Lpi batch 12 assignments

IMPROVE SRI LANKA’S
LOGISTICS FRIENDLINESS
UNDER THE SIX PILLARS OF THE INDEX
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Contents
Introduction to LPI.........................................................................................................................................................4
Logistics Performance Index (LPI) is the weighted average the country scores on the following six key dimensions:-........5
1..............................................................................................................................................................................................9
Pillar 01 ...............................................................................................................................................................................9
The efficiency of the clearance process (speed, simplicity, and predictability of formalities) by border control agencies,
including customs. ..............................................................................................................................................................9
 Expansion of custom bond offices around the island...........................................................................................9
 Expanding the established EDI facility...................................................................................................................9
 Streamlining the payment of customs duties and penalties................................................................................9
 Paperless Trade and Moving Towards a Single Window ....................................................................................10
 Reduced variability of clearance time .................................................................................................................10
Pillar 02 .............................................................................................................................................................................12
The quality of trade- and transport-related infrastructure (ports, railroads, roads, information technology). ..............12
 Sea Port and Airport Development .....................................................................................................................12
 Expansion of Bandaranaike International Airport ..............................................................................................12
 Development of a second International airport at Mattala...............................................................................12
 Power & Energy....................................................................................................................................................13
 Telecommunication Infrastructure Development ..............................................................................................13
Pillar 03 .............................................................................................................................................................................13
The ease of arranging competitively priced shipments....................................................................................................13
Pillar 04 .............................................................................................................................................................................15
The competence and quality of logistics services (transport operators, customs brokers).............................................15
Lack of Proper Training Body for Wharf Clerks and Shipping Executives...................................................................15
Lack of Customer Orientated Approach......................................................................................................................16
Pillar 05 .............................................................................................................................................................................16
The ability to track and trace consignments.....................................................................................................................16
Developing the SLPA tracking system..........................................................................................................................16
Pillar 06 .............................................................................................................................................................................17
Timeliness of shipments in reaching destination within the scheduled or expected delivery time ................................17
Expediting the completion of Colombo south harbor project....................................................................................17
Enhancing Productivity at Unity Container Terminal..................................................................................................17
2............................................................................................................................................................................................19
01. SUPPORTIVE GOVERNMENT POLICIES.................................................................................................................20
02. A MARITIME HUB FOR THE INDIAN OCEAN ........................................................................................................20
03. INTRODUCTION LOCATION AND CONNECTIVITY ................................................................................................21

04. EDUCATED AND ADAPTABLE WORKFORCE.........................................................................................................21
05. SOCIAL INFRASTRUCTURE....................................................................................................................................21
06. Location and Connectivity.....................................................................................................................................22
07. ACCESS TO KEY MARKETS .....................................................................................................................................22
08. FAST DEVELOPING INFRASTRUCTURE...................................................................................................................23
Conclusion .......................................................................................................................................................................24
References........................................................................................................................................................................25

Introduction to LPI
A multi-dimensional assessment of logistics performance, the LPI of the World Bank, is an international
benchmarking tool focusing specifically on measuring the trade and transport facilitation friendliness of a
particular country, and in so doing, helping them to identify key barriers to, and opportunities for,
Improvement. The LPI summarizes the performance of countries through six dimensions that capture the
most important aspects of the logistics environment
The LPI provides not only a comprehensive assessment of logistics performance worldwide, but also an
analysis of performance trends which makes it possible to understand trends over time. Performance is
evaluated using a 5-point scale and the overall LPI is aggregated as a weighted average of the six areas of
logistics performance. The LPI also includes a set of domestic performance indicators which is not included
in the overall country score. It is also complemented with quantitative information on particular aspects of
international supply chains in respondents' countries of work, including import / export, lead time, supply
chain costs, customs clearance, and the percentage of shipments subjected to physical inspection (see
Figure 1).
The overall index is calculated by analyzing the six main sub-dimensions listed above. None of these
independently guarantee a good level of logistics performance, and their inclusion is conditioned to
empirical studies and extensive interviews carried out with specialists in international freight transport.
Measures performance along the logistics supply chain within a country and offers two different
perspectives: International and Domestic.
 International LPI: provides qualitative evaluations of a country in six areas by its trading partners -
logistics professionals working outside the country.
 Domestic LPI: provides both qualitative and quantitative assessments of a country by logistics
professionals working inside it. It includes detailed information on the logistics environment, core
logistics processes, institutions, and performance time and cost data.

Logistics Performance Index (LPI) is the weighted average the country scores on the following six
key dimensions:-
1) Customs: Measures agility clearance processes, in
terms of speed, simplicity and predictability of formal
issues conducted by customs control bodies.
2) Infrastructure: Evaluates the quality of maritime,
land, rail and air transport infrastructure (including
ports, roads, railroads, and IT). The perception held by
respondents about this infrastructure is valuated in
terms of the modes of transport together with storage
and moving goods.
3) International shipments: Measures the ease of negotiating competitive prices for sending.
4) Logistics quality and competence: Indicates the quality of logistical services, such as transport operators or
customs agents.
5) Tracking and tracing: Measures the follow-up and location of shipments. Identifying the exact location and
route followed by each good is relevant up to the moment of delivery to the final client. In this component,
all agents of the good’s supply chain are involved; therefore, traceability is the result of global action.
6) Timeliness: Refers to the exact time of shipment delivery. It is important to consider this factor because
due to the high degree of existing competition, not meeting the established times is unacceptable.
This measure indicates the relative ease and efficiency with which products can be moved into and inside a
country. The scorecards demonstrate comparative performance of all countries (world), regional and income
groups.
These indicators can be divided into two main areas: (1) regulatory policies (customs, infrastructure and
logistic quality and competence), and (2) service delivery performance outcomes (timeliness, international
shipments, and tracking and tracing). The first concerns the distribution chain, while the second determines

the efficiency of the service. Each component is key to determining competitiveness in international trade
within each country.
It is interesting to note that Sri Lanka made significant progress in all six indicators. This performance is in
line with the Sri Lankan government's push for infrastructure development and other related matters, such
as the improvement of dwell time in Sri Lankan ports (which has now fallen below four days).
It suggests policy actions for improving individual components in the index. A novel mathematical model is
proposed in order to find an eligible number of scenarios, and the results of this proposed model are used to
determine the most important logistics performance indicators that influence the export level of the
country.
The international score uses six key dimensions to benchmark countries' performance and also displays the
derived overall LPI index. The scorecard allows comparisons with the world (with the option to display
world's best performer) and with the region or income group (with the option to display the region’s or
income group's best performer) on the six indicators and the overall LPI index.
LPI in Sri Lankan Context
Sri Lanka has made a significant not improvement in the World Bank's 2018 Logistics Performance Index (LPI)
compared to the index of 2014 / 2016. The World Bank has recently released its biennial report on logistics
performance index for 2018. For Sri Lanka, the findings are quite disappointing. The report shows that the
overall ranking of Sri Lanka in the area has gone down to 94th from the previous 86th position in the global
ranking of 160 countries in 2016, With a Score of 2.60 out of 5. Germany topped the rankings with an
impressive score of 4.20. In the year 2016 Sri Lanka had scored 2.68. The World Bank revises the LPI ranking
biennially. Sri Lanka ranked 81st in the LPI ranking in 2012, but dropped to 94 in 2018 as a result of
tightening sanctions, which ranking has been improving ever since.
This has happened despite the fact that Sri Lanka needs to swiftly expand its logistic facilities as a fast
growing economy, aspiring to become an upper middle-income country soon. There has been a downward
slide for Sri Lanka in two of the six indicators, which indicate a weakening in those areas. On the Timeliness
criterion, Sri Lanka has slipped to 122th position from the earlier 87th. In case of Logistics competence, the
slide has been 42 notches - from 67th to 109th. In case of International shipments, the slide has been 9
notches - from 103rd to 112th. The best imp romance out of six was on Infrastructure whose ranking has

gone up 38 notches - 85th from the previous 123rd. However, the ranking has slightly improved only in case
of Customs, Tracking & tracing. (See figure 2).
Figure 2: Sri Lanka Performance in the LPI per Indicator
Sri Lanka fare better in four sub-indexes while the performance in infrastructure and international
shipments worsened in the last two years. Customs performance went up to 2.58 from 2.52 while the
Tracking & tracing inched up to 2.79 from 2.71. The best performance out of six was on Infrastructure whose
score rose to2.49 from 2.24. However, Timeliness performance fell to 2.79 from 3.08 of 2016 while the sub-
index measuring the ease of arranging competitively priced Logistics competence also went down to 2.42 in
2018 from 2.84 in 2016. International shipments score down to 2.51 in 2018 from 2.62 in 2016.
Learning’s from LPI report named Connecting to Compete by Word Bank identifies fact based policy making
as one of the key changes needed to be adopted by governments. Logistics performance of the country and
its economic footprint should be measured and understood. Establishing and associating professional and
academic institutions to generate the factual understanding of a country’s logistics function is indeed of
paramount importance to Sri Lanka as well. One of the key things to ponder from the LPI and its
corresponding report is that Sri Lanka and similar non-high income countries can outperform their peers in
high income category by focusing on logistics improvement in identified critical areas.
In South Asia, Sri Lanka ranks at the three position. India with a global ranking of 44th position tops the
South Asian rankings. It scored (3.18) in the LPI and Maldives with score of (2.67) are above Sri Lanka in the
ranking. Bangladesh, Nepal, Pakistan, Bhutan and Afghanistan are at the bottom fifth places in South Asia
with the scores of 2.58, 2.51, 2.42, 2.17 and 1.95 respectively. Globally, Germany retained its top position in
the ranking for the fourth consecutive editions of the LPI with a score of 4.2. Regrettably, Sri Lanka ranking
even among the South Asian countries has to 3rd from the earlier 4th. India leads the pack in the South Asia
region with a ranking of (44th), followed by Maldives (86th). Only the landlocked countries Bangladesh
(100nd), Nepal (114th), Pakistan (122th), Bhutan (149th) and Afghanistan (160th) are behind Sri Lanka.

Country overall
LPI score
overall
LPI rank
Customs Infrastructure International
shipments
Logistics
quality and
competence
Tracking
and tracing
Timeliness
score score score score score score
India 3.18 44 2.96 2.91 3.21 3.13 3.32 3.50
Maldives 2.67 86 2.40 2.72 2.66 2.29 2.60 3.32
Sri Lanka 2.60 94 2.58 2.49 2.51 2.42 2.79 2.79
Bangladesh 2.58 100 2.30 2.39 2.56 2.48 2.79 2.92
Nepal 2.51 114 2.29 2.19 2.36 2.46 2.65 3.10
Pakistan 2.42 122 2.12 2.20 2.63 2.59 2.27 2.66
Bhutan 2.17 149 2.14 1.91 1.80 2.35 2.35 2.49
Afghanistan 1.95 160 1.73 1.81 2.10 1.92 1.70 2.38
Figure 3: Ranking of SOUTH ASIAN Countries in the Logistics Performance Index - 2018
LPI can be used to benchmark a country’s logistics performance against the best in class performers in the
world and the Asian region. In Sri Lanka’s case, the most critical areas for development are the customs,
infrastructure and tracking and tracing related to logistics
Country Sri Lanka LPI Rank ( 2007 to 2018)
2007 2010 2012 2014 2016 2018
1 Singapore 1 2 1 5 5 7
2 Netherlands 2 4 5 2 4 6
3 Germany 3 1 4 1 1 1
4 Sweden 4 3 13 6 3 2
5 Japan 6 7 8 10 12 5
6 Hong Kong, China 8 13 2 15 9 12
7 Finland 15 12 3 24 15 10
8 India 39 47 46 54 35 44
9 Sri Lanka 92 137 81 89 - 94
10 Somalia 127 155 - 160 158 144
11 Afghanistan 150 143 135 158 150 160
12 Greece - 54 69 44 - 42
13 Vietnam 37 53 53 48 - 39
Figure 3: LPI Comparison Rank in Sri Lanka

1
World Bank has ranked Sri Lanka in the 94th position according to the logistics performance index. As per the
question this response will examine and detail the actions initiated by the Sri Lankan government and its
logistics industry under the six pillars pf the logistics friendliness index.
Pillar 01
The efficiency of the clearance process (speed, simplicity, and predictability of
formalities) by border control agencies, including customs.
 Expansion of custom bond offices around the island
As per subject heading Sri Lanka is an island and trade is dense around commercially developed cities such as
Colombo, Galle, Kandy, Kurunagala and north after the post war scenario.
There has been slight expansion in the custom bond houses in areas of the western province such as
Peliyagoda, Blomendhal and Kelaniya and Katunayaka in the Gampaha province. However factors to be argued
is what facilities have been extended to the balance 10 provinces. Measures to be taken custom bond houses
provincially will help reduce congestion at Colombo and will help a drastic increase in the LPI for Sri Lanka
 Expanding the established EDI facility
Customs EDI has been implemented few years back for the benefit of the consignees to submit manifest and
import entries as and when good arrived. However it is now observed that technology is used very limited.
Apart from air cargo village which uses the facility to the full potential some needs to be implemented and
custom long-room and customs bonds division for uniformity. Streamlining this procedure will help Sri Lanka
increase LPI index
 Streamlining the payment of customs duties and penalties
Even the world trade has expanded and simplified the payment procedure by documentary credits / direct
remittance and swift transfers. Sri Lanka customs is still holding on to the traditional procedure where the
consignees need to rush to the bank and need to obtain pay orders. By standard most shipments delay since
the consignees are unable to obtain pay order from banks on time. Thereby taking to consideration the
payment procures the Sri Lanka Customs need to adapt to same to improve LPI.
QUESTIOS
N
Discuss the actions Sri Lanka has taken during past half a
decade to improve Sri Lanka’s logistics friendliness under the
six pillars of the index

 Paperless Trade and Moving Towards a Single Window
A “Single Window” (SW) facility enables all parties involved in trade and transport to lodge all necessary trade-
related documents and information to be submitted once, at a single entry point to fulfill all trade and
regulatory requirements. This also allows for sharing of information, standardized information and documents
and coordinated controls and inspection. The benefits of a SW/paperless system are vast. Moving to such a
system is also challenging, with the need among others to,
(i) Analyze and standardize national data,
(ii) Have an enabling legal framework,
(iii) Inter-agency collaboration, and
(iv) Have an enabling technical and management system. Hence, the need for a SW project to be
included into a national trade facilitation strategy of the country and a clearly identified national
focal point to drive such a program in Sri Lanka. Technical assistance and expertise can be drawn
from countries like Singapore and Korea, who have established Single Windows in their countries.
 Reduced variability of clearance time
Even though average clearance times have not changed significantly, Sri Lanka customs clearance has
improved as a result of a decrease in the variability of clearance times. Simplification and automation of
customs procedures, increased productivity gains due to improved IT capability, and investment in improved
management and human resources capability have all contributed to this improvement.
Sri Lanka Customs has initiated several programs to reduce documentation and clearance times in the trading
process, such as the recent ‘Sri Lanka Customs Paperless Exports Clearance Initiative’. Once implemented, the
Customs expects the number of documents in the export process to decrease from the current 12-16
documents, to 4-5 documents. Some of the initiatives under this program include,
(i) Warranting the Customs Declaration (CUSDEC) form without the paper copy being submitted to
Exports Office. Introduced in December 2013, e-warranting is however, still at the initial stages
with a limited number of exporters currently using this facility;
(ii) Calculation and payment of all charges including the fee for Panel Examination will be done in one
instance rather than having to make payments at different points of the process.

(iii) Establishment of Centralized Cargo Examination facility. Currently being developed within close
proximity to the port, this will enable the cargo to be examined at the central facility rather than
having a customs officer visit individual factories to carry out the panel examinations; and
(iv) Better utilization of the Green Channel. The customs introduced the green channel system to
facilitate the low-risk consignees. Currently being tested with 35 selected importers, it is to be
extended to about 100 importers shortly. The system is expected to reduce the turn-around time
by 6-7 hours. In 2012, from the 189,617 import CUSDECs (home use) registered at examination
points, close to 50,000 cargo containers with low risk commodities were released under green
channel clearance.
With growing trade volumes and changing operating environments, customs modernization is vital in meeting
the often dynamic challenges which include:
I. Sophisticated and demanding clients who have invested significantly in modern logistics, inventory
control, manufacturing, and information systems.
II. Policy and procedural obligations that is associated with international commitments.
III. Proliferation of bilateral and regional agreements which increase the complexity of the
administration of border formalities and controls.
IV. Security concerns including threats from organized crime and terrorism.
V. Widespread revenue fraud.
In the process of modernizing the customs, it is necessary for Customs in countries like Sri Lanka where
revenue collection is a major objective, to find an appropriate balance between trade facilitation and
regulatory control.
In terms of trade facilitation in Sri Lanka, research studies such as those carried out by IPS highlight key areas
that need improvement in facilitating trade. The necessary interventions broadly include:
(i) The need to take forward the computerization and automation of trade procedures and have a
fully automated system in order to minimize human intervention, reduce documentation and time
taken to trade;
(ii) The necessity of a change in mind-sets to embrace new technologies,
(iii) Enabling customs clearance during weekends and holidays; and
(iv) Having all trade-related agencies that need to be visited to get approvals, permits and other
documentation under one roof.

Pillar 02
The quality of trade- and transport-related infrastructure (ports, railroads, roads,
information technology).
The ports and airports have well established in Sri Lanka half a decade earlier and also have commissioned and
operated two highways namely the southern expressway and the airport expressway ,whilst these
infrastructures have immensely contributed towards the elevation of the infrastructure towards transport ,
We also await completion of the central expressway due to be opened 2019 first quarter
However, The Sri Lankan government has launched an ambitious program of physical infrastructure
development to completely upgrade the sea, air, road, power and telecom backbone of the country. The
following are the main features of this program
 Sea Port and Airport Development
The Sri Lankan government has declared its intention to develop the country as a leading regional aviation,
navigation and trading hub in South Asia. Therefore, the development of maritime & aviation
transportation is at the forefront of the government's infrastructure development agenda. The focus of
these developments is to expand the capacity and improve the efficiency of existing ports through
modernization and construction of new ports and airports in strategic locations.
 Expansion of Bandaranaike International Airport
A project is under way to expand the island's first international airport at Katunayake, 35 km north of
Colombo. The project includes the expansion of the transit area, construction of new baggage-reclaim
area, multi storied car park and widening of the existing runway. A feasibility study is being carried out for
a second runway.
 Development of a second International airport at Mattala
The construction of the new international airport at Mattala in the southern Hambantota district is carried
in two phases. The first phase was completed and opened on 18th March 2013. That includes one runway
and a taxi way that will be expanded in the second stage to allow for larger planes, including the latest

airbus A380, to land. This air port will open up the vast southern and eastern areas of Sri Lanka for
development including tourism projects. The airport will be in close proximity to the Hambantota port.
 Power & Energy
Development of power & energy sector is a key aspect of the government's infrastructure development
agenda and long term strategies have been introduced with active participation of the private sector, as a
key component.
Norochcholai Coal Power Project
The construction of first phase of the Norochcholai Coal Power Plant (300 MW) was completed by end of
2010 and was added to the national grid by end of March 2011. The second phase will add another 600
MW to the national grid.
 Telecommunication Infrastructure Development
SEA-ME-WE IV
Sri Lanka is connected to the South East Asia-Middle East-West Europe 4 (SEA-ME-WE IV) project, the
submarine cable system linking South East Asia to Europe via the Indian Sub-Continent and Middle East.
The project aims to take these regions to the forefront of global communication by significantly increasing
the bandwidth and global connectivity of users along its route between Singapore and France.
Pillar 03 The ease of arranging competitively priced shipments.
The liberalization of effective entry barriers for foreign firms to Sri Lanka’s shipping and freight forwarding
industry was debated via the 2018 Budget which hailed as a courageous move by many logistics experts.
It was pointed out that Sri Lanka will not be able to call itself a logistics hub, and attract business without
significant presence of global players in Colombo.
It is nearly impossible to think of any major hub, which has succeeded without substantial
investments/presence of global firms and them being active on ground. These firms will be reluctant to put
money into a destination if they are only minority shareholders,” experts said.

The presence of global third party logistics firms in Sri Lanka according to these experts will enhance the brand
value of Sri Lanka as a location.
“It will increase the confidence the multinational manufacturing firms have about Colombo, and will be more
willing to use Colombo as a destination where they will be willing to carry out some of the value added
logistics functions (e.g. packaging, labelling, quality checking, simple assembly) etc,” experts said.
According to them one of the key factors that help attract logistics business to locations like Singapore is the
presence of global leading third party logistics firms.
“These firms also bring new technology, new knowledge about logistics and supply chain management and are
experienced in managing highly sophisticated and complex supply chains for their clients. It is the trust the
global firms have in their logistics companies that make them outsource key logistics and supply chain
functions. Hence, the presence of such firms will be a huge value add to the location advantage of Sri Lanka,”
the logistics industry experts emphasized.
They will also help market Sri Lanka as a destination for logistics- which is critical to get business. It is far easier
for such firms with their global presence and networks, than for local firms
At present, Sri Lanka is operating far below its potential, especially in terms of logistics. Therefore, it is
important to remove all constraints that are present, which prevent us from reaching our potential.
However admits above potential benefits after continuous lobbying by CASA and SLAFFA the decision to
liberalize the shipping industry was not pursued by the government. This has invariably impacted the industry
as many lines are being held and controlled by few large agency houses which have a monopolistic behavior in
offering rates
The ease of arranging shipments is the weakest LPI dimension for Sri Lanka. There has been only limited
improvement over time since 2014. On this subcomponent Sri Lanka ranks 112th out of 160 countries in 2018
LPI. For mitigate this kind of decreases,

 Sri Lankan government diminishes quantity restrictions (commonly known as import quotas.
 Routing and scheduling of trucks should be planned properly. And, a unified database should be
designed to track all shipments.
 Sri Lankan government should establish a structural body to control warrants and licenses of
transportation activities quite unknown to many, a crucial factor is evident in container statistics of
Sri Lanka. 28% percent of domestic containers handled are empty containers .This does not generate
any income to shipping lines but creates a substantial cost. The imbalance that causes the need for
empty reposition is primarily due the fact that the country’s export volume is only 35% percent of
external trade compared to 65 percent of imports against the total laden movements. Therefore
obviously the surplus empty container units should be evacuated from Colombo. However another
paradox is that 35,889 and 41,385 TEUs of empty containers have been imported into the country, in
addition to the surplus empties already stored in Colombo. This is due to complexity in demand for
20 foot and 40 foot containers as demanded by different commodities. A carrier may have a surplus
of 20 foot units in stock but a deficit in 40 foot units. This is due to the fact that majority of import
commodities are stuffed in 20‟s while exports from SL predominantly demand 40‟s.
Pillar 04 The competence and quality of logistics services (transport operators, customs brokers).
This factor evaluates the overall level of
competence and quality of logistics services
(e.g. transport operators, customs brokers,
etc). The level of Sri Lanka has Decrease by 43
indexes since last two years. It is a negative
sign regarding logistic performance.
Lack of Proper Training Body for Wharf
Clerks and Shipping Executives
Today any new comer to the logistics industry will have to commence work with hands on training only. Such a
situation would only cause errors, delays and penalties to the shipment but not a professional approach this
also leads to purposeful misleading of consignees and shippers by the untrained staff leading to customer
dissatisfaction and panic. The most appropriate measure would be establishing a training organization to
improve these lapses of newcomers entering the industry.

Lack of Customer Orientated Approach
Many logistics providers today will be most clients orientated till they obtain the business only. Upon
obtaining same the logistics provider will work on deadlines suitable for the operator only. This lack of attitude
in pleasing and satisfying the customer will not help development of future business dealings. Leaders and
heads of organizations identifying and addressing these scenarios will help maintain healthier customer
relations improving creating more continuous business.
Despite the growth of the logistics industry, the availability of skilled work force in the sector is scarce, leading
to inadequate management, especially at the tactical and strategic levels. The Turkish logistics sector generally
suffers from poor organizational skills, lack of leadership, lack of alignment between positions and skills and
lack of sufficient research and development activities. The transport and logistics industry appears highly
unattractive to workers due to its poor image, extreme working conditions, low pay scale and lack of clearly
defined career path. Incentives to support professional training and higher education in areas of logistics and
transport are scarce. The most immediate requirement for skill development is in the technical and middle
management levels.
Pillar 05 The ability to track and trace consignments
Tracking and tracing measures the performance of technology used to follow-up the consignments’ movement and
reach.
Developing the SLPA tracking system
The SLPA has implemented a track and trace system for container getting loaded and unloaded to vessels. Currently
there is an online system in place for consignees to log in and track as to what has happened to their units. However the
system will only advise a very limited extent of feedback. The system fails advice consignees when the units are loaded,
date of sailing, date of stacking etc. More availability of information will help shippers and consignees advise their load
and discharge ports on the current status of shipment accurately.

Pillar 06 Timeliness of shipments in reaching destination within the scheduled or expected delivery time
Timeliness of shipments in reaching destination measures how reliably shipments meet the promised delivery
times. Sri Lanka’s performance on timeliness of shipments is relatively low compared to most peers. The score
has decreased significantly since 2014. Shipment times depend on the nature of the product, planning and
management, logistics services, distance to customers and suppliers, but also on external factors such as
supply chain disruptions related to political risks or weather conditions.
Expediting the completion of Colombo south harbor project
As we all know the current ports authority struggles to accommodate all container carriers calling port of
Colombo on arrival. A standard berthing delay of at least 12 hrs- 18 hrs is expected on berthing this is mainly
due to the limited berths available. Swift completion of the Colombo south harbor project is much required to
minimize berthing delays so all vessels get accommodated on arrival will definitely help boost the LPI.
Enhancing Productivity at Unity Container Terminal
Today within the SLPA facility we have four main berths and two conventional berths for cargo loading and
discharging. The UCT is a with two berth currently very low on productivity due to insufficient cranes and the
ports authority is very reluctant to berth vessels due to lack pier strength at UCT. This is a resource freely
available with the ports authority if the authorities take initiative to develop this berth this will enhance the
turnaround of vessels and help boost the throughput of the port directly helping the growth of the LPI

Reducing transport network system vulnerability the need to reroute shipments due to political instability and
war in neighboring countries has been one of the major reasons for delays in delivery times.

2
“Logistics performance is about achieving reliability of supply chains linking economies to markets. In the most
constrained countries the needs focus on infrastructure, or critical improvements in customs and border
management,” in 2018 Germany is the 1st
rank for LPI and the 2nd
and 3rd
positions secured Sweden and
Belgium. When we comparing the Germany and the Sri Lanka performances, Sri Lanka being a 94th
position in
the LPI 2018.For increasing the LPI positions Sri Lanka needs to uplift there 6 pillars identified by the LPI.
Sri Lanka has introduced the vision called VISION 2025 there Sri Lanka exercised their franchise in a decisive
manner, marking historic milestones in our country’s journey. People in the north, south, east, west, and
centre came together to vote for: a change in Sri Lanka’s political culture against the politics of ethnic and
religious division and against extremism on all sides; against impunity; for a strong democracy; for the rule of
law and good governance; for reconciliation and sustainable peace; equality; upholding, promoting and
protecting human rights of all and the pluralistic nature of our society; and for inclusive and equitable growth
and development of the country. These were the aspirations of the people of Sri Lanka who voted to send a
message to those who they elected that the promise of strong democracy and democratic institutions, the
promise of reconciliation and sustainable peace and the promise of development, must be fulfilled.
Sri Lankan government takes several actions to overcome the LPI standards, such as
Compare Sri Lanka’s actions with that of the top three performers
of the index, provide your comments on how Sri Lanka’s approach
should be during the next half a decade.
QUESTIOS
N

01. SUPPORTIVE GOVERNMENT POLICIES
 Sri Lanka pioneered South Asia's economic liberalization over three decades ago. Liberalizing many
areas of the economy, the government has embraced strategies and policies that are more than
conducive for international investment. In fact the policy environment is undoubtedly, compelling.
 The following transparent investment laws aim to foster foreign direct investments.
 Total foreign ownership is permitted across almost all areas of the economy.
 No restrictions on repatriation of earnings, fees, capital, and on forex transactions relating to current
account payments.
 Safety of foreign investment is guaranteed by the constitution.
 Existence of a transparent and sophisticated legal and regulatory framework. Covering all prerequisite
business law enactments.
 Bilateral investment protection agreements with 28 countries and double taxation avoidance
agreements with 38 countries.
 Sri Lanka is a founder member of the Multilateral Investment Guarantee Agency (MIGA), an investment
guarantee agency of the World Bank. This provides a safeguard against expropriation and non-
commercial risks.
02. A MARITIME HUB FOR THE INDIAN OCEAN
Many ports in South Asia and East Africa remain relatively under-developed, while others such as Singapore
and Dubai do not enjoy Sri Lanka’s strategic location to be able to facilitate trade in the Indian Ocean to the
same degree.
This briefing note outlines the key factors that make Sri Lanka a maritime hub in the region;
 Strategic location and strong connectivity to international shipping routes
 Shifts in global shipping trends –a higher proportion of world trade has shifted towards Asia and larger
vessels preferring to call only fewer hub ports
 Increased investment in Sri Lanka’s logistics infrastructure – new terminals with the capacity to handle
the largest categories of vessels
 Expanding preferential trade access
 Improved air connectivity for facilitating multi-modal transport
 Enabling technology, processes and legislation – adopting digitised systems, favourable regulatory
changes and better inter-institutional integration with reduced bureaucracy

03. INTRODUCTION LOCATION AND CONNECTIVITY
Located in the Indian Ocean, bordering on the equator, the island of Sri Lanka boasts of a rich history of
civilization, rulers, religion, traditions and marvels of engineering. A 30,000 year history beginning with the
“Balangoda Manawaya” to the present Democratic Socialist Republic of Sri Lanka, the country has had its fair
share of influences but has always remained true to its identity of being the “Pearl of the Indian Ocean”.
 Sri Lanka is situated at the crossroads of major shipping routes connecting South Asia, Far East and the
Pacific with Europe and the Americas. Sri Lanka is strategically located next to the fast growing Indian
sub-continent with close proximity to Southeast Asia and the Middle East. The country has strong air
connectivity with over 100 weekly flights to India alone.
 Sri Lanka is connected to the SEA-ME-WE III and IV (South East Asia – Middle East – Western Europe)
fibre optic communication backbone with over 11 communication satellites orbiting above the south of
the country.
04. EDUCATED AND ADAPTABLE WORKFORCE
 Sri Lanka possesses the most literate population in South Asia and one of the highest in the developing
world with a literacy rate of 92.2% (91.1% and 93.5% respectively for females and males).
 Extensive investment in public education has produced a workforce that is not only competent but
intelligent, trainable and comfortable with high tech production and services.
 Approximately 50% of the students who have completed higher education are trained in technical and
business disciplines. English is widely spoken and is the main language used by the business community.
 Well educated and energetic, skilled and semi-skilled human resources are readily available at
competitive wage rates.
05. SOCIAL INFRASTRUCTURE

 Sri Lanka leads the South Asian region in human development indices with its high literacy rate and
national health indicators. The country boasts a life expectancy of 70.3 years for males and 77.9 years
for females and an infant mortality rate of 8.5 per 1,000 live births, which ranked it 92 of 186 countries.
 Sri Lanka is a firm proponent of international laws and UN's rights of labour, children and women. The
country has an edge over its regional competitors because of its stringent adherence to child labour
laws and endorsement of gender equality.
06. Location and Connectivity
 Sri Lanka is situated at the crossroads of major shipping routes connecting South Asia, Far East and the
Pacific with Europe and the Americas. Sri Lanka is strategically located next to the fast growing Indian
sub-continent with close proximity to Southeast Asia and the Middle East. The country has strong air
connectivity with over 100 weekly flights to India alone.
 Sri Lanka is connected to the SEA-ME-WE III and IV (South East Asia – Middle East – Western Europe)
fibre optic communication backbone with over 11 communication satellites orbiting above the south of
the country.
07. ACCESS TO KEY MARKETS
Sri Lanka is the only country to have Free Trade Agreements with both India and Pakistan, giving duty free
access to over 1.3 billion consumers from the island.
 The Indo-Sri Lanka Free Trade Agreement (ISLFTA), which came into effect in year 2000, provides
strategic access from Sri Lanka for over 4,200 products (at zero duty) to India, which is the world's
second most populous market. The Pakistan – Sri Lanka Free Trade Agreement (PSLFTA), which came
into effect in year 2005, provides strategic access from Sri Lanka for nearly 4,500 products (duty free
from 2008) to the Pakistan market.
 Since the agreement was signed bi-lateral trade between Sri Lanka and India have grown more than 5
times and bi-lateral trade between Sri Lanka and Pakistan have grown 3 times.
 In order to qualify under the two free trade agreements products need to be wholly produced or have
a domestic value addition of 35% value addition FOB level.
 The HScode transformation needs to be at the 4 digit level for the ISLFTA and 6 digit level PSLFTA. Both
agreements require sufficient process. For more details, please click here : ISLFTA, PSLFTA

 In addition, by locating in Sri Lanka, a company can gain preferential trade access to two large regional
blocs under the South Asian Free Trade Area (SAFTA) and the Asia–Pacific Trade Agreement (APTA).
08. FAST DEVELOPING INFRASTRUCTURE
The Sri Lankan government has launched an ambitious program of physical infrastructure development to
completely upgrade the sea, air, road, power and telecom backbone of the country. The following are the
main features of this program:
 Sea Port and Airport Development
 Colombo Megapolis
 Development of High Mobility Road Network
 Power & Energy
 Telecommunication Infrastructure Development
Due to our geographical location Sri Lanka can serve
more than 17 Feeder points in the region

Conclusion
When we analyze the Top performing countries, they have remained relatively consistent since 2010. The top
15 performing countries have changed only marginally since 2010, and include dominant players in the supply
chain industry, such as Germany, the Netherlands, and Singapore. The 2016 report ranked Germany the
highest and Syria the lowest. Countries at the bottom of the rankings are either fragile economies affected by
armed conflict, natural disasters, political unrest, or geographic constraints.
Using LPI index for the 160 competitors it has been observed that Sri Lanka is in 94th rank. The top performers
are in general the leading exporters and importers worldwide (Germany, Sweden, and Belgium). Furthermore,
they are the strongest competitor’s international trade.
Sri Lanka showed not sufficient performance in international shipment and infrastructure aspects. On the
other hand Sri Lanka presented a relative good Tracking performance. Furthermore when Sri Lanka is
compared with the countries in its own clusters it may be observed that the Sri Lanka has been ranked bellow
competitors such as India, and Maldives.
Moreover, multiple comparisons of means among clusters have revealed that Shipment cost and Logistics
competence is key indexes which distinguish areas where Sri Lanka has shown large inefficiencies.
In terms of public policies, the results reveal that is important to reduce the bureaucracy and to improve
infrastructure on logistics activities. Hence in order to overcome the logistic obstacles of Sri Lanka, there needs
to be investment in projects which become less bureaucratic and more efficient customs procedures inasmuch
as they might improve port, rail and road infrastructures.
The reform of the customs aspects implies less initial investment and short-term benefits. Therefore, a
strategy that might improve logistic performance of Sri Lanka would be to focus upon reforms since initial
infrastructure investments are large and the benefits are usually long-term. Only the investment in
infrastructure might not ensure the logistic performance improvements which enable us to conclude that even
though these investments are necessary, they might not be sufficient.

References
https://lpi.worldbank.org/international/aggregated-ranking
Sri Lanka Customs, 2013, Sri Lanka Customs Annual Performance Report 2012, Sri Lanka Customs.
De Wulf, Luc and Sokol, Jose B, 2005, Customs Modernization Handbook, The World Bank.
Woo, Yuen Pau and Wilson John S, 2000, Cutting Through Red Tape: New Directions for APEC’s Trade
Facilitation Agenda, Asia Pacific Foundation of Canada: Vancouver.
file:///C:/Users/LIOC/Downloads/Publishedarticle.pdf
http://www.pajcci.com/Downloads/LPI%20Ranking%20Pakistan%20vs.%20Iran.pdf
file:///C:/Users/LIOC/Downloads/Logistics_Competencies_Skills,_and_Training_A_Global_Overview%20(2).pdf
https://www.researchgate.net/profile/Lalith_Edirisinghe/publication/269517659_Converting_Sri_Lanka_into_
a_Commercial_Hub_in_Asia_An_assessment_of_postwar_progress_with_insights_to_the_way_forward_-
_A_Case_Study/links/548d976f0cf2d1800d82c8bd/Converting-Sri-Lanka-into-a-Commercial-Hub-in-Asia-An-
assessment-of-postwar-progress-with-insights-to-the-way-forward-A-Case-Study
- Mohamed Mufaris -
Batch 12- Assignments
Individual assignment
Date of submission: 5th October 2018

Lpi batch 12 assignments

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