Financial Daily from THE HINDU group of publications
Wednesday, Sep 18, 2002
`India must emulate China ports model'
CHENNAI, Sept 17
THE country should try to replicate China in creating more infrastructure including ports for better and faster economic growth. Ports should not be looked at in isolation, but should be treated as part of the economic activity, according to Mr B. Sridhar, Chairman, CII (SR) Port Group, and Director, Bengal Tiger Line Pvt. Ltd.
He was briefing media after the recent CEOs' study mission on ports' competitiveness and networking to Hong Kong and China.
One-third of China's exports were now containerised, compared to over half of exports in the West. China's containerised trade was expected to rise by over 20 per cent every year over the next three years, reaching 40 million TEUs (twenty foot equivalent units) by 2005.
Further, under the Tenth Plan (2001-05), China planned to build 80-100 container berths, adding 20 million TEUs of handling capacity across the country. "This is a clear indication of supply-driven market economy compared with India, which is a demand-driven economy,'' he said.
The Chinese strongly believed that demand would follow when a good infrastructure was in place, and would play a critical role in reducing the transit cost of a product. Thanks to the creation of such infrastructure, the mission members could travel the 400-km distance between Ningbo and Shanghai within four hours. Worldwide, ports are emerging as significant contributors for the growth of GDP of the respective economies. Ports play a major role in enhancing the efficiency of the users and meeting the high expectations with respect to delivery period,'' he said in a release. The Hong Kong port contributed over 20 per cent of the country's GDP, he added.
India should learn from Hong Kong on efficiency, planning, innovation and initiatives related to technology. The size of Hong Kong port would be about 1/10th of the total Indian ports (without hinterland), but it handled six times more containerised cargo than India's entire 11 ports put together.
The Kwai Chung Container Port area of Hong Kong was an example for the "nearest perfect market dynamics''. The prices of services provided were determined by market forces and not by regulators. Further, the market was structurally driven and motivated by competition.
Referring to the pricing policy of Shanghai and other Chinese ports, Mr Sridhar said it (pricing) was volume driven - the higher the volume, the lower the price. This gave an opportunity to the users to choose the ports based on its competitiveness alone. In India, it was under the regulatory framework, which had its own benefits and disadvantages, he said.
The creation of special economic zones (SEZs) in and around the ports in China had a tremendous impact on reduction of time and cost and improved efficiency of the companies located within SEZs. The ports had also benefited in terms of incremental volumes. This was one area in which the Indian ports had not been successful so far.
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