and preventing progress. Indeed it can prevent the sort of reform that can truly improve a business,” he said.

Addressing further, the Deputy Minister said that ‘good governance’ does come into other areas of logistics as well, and therefore Sri Lanka should look into issues like the role of the Sri Lanka Ports Authority presently being both a regulator and an operator (in competition with the private sector).

“Moreover, there are a number of government ministries involved in managing logistics in Sri Lanka. For example, Sri Lanka Ports Authority, the Aviation Authority Sri Lanka, and SriLankan Airlines Cargo all come under different ministries. Is there sufficient coherence in the way the Ministries of Ports, Transport and Public Enterprises operate with regard to Sri Lanka’s logistics?,” the Deputy Minister questioned.

Wickramaratne said that according to a 2009 study by Patunru et al, cited by the ADB, it was found that in Indonesia, the limited soft infrastructure played a vital role in constraining port efficiency, more so than hard infrastructure, although the two were interlinked.

“Sea port competitiveness suffered from poor physical infrastructure such as inadequate channel depth, shortage of berths, and limited cargo handling equipment, storage and transit areas, but it also suffered from limitations in soft infrastructure, such as labour skills, regulation, bureaucracy, and other institutional factors affecting port capacity utilization. Moreover, the lack of direct competition between ports controlled by the same government authority was also a critical factor. This is an issue that the Sri Lankan government must explore further too,” the Deputy Minister said at the conference held under the theme ‘Logistics to Power the World’.

The deputy Minister further acknowledged that the investment in physical infrastructure that has already taken place, though valuable for the logistics industry, is however not sufficient.

“To achieve a world-class and efficient logistics system and to compete on a global scale, it is also important to develop the soft infrastructure. That is, we need to invest more in human resources, technology, and the systems that drive the success of logistics. With regard to the significant ICT infrastructure investment necessary, the private sector is at an advantage as they are substantially ahead at innovating, expanding and financing, particularly in comparison to the public sector,” Wickramaratne said.