Sri Lanka aims to rival Singapore port
Sri Lanka aims to create an Asian shipping hub capable of competing against Singapore and Dubai by pouring US$3.4 billion into expanding ports with Chinese help, after the island’s container volumes surged to a record, reported MyPaper.
President Mahinda Rajapakse’s goal of capitalising on the end of a 26-year civil war to build a trade gateway to emerging markets makes shares in John Keells Holdings and Aitken Spence & Co a buy, said NDB Aviva Wealth Management.
Port revenue may almost triple to US$656.96 million in 2015 from last year, Standard Chartered estimated.
“Sri Lanka can transform its economy by boosting its port infrastructure,” said Ms Samantha Amerasinghe, a Colombo-based economist at Stanchart.
“Peace provides an opportunity (for it) to take advantage of a historic shift that will put the island at the centre of the biggest trade routes of the future.”
The government forecasts rising cargo levels will enable transportation, including ports, to make up 40 per cent of gross domestic product by 2020, a fourfold gain from last year.
Economic growth reached a 32-year high of eight per cent last year, amid Chinese investment in roads and harbours.
Rajapakse, whose armed forces defeated separatist rebels in May 2009, is seeking to take advantage of Sri Lanka’s position 31 km off India’s southern coast. There lie the main shipping lanes linking the Far East, West Asia, Africa and Europe.
Deeper berths, new terminals and increased efficiency in the capital, Colombo, and in southern Hambantota city will allow bigger, super-post-panamax ships to dock and transfer cargo more quickly to and from smaller vessels that carry goods for India and other emerging markets.
The government is seeking to close the gap with Singapore, the top container port in 2009, and Dubai, which ranked seventh, according to data from London-based Cargo Systems, a unit of Informa. Container volumes in Singapore were more than seven times higher than those in Colombo, which ranked 32nd.
John Keells stands to gain from managing a terminal at Colombo port and a 30 per cent stake in Maersk Lanka, a joint venture that includes Copenhagen-based A P Moeller-Maersk, said Bimanee Meepagala, analyst at NDB Aviva Wealth Management.
Louis Lu, an analyst at Aberdeen Asset Management Asia in Singapore, said that his company is confident that both John Keells’ and Aitken Spence’s port business will continue to be key beneficiaries in the long run, as they are “good proxies to the country’s postwar recovery, with solid balance sheets and experienced management teams”.
China has tightened its embrace of Sri Lanka by committing at least US$3.7 billion since 2005 to projects, from ports to a power plant. The island has attracted rising powers since the 16th century for its access to pivotal maritime links, leading to colonisation by the Portuguese, Dutch and British, until independence in 1948.
China pledged US$306.7 million in 2007 to the initial phase of the tax-free port in Hambantota, the highest among donors that also included the Asian Development Bank, Japan and Denmark, figures from Sri Lanka’s Ministry of Finance & Planning showed.
The island expects an $808 million loan from Export-Import Bank of China to help pay for the next leg, Sri Lanka Ports Authority engineer Agil Hewageegana said.
Container volume in Sri Lanka surged 22 per cent last year to 4.16 million TEUs, according to the ministry.
President Mahinda Rajapakse’s goal of capitalising on the end of a 26-year civil war to build a trade gateway to emerging markets makes shares in John Keells Holdings and Aitken Spence & Co a buy, said NDB Aviva Wealth Management.
Port revenue may almost triple to US$656.96 million in 2015 from last year, Standard Chartered estimated.
“Sri Lanka can transform its economy by boosting its port infrastructure,” said Ms Samantha Amerasinghe, a Colombo-based economist at Stanchart.
“Peace provides an opportunity (for it) to take advantage of a historic shift that will put the island at the centre of the biggest trade routes of the future.”
The government forecasts rising cargo levels will enable transportation, including ports, to make up 40 per cent of gross domestic product by 2020, a fourfold gain from last year.
Economic growth reached a 32-year high of eight per cent last year, amid Chinese investment in roads and harbours.
Rajapakse, whose armed forces defeated separatist rebels in May 2009, is seeking to take advantage of Sri Lanka’s position 31 km off India’s southern coast. There lie the main shipping lanes linking the Far East, West Asia, Africa and Europe.
Deeper berths, new terminals and increased efficiency in the capital, Colombo, and in southern Hambantota city will allow bigger, super-post-panamax ships to dock and transfer cargo more quickly to and from smaller vessels that carry goods for India and other emerging markets.
The government is seeking to close the gap with Singapore, the top container port in 2009, and Dubai, which ranked seventh, according to data from London-based Cargo Systems, a unit of Informa. Container volumes in Singapore were more than seven times higher than those in Colombo, which ranked 32nd.
John Keells stands to gain from managing a terminal at Colombo port and a 30 per cent stake in Maersk Lanka, a joint venture that includes Copenhagen-based A P Moeller-Maersk, said Bimanee Meepagala, analyst at NDB Aviva Wealth Management.
Louis Lu, an analyst at Aberdeen Asset Management Asia in Singapore, said that his company is confident that both John Keells’ and Aitken Spence’s port business will continue to be key beneficiaries in the long run, as they are “good proxies to the country’s postwar recovery, with solid balance sheets and experienced management teams”.
China has tightened its embrace of Sri Lanka by committing at least US$3.7 billion since 2005 to projects, from ports to a power plant. The island has attracted rising powers since the 16th century for its access to pivotal maritime links, leading to colonisation by the Portuguese, Dutch and British, until independence in 1948.
China pledged US$306.7 million in 2007 to the initial phase of the tax-free port in Hambantota, the highest among donors that also included the Asian Development Bank, Japan and Denmark, figures from Sri Lanka’s Ministry of Finance & Planning showed.
The island expects an $808 million loan from Export-Import Bank of China to help pay for the next leg, Sri Lanka Ports Authority engineer Agil Hewageegana said.
Container volume in Sri Lanka surged 22 per cent last year to 4.16 million TEUs, according to the ministry.