Jingtao Bai, Managing Director, China Merchants Port Holdings Company: Interview

Interview: Jingtao Bai

What are the most challenging aspects of serving both large multinationals and local companies?

JINGTAO BAI: In terms of balancing between serving large multinationals and local companies, we do not envisage any serious challenges. In fact, the first anchor customer that we are serving in our quest to be an energy hub for the region is a 100% locally owned company. Regarding multinationals, we are receiving many inquiries about setting up a variety of heavy and light industries.

Additionally, we have enjoyed considerable progress in the establishment of food-related industries. This is not only to supply the local Sri Lankan market but also to reach out to the wider region, wherein the demand for fast-moving consumer goods is growing rapidly. Another key consideration in striking this balance is that most Sri Lankan enterprises have connections with multinational companies, so they tend to form joint ventures in order to enter the local market.

There remains a growing demand from both local and multinational enterprises for more government-led fiscal incentives. The government needs to be aware of the fact that other countries in the region, which compete for these same investments, offer attractive incentives as well.

In terms of developing Hambantota as a multi-purpose port, where do you see opportunities to develop a suite of value-added services?

BAI: Hambantota has been declared a free port by the government and thus offers considerable potential for the provision of value-added services. This is a priority for us because it would allow many industries to use the port. Our initial plans are to cover value-addition services for the roll-on/roll-off business, which saw considerable growth over its first year of operation. The value-added services are likely to include the reconditioning of second-hand cars that are sourced from Japan and destined for African markets, as well as pre-delivery inspection facilities for new cars in both the local and trans-shipment markets.

In addition, there is potential to cover a host of other consumer goods destined for regional markets, where labelling and marking can be completed within the free port facility. Investors will benefit from the many free trade agreement concessions from the government. These factors will all be taken into account during the development of the suite of value-added services at Hambantota Port.

How can Hambantota port’s development dovetail with the Port of Colombo to avoid the risks associated with operating under capacity?

BAI: With the Port of Colombo, Sri Lanka has already established itself as a regional trans-shipment hub. We see many similarities between the role that Hong Kong plays within East and South-east Asia and the role that Colombo could play within South Asia, the Middle East and Africa. Data from the Port of Colombo shows that there has been continuous growth in cargo volumes over the years, which has only been stymied by lack of capacity. Currently, Hambantota Port is fully geared to handle small container feeder vessels.

In the future, if we observe further delays in addressing the lack of capacity in Colombo, then we would certainly take an open-minded approach to injecting deepwater container vessel capacity at Hambantota Port, and we would dovetail with the Port of Colombo to facilitate capacity enhancements. This is to ensure that Sri Lanka retains its position as the regional trans-shipment hub. Since the Sri Lanka Ports Authority is a shareholder of Hambantota International Port Group, we are confident that we could also work as partners in order to move forward and meet our common objective.