The Sunday Leader

China Holds Sway At Hambantota

By Halik Azeez

Construction underway at the Hambanthota Port and Concept artwork depicting the completed Cricket Stadium

Proposed Plan for the Hambanthota Suriyawewa Stadium

Involved in constructing and part financing the projects to the tune of Rs 60 billion, China is literally calling the shots in Hambantota.  The multi billion rupee projects include a port, airport, cricket stadium and convention centre. Costs for the four big projects total almost up to more than USD 500 million or Rs 60 billion. Construction is largely carried out by Chinese corporations which employ a Chinese workforce.

Most of the funding for the projects is being generated from China; mainly from the China Export-Import Bank. The loans are offered at concessionary rates with short grace periods. But these, together with borrowings made for other development projects, still add up to huge amounts of potential debt for the Sri Lankan government which will have to be paid back. How the current government of Sri Lanka is going to do this is anyone’s guess.

The Sri Lankan people get little or no benefit from the large amount of monies spent on the projects. The money lent from China is going back into the pockets of Chinese construction firms and workers, completely bypassing Sri Lankans and minimizing any trickle down and/or multiple effects which could have stimulated the local economy.

The Sri Lanka Ports Authority signed a contract with a Chinese firm, China Harbour Engineering Company, to start the second phase of a new port in Hambantota on the South Coast.

Phase two would start in November this year with the completion of the first phase of the port project.

This agreement was signed by SLPA Chairman B. Wickrama and the Chairman of the China Harbour Engineering Company Sun Ziyu.

China will continue to provide finances for the second phase of the port project. Phase two of the project will include further excavation of the site for the harbour basin and dredging of the approach channel as well as building berths for ships.

Reaping Benefits

Whether the use of the port in Hambantota will be monopolized by China or if it will completely belong to Sri Lanka is as yet unclear. Officials have stated that the port will be turned over to the Ports Authority who will then repay the debt to the government.

It is also unclear yet whether the other projects, once completed, will remain in state control or not. Public-private partnerships are a mechanism to ensure that state institutions run with efficiency but given the recent track record of the government, which looks to be on a reverse privatization spree, such partnerships don’t look likely. Meanwhile, the inefficiency in the Ports Authority and Mihin Air does not bode well for the new institutions at Hambantota. The Sunday Leader was unable to reach Minister Basil Rajapaksa for comment on this issue.
A Political Partnership

Speaking to The Sunday Leader, Senior Lecturer in Economics, University of Colombo, Dr. Srimal Abeyratne said, “Partnering with China is seen as more of a political move rather than an economic one. It is in step with the current government’s tendency to partner with non-traditional countries”.
The Professor went on to state that any potential benefit from the projects will heavily depend on the state of the overall economy and business environment.

“Infrastructure such as ports and airports are heavily dependent on robust economies. Successful implementation of the government’s five hubs concept and steps to create the connectivity, compliance and business friendly environment of an open economy will be necessary to ensure profits from these initiatives.” Not a lot of information has been released to the public on costs and completion dates.
At the inception of looking for potential construction partners, Sri Lanka apparently looked to other nations like the US, but China seems to have offered the best terms and hence seem to have been accepted. “We have no favorites,” said Jaliya Wickramasuriya speaking to the New York Times on the subject. China has recently emerged to become a global construction powerhouse capable of offering major cost advantages as compared to competition.

String of Pearls

International controversy surrounds the Chinese entrance, worrying India; Sri Lanka’s powerful neighbour. China has been engaged in similar activities throughout the region; setting up powerful naval bases in areas of Pakistan, Bangladesh and Myanmar. It has also begun constructing railroads in Nepal, a country which previously had no railway system at all. This strategy, the Indian government somewhat sarcastically calls the ‘string of pearls’; to indicate an emerging Chinese stranglehold. Though China insists that this is merely to strengthen regional markets for its products and secure its supply chain, India fears that China is beginning to pose not only an economic but also a security threat.

The two nations do not exactly have a rosy past. The countries fought a war in 1962 over the Himalayan border and to India’s annoyance, Pakistan, with whom India has fought four wars, maintains close military ties with China. Sri Lanka could become the latest battleground between these two giants with both of them eager to be exacting the most influence. India has invested heavily in Sri Lankan projects and has just committed a 200 million credit line for a power project in Trinco, as well as agreeing to construct a railway line between Talaimanar and Madhu in the North.

26 Comments for “China Holds Sway At Hambantota”

  1. land like no other

    well done fools for srilanka you gave this power to this fools and you and ur grate grand children gona suffer from this mess.

  2. I do not know the background of this writer. For one thing all western backed NGOs and UNP cohorts had criticized Chinese involvements in our development. As such, this writer had deliberately forgotten that during the three years of RanilW’s rule beginning 2001, he had not started a single project of this magnitude.

    This writer moans about the loans of US dollars 500 million for money spinning harbour project in a busy sea route. Again he has forgotten that RanilW too was offered 4,500 million dollars for unnamed development projects in the North by the so-called Inter National Community. Would this writer say how Sri Lanka would have paid back that money had it being granted? It must be mentioned that loan didn’t materialise because; IC wanted more than that so-called peace agreement. They wanted Sri Lanka to grant ‘Self Rule’ to LTTE.

    During ChandrikaK and RanilW’s administrations we had terrible power cuts. Both of them resorted to expensive thermal power generation as a remedy. None had the political will to start either Kothmale hydro power or Norochchole coal power project. With Chinese help President Rajapakse started a coal power project. Consequently, we shall have no power cuts in the foreseeable future. Cost is less than half. And this writer asks how we would pay the loan back. He had also forgotten that Indian project is yet to start.

    China does not barge in and force friendships like the Colonialists of yesteryear. China does not force its religion or culture on others. China does not interfere in internal matters of Sri Lanka. Indeed China protects us from the sharks that aim to tear us to pieces like they did to Serbia.

    China doesn’t appear to consider India is a rival or enemy. China’s problem with India is its support to Dalai Lama. But that is not a big enough issue for China to scheme up to breakup India. So, China is not a threat to the unity of India. The real threat to the unity of India is not China but ‘Nationalism or Separatism’ desire of Tamils.

    This string of pearls is a creation of the Pentagon. They made it to bring about a fear psychosis to India and use it as a cat’s paw in their games. It was Westerners that want to break up India all along. That is why India objected to JRJ when he wanted to give that Trincomally oil tank farm to US. For what reason otherwise Westerners had supported LTTE for the last thirty years. Tamils being more anglophiles than the British, Westerners knew they can have their bases in Eelam.

    True; there had been a war between china and India in 1962. Some say, the reason for China overrunning Arunachal Pradesh in 1962 was India’s response to China policy on Tibet and Dalai Lama. Others say it is the border dispute arisen from the McMahon line. Whatever is the truth, the fact that China withdrew from the overrun disputed area to end the war in less than two months is a good indication to foretell its future intentions. And, other than two insignificant skirmishes between Indian and Chinese forces in Sikkim in 1967, there had been no incidents what so ever.

    Anyway since, president Mahinda started to develop this country with Chinese aid, suckers of the West have started their crusade. They started foretelling that China is building a naval base in Hambantota. Some other cock-teasers have gone so far as to present a China bogy to Indians. Who care, our President is playing his cards right. If he continue it, we will end up with string of pearls all over the country.

    • The Observer

      A good response by Leela to the absolute tripe being bandied by the likes of this writer. Several constituencies the world over are envious of the progress Sri Lanka will make under their current leadership. Good leaders are decisive in their leadership behaviour and not afraid to stand up to falsehood. The present leader shows positive signs of this trait. There will be many, many groups working towards destroying Sri Lanka. Sri Lanka will need stand very strong in the years ahead.

    • For every thing Ranil Wickramasinghe
      He was there only less than 2 years.At tha time growthrate at minus1.3%
      I think Leela also voted for Chandrika at that time.We must appreciate any good development.But mainthing is human right and freedom not only for suppoters of Mahinda but every body.Othervise our country can’t be developed.


      • Justin: Until Mahinda contested for presidency, I have never voted for SLFP. I cancelled my vote at the Presidential election 1994. I did so because I knew about her capabilities. I knew Wijaya and Ossi personally.

        I voted MEP then SU and then JHU, since. I voted for Premadasa in 1988. And before that I voted the Liberal party in England for many many years.

        • Samanth

          I think its time for the EU and US to put little sanctions on MR so that people of this calliber shall understand of the our contry situation infront of the world. Then these extreamist ideas will soon fade and we will see the real freedom. Its not backing western powers but accepting that in their countris Presidents and priministers are called Mr. President not His excellencies. I think when we reach that moralty we would be a free and sourign country. Otherwise we will be in the same hell for eternity

    • lankan

      -China is literally calling the shots in Hambantota — Why? Doesn’t our king Rajapakse have the nerve to ask?
      -add up to huge amounts of potential debt for the Sri Lankan government which will have to be paid back. — who’s going to pay the loan with interest? The poor folks of Lanka, and not the MR family
      -The Sri Lankan people get little or no benefit from the large amount of monies spent on the projects. The money lent from China is going back into the pockets of Chinese construction firms and workers, completely bypassing Sri Lankans and minimizing any trickle down and/or multiple effects which could have stimulated the local economy

      When you borrow money from the bank, will you allow your bank to build the house for you and keep you in the dark?
      Who’s going to control the ports? There’s no freedom of speech in the country. How can one expect transparency from the government?

    • Nadaal

      I wonder the period of repayment. Is it a long term soft loan like in 25 years or just in 5 years.? If it is a long term loan even if this project does not help the overall economy stimulation right away I think it is worth it for the simple reason
      that it will benefit the future generations. No body would take back a harbor or a stadium to China after completion even if Sri Lanka failed to repay on time. Besides in another 25 to 20 years 500 million today will be some thing like 200 million when you consider the inflation. It will be there for Sri Lankans and what we should worry at the moment is about mismanagement and corruption of the administrations as they are responsible for the failures of the Corporations and Authorities. As for the displeasure of Indians they have to learn to live with it as India is not capable of assisting Sri Lanka so much due to the restrictions placed on the centre by the Tamilnadu state. Just imagine what happens when a movie star from Bollywood or Kollywood vists Sri Lanka?
      As for China and Pakistan, well we have to show our gratitude to them as they have always been with us in the need of the hour.

    • jollygoodsir

      looks like smiley face Jaliya has coached you well… look for a ‘bonus’ in extra time with you at the embassy… hina hina hina

  3. Mossad

    Halik Azeez I don’t know whether you are male or female but nothing wrong with getting aid from another country to develop our own country. Because you don’t like this government not necessarily means that everything this government does is wrong.

  4. Sisila

    When past Govt. building and expanding ports developing KTA, BMICH ( build by China as a gift to Mrs B by negotiating the put stop to the WAR tension b/w India and China) , SSC, Premadasha Cricket stadium, etc ,etc, these so called journalist keeping quite. Coz its near to Colombo they are business can grow, more facility to Colombo. We need to borrow money to development. When Mahawali was constructed most of money went Sweden (Skanska – they too got Swedies engineers and foreign labour force) and Gamini Dissanayake. WHY is it B’coz all the development going out of COLOMBO??????

  5. Max

    I agree with Leela’s comments, if the country is to move forward, we need to develop the the country irrespective of where the funds come from.

  6. LankaLiar

    Hey only one comment has LTTE mentioned. Why? It looks like LTTE has taken over China and through them trying to destroy Sri Lanka. Also China is building a harbour so that LTTE can use them and the cricket stadium for LTTE to play cricket. and a conference centre for LTTE to have meetings. A cricket stadium and a conference centre for 6m What a joke. Are you going to rare chicken in them.

  7. HUD

    I have a question. What are you asking MR to do? When he is launching projects, you criticize him. If he stays without doing anything, you will criticize him again?
    I’m not clear you? Are you asking not to start projects like these? Or asking just not to get support from China?

  8. HUD

    I can recall the same tone this newspaper had when MR started all-out war against LTTE. At that time this newspaper was repeatedly chanting “this war cannot be win. LTTE can’t be defeated. Army commander Sarath Fonseka is corrupt. Gotabaya is corrupt. They are earning money from war. Only Ranil knows a solution for the this war….etc”.

    Now it is using the same tone against MR’s actions on economic development .

  9. ……….so why worry China offer all free for nothing….better forget GSP+….START EXPORT TO CHINA ….your garments and house maids….you will get Yuans instead of Euro….Jayawewa

  10. dagobert

    Why all this criticism……………. Lets try to bring out the best in these developments. Be it anybody, Do we not take pride ?
    Do we not need development in any form ???

    I wish the management of the Hambantota Harbour is outsourced to Hutchinson Whampoa of Hong Kong……. They will not only bring about the success but will be able to generate income to pay back all loans received by Hambantota.

    Hutch Wham maintains sucg Ports & terminals from South America to East Asia.
    There is an International play ground and now we need a large 750 room hotel outside hambantota to accomodate visitor and serveral small Inns.
    Hope Sajith will get into the act to activate this spear together with Namal
    with the assistance of all provinsial councillors & MPs of the District.

  11. dagobert

    koopu………….. With political venom at heart you speak nonsense.
    Do you realise the power of the Yuan today ? How much it has appreciated against the US$ ? USA wants it to appreciate further.
    Yuan is appreciating by the day and HK is planning to shift their trading to Yuan and Internationalise it.

    China is taking their excess money out to Invest elsewhere to derive future income & doing it sensibly unlike Norwegians who brought their money to the LTTE and acted as a proxy to the West. All that funds are down the drain.


  13. KMR

    Chinese are our true frinds. They can contruct anything they want in this country. With the help of China we can kick out these bloody Indians.

  14. SL

    Ya the write portrays a very ungrateful tone. Chinese are offering concessional loans meaning below market rates. who else would do that…bloody europeans? we have seen during olympics, china built awesome structures in record time. their skill and their knack for executional should not be comparison those sad indians and their commonwealth stadium is flooded and breading mosquitos and incomplete when the games are next month.

    what we need is to negotiate good trade arrangement so we can export our goods at advantage. china gave tariff free duties to bangladesh two months ago. we should ask for the same. i am sure they will give us because we are a special friend.

  15. Ruhunu

    Try to appreciate good things done.It was a great acievement by current government.Well done MR

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