Sri Lanka?s Dockyard in talks with Croatian shipbuilders

Colombo Dockyard Ltd. (CDL) is having talks with Croatian investors on setting up ship building facilities in Sri Lanka according to a government minister. Investment promotion minister Sarath Amunugama said negotiations on the Croatian investments had taken place between officials of the two countries last week.

Croatia is one of the world?s top six ship building nations but its yards have been struggling in recent years because of rising costs and have required state aid. The talks were being held with CDL, a subsidiary of Japan?s Onomichi Dockyard Co., and the location for the proposed ship yard would be in Hambantota where a new port is to be built.

China has agreed to fund up to 85% of the Hambantota port which will be built by a Chinese consortium consisting of China Harbour Engineering Company and Sino Hydro Corporation. Construction work is expected to start in three months.

The government wants to start the port project with a bunker terminal and make it an industrial port and later build container terminals for transshipment cargo. CDL has said its marketing efforts were winning more orders but lack of space in the Colombo port was holding back expansion.

Shipbuilding has moved away from Europe because of high costs, mainly of labour, and has shifted to Asia, hence the interest in Sri Lanka. Former East European yards like in Croatia are also losing their competitiveness as their economies get integrated into the European Union. Croatia has also expressed willingness to invest in the ship-building sector in Iran recently because of its cheap workforce.