Vizhinjam, the silver bullet?

The work on one of the costliest infrastructure projects Kerala has ever seen--Vizhinjam deep see port-is going on at a hectic pace. It presents an opportunity for inclusive and ecologically sound development but that outcome is not automatic, as it calls for concerted efforts on a sustained basis

India's vast 7,517-km coastline with 12 major ports, including Jawaharlal Nehru Port Trust, Chennai, Kochi and Tuticorin, and transportation of 70 per cent of the nation's cargo through water ways are a signal for increasing investments in shipping.  In this landscape, Vizhinjam offers a promise as a transshipment hub in the tradition of Singapore and Colombo, especially for containers carrying a host of cargos. The crucial question is if this is also a recipe for lifting Kerala into the 21st century for the welfare of the people and the environment. The answer is a qualified yes.

India's initial natural advantage in port development and shipping has been analytically laid out by Thiruvananthapuram MP Shashi Tharoor who also finds that the uncompetitive place that the country found itself post-independence owed squarely to East India Company's strategy to control ports and trade as a way to conquer India. That history also reveals that the early advantages might still be regained. Vizhinjam's unique edge is that it has a natural deep draft of 20 meters within one nautical mile and the minimal need for maintenance dredging.  The port development project can be done at a Rs 7525 crore cost.  The concession agreement signed with Adani Vizhinjam Port in mid-2015 and the target completion of construction by end 2019 are a good start.  

Vital would be the state's continued priority for the project, which was signaled when the Chief Minister named Vizhinjam as one of the 12 major state initiatives in 2017, and this direction needs to be followed through. Key is also public support for the enterprise, because it is not just about building a port but generating socio-economic and environmental progress. It is also critical that the technical and management sides assure timely completion, minimal cost overruns and the establishment of business networks.

Global experience also tells us that in the drive for development, one wheel is not enough, and that we need at least two if not four for a steady and stable ride. That is why it makes eminent sense to aim for maritime clusters of multiple development prongs that feed on each other. Vizhinjam's management, at a conference on port-led development in Thiruvananthapuram on February 18, promoted the idea of maritime clusters.  

In the spirit of clustered development, Singapore's port-based strategy targeted air traffic growth for complementarity with the ports, as the nation-state's Civil Aviation Authority struck air service agreements with numerous countries for increasing flight connections. Free trade agreements with 30 trading partners also helped traffic flows. Singapore also had fiscal measures to attract logistics companies to locate around port. It encouraged foreign vessels to register with Singapore's Registry of Ships.  The republic introduced incentives exempting shipping lines from income tax. It clustered port and maritime activities complementary to the trade in goods and services, enhancing its position as a logistics hub.

Helpful in this regard is government of Kerala's identification of the port's influence zone and preparation for its planned development. An area of 272 sq.km. has been identified as the influence zone of port and delineated. Various zones including commercial, industrial, logistics, residential, and recreational ones are being proposed. Clusters are defined spatially, as areas that feature higher than average concentrations of value-added activity in IT, maritime, agriculture and textiles. Business and logistical connectivity with Tamil Nadu and other neighboring states is of paramount importance.

The other lesson from worldwide experience is the payoff to looking for ways to leapfrog into higher technology, digital infrastructure, and smart management approaches. Singapore launched the world's first national single window in 1989 which digitised and streamlined trade permit approval processes. Logistics cost of exports are a high 14 per cent of total cost in India and the turnaround time triple that of the East Asian leaders. A top priority in Vizhinjam has to be to break the high logistical cost and introduce digitalisation, new technologies and management practices.

A new concern at this point will be about building solid resilience to the deadly impacts of climate change.  Kerala's coasts are among the most vulnerable in the world because they are low-lying, highly exposed to warming sea level temperatures and very densely populated.  It will be crucial to defend the coast lines as well as protect coral reefs, marine life and fishing.  Equally important for the state's socio-economic situation is to make port development an engine of inclusive growth, sparking investments in skills and education and promoting employment generation.

The bottom line is this: Vizhinjam presents an opportunity for inclusive and ecologically sound development in Kerala, but that outcome is not automatic, as it calls for a concerted and persistent effort on a sustained basis.

(Vinod Thomas is former senior vice-president, the World Bank, and visiting professor, National University of Singapore. Vndthomas49@gmail.com)