Sri Lanka’s Port Strategy
Colombo Port
By Indi Samarajiva
Sri Lanka is building or expanding not one but six ports. The Mahinda Chinthana envisions 10,000 ships passing through Hambantota alone, while current traffic islandwide is around 6,000. Indeed, Mahinda has pushed through with his vision despite much advice that building Hambantota was unnecessary because his government has faith in a regional model of development. The World Bank and many economists and advisers, however, see a future where Colombo and the Western province will continue to lead. The question today is whether Helping Hambantota will hurt the country.
Hambantota
Hambantota is a sleepy fishing town of about 20,000, largely Muslim in the center and actually not a hotbed of Mahinda support. It is near Mahinda’s home area around Tangalle to the West and Yala to the East. This area is a nice vacation spot, but not exactly an economic hub. This is the place where Mahinda envisions “an international airport, international conference and convention centres, international sports stadia, new railways, expressways and tourist regions.” Of course, cities like Las Vegas were created whole cloth out of the desert by men of will and action (gangsters, actually). With credit, all things are possible, but it does not necessarily make them prudent.
The Hambantota port was built with a $300 million dollar loan from China, but this delivers a port without container handling, with limited bunkering and, in phase one, the ability to handle only about three ships a day. “In about ten years, with the second phase coming on stream, we aim to handle about 8,000 ships a year,” said Sri Lanka Ports Authority Chairman Priyath Wickrama. Getting to that phase, however, will cost about $1.5 billion (total). The Chinese contractor gets paid, the Chinese Navy gets a strategic asset, but the Sri Lankan taxpayer takes the risk..
Colombo
Aside from the investment in Hambantota going to waste, one risk is that the internal competition could hurt Colombo. Colombo is already the major port for South India region and 75% of the 3.5 million TEUs (twenty tonne equivalent units) it handled in 2008 were transshipments for India. The government is also investing $300 million in drastically expanding the Colombo South harbour and revamping the Jaya Container Terminal. They also project a further $700 million investment with private sector support.
Colombo is already a major port, but it faces competition from the Cochin port in Kerala which is also modernizing fast. The question is whether it will now also face competition from Hambantota. Hambantota is designed as a bunkering port, providing oil and similar services, not containers. The temptation to provide container services, however, is strong, especially the goal is 10,000 ships in the Hambantota port alone. This would give Sri Lanka two adjacent ports competing for hub status, something Lew Kwan Yew once advised Vietnam against.
More Ports
Hambantota, however, is not the only new port that Mahinda is developing. The SLPA is also developing Galle as a recreational port, expanding the natural port of Trincomalee, setting up a 49 million Euro harbour in Oluvil and repairing ports in KKS and Point Pedro in Jaffna. This all points to a broader strategy.
Mahindanomics
In opening the port, Mahinda said, “Not only the South, Hambantota, Moneragala and Embilipitiya, but the entire Eastern region too will become a single vibrant economic region from these infrastructure developments. This development is not confined to a single region. It will help make the entire country one large economic zone.”
In contrast, a recent World Bank report stated “The journey from low incomes to high incomes involves rising concentration of prosperity in a few places. Unbalanced growth is the norm and has characterised the development experience of countries such as the United States and Japan, among the most prosperous in the world.” They continued that this growth will likely be in Sri Lanka’s Western province and that efforts to move it outside would be counterproductive.
“Consider the generous incentives offered by the Board of Investment to move economic activities outside Colombo,” continued the report. “Analysis for this report shows that 80 percent of investments approved under Section 17 of the BOI Law and the 200 Garment Factory Programme took place in Western province, not in lagging areas. Firms benefit from being close to other businesses and the international gateway, so industrial relocation policies end up hurting productivity and profitability.”
What emerges here is a very broad difference in strategy between Mahinda and the World Bank (and most conventional economists). Mahinda’s plan envisions five ‘great centers of progress’ while the World Bank sees continued growth in Colombo. The government’s National Physical Plan envisions a one million population in Hambantota by 2030 and around four million around Trinco-Anuradhapura-Dambulla. The World Bank, however, says that this plan doesn’t say how exactly this will happen. The clear implication is that the natural course is for Colombo-centric growth to continue.
Going It Alone
Mahinda, however, has gone it alone before. He invested similar billions in a war the international community deemed hopeless and came out ahead. Now when they tell him to invest in Colombo he is instead dredging new ports out of the earth and expanding in five different directions at once.
“As in fighting a war, in building an independent economy too we must be ready to face many challenges,” said Mahinda. He clearly sees his second presidential term as requiring similar resolve. Indeed, the SLPA chairman said Mahinda ordered advisors that didn’t believe in the Hambantota port to simply leave the room. Mahinda has fought naysayers before and come out ahead. With Sri Lanka’s port strategy, he’s taking a chance that he can do the same on the economy.
Two ports are OK.but not more.Other ports should be developed to use domestically.
This is a well balanced article from Indi with constructive criticism. I like your sentence “The Chinese contractor gets paid, the Chinese Navy gets a strategic asset, but the Sri Lankan taxpayer takes the risk”. Hambantota port project is a risky business. Sri Lankans may gain or lose but China won’t lose. On the other hand more risk you take in doing business will result more profit too. We have to wait and see. Remember when Mahinda declare the war against ruthless LTTE, almost all in the world except few people in Sri Lanka thought LTTE is invincible. My belief is Mahinda is rather using Hambatota port and Trinco port as two big devil masks to neutralize tension on him from big bullies influencing in the South Asian region.
the main ports will be cbo & trinco for shippng activities incl cntr hadling etc. hambanthota for break bulk /project cargo as the draught is less. it will also be for yatcts /private boats – cruise vessels – ideal for tourism. the so called pandit indi samarahiva who wrote this looks to be a puppet who has written on someone else instruction on a political agenda no knowledge on shipping & ports. the world bank or usa will tell to our benifit ??? if everyone says no we should do it as ports are the backbone of the economy & we should look after our development. well doen MR.
I’m expecting this Government to spend, spend, spend and spend on projects whether they are Sea or Airports, Highway or Bi-ways for their own benefit so that they can laugh all the way to Switzerland. Ask Mervin Silva about it. He once gave an interview about how contractors are stealing so many bags of cement from Government projects. His advise – don’t eat the whole cake just take a small slice!!!! meaning take only 2 or 3 bags of cement not 10!!! How many slices can you cut from a cake? How thick do you want a slice to be? Now you better do the math, $1.5 Billion divided by the number of pieces!!!
This I call “Development through Corruption” God Bless Sri Lanka
No matter what ever this government does , it’s not F good enough for you scum lot. So R.I. P.
sam i belive you are not from the shipping field reading you ignorant comment. the benifts of hambantota port is immense no wonder india & singapore are worried. i belive MR has a good advisor on shipping. we are finally in the right direction
Sam!
I totally agree with you!
This newspaper always write against Sri Lanka, late Wasantha also did the same things and I guess more than anything nature punished him, tell who regret, as long as foreign NGO funding are secured this paper will survive but it does not have clear objective!
it has a clear objective Saraprobe. thats to create chaos and disrupt activities in Sri Lanka. pure and simple.
sara very true!! i belive the gona who wrote this article doesnt know anything on shipping
Why not buldoze Yala and build houses there
you are a A grade idiot
WE WILL HAVE LOTS OF PORTS, BUT WITHOUT SHIPS.
THE WAY MR IS HANDLING FOREIGN POLICY WITH “GLP”
AND ECONOMICS WITH “CABARAL”, WE WILL BE IN DEEP SHIT.
ADD TO THIS WE HAVE THAT “JOKER” BANDULA WANTING TO
TEACH CHINESE IN OUR SCHOOLS. I THOUGHT THE PRESIDENT
DECIDED IT WAS “THE YEAR OF ENGLISH AND IT”
WELL, I ALWAYS I THOUGHT HE LOOKED “HALF CHINESE”
WE HAVE HAD CHINESE HERE FOR A VERY LONGTIME, WHO KNOWS HE MAY BE OF CHINESE ORIGIN.(BAN DUL GUN WAR DEN)
Has anyone visited Putrajaya in Malaysia? Putrajaya (its new federal capital) was Mahathir’s baby as well as his cash cow. Its a colossal white elephant 40km from KL. An entire administrative city with modern buildings, mosques, freeways, artificial lakes, bridges, gardens and DPL missions.The project cost billions and to this day remains a dead city with almost empty buildings. Technically all government departments have relocated to Putrajaya but it remains an outpost of the Malaysian gov’t with massive injections of cash to keep it going.
Of course the Mahathir family made zillions for generations from the project. Such is power in Asia and what it can do. So MR is no exception.
o ships will come to Hambanthota
You are with the new JVP, SF, Arguna mentality. They are frustrated because of lost love.
This is a well balanced article from Indi with constructive criticism. I like your sentence “The Chinese contractor gets paid, the Chinese Navy gets a strategic asset, but the Sri Lankan taxpayer takes the risk”. Hambantota port project is a risky business. Sri Lankans may gain or lose but China won’t lose. On the other hand more risk you take in doing business will result more profit too. We have to wait and see. Remember when Mahinda declare the war against ruthless LTTE, almost all in the world except few people in Sri Lanka thought LTTE is invincible. My belief is Mahinda rather using Hambatota port and Trinco port as two big devil masks to neutralize tension on him from big bullies influencing in the South Asian region.
Although you axed my comment I am unbowed and unafraid like you. I reveal the truth. I am not funded by INGO like you guys.
When the Mahaweli project was underway, we saw similar stories in newspapers. One argument was that there will be no water to fill all those tanks. But even with all the corruption and stealing it recovered all the costs and is now a viable project. We may have been in trouble today if it was not there. It is the same here. Negativity is the order of the day.
The Mahaweli project is such a success, that is why we import rice in this day and age too.
We tightened the belt for the war, are we to do the same for this too ????
So what writer suggests?Do we have to sit idle W/o doing anything??
This writer from Vancouver, Canada is a deployment of a western interest by pre defined agenda of an INGO. The more article are on the way to discredit Sri Lankan government‘s effort to develop the country which was in the darkness for last three decades. Westerners never let us to stand up ourselves. These are the puppets they found to write against their own country.
Some people are negative about everything good for Sri Lanka & its citizens….
I lived in Singapore early 1960′s…
when Singapore expanded its harbour…..
“Naysayers” comments – why does a small island like Singapore….
need such a large harbour….
Today Singapore Harbour is the 2nd largest Container port in the world….
the Port led in the economic development of Singapore…
Many of the negative comments & fake economic analysis are coming out
of Singapore…..
because Singapore will lose income….
look at a World map….
Hambantota will be the bunkering port of choice for ships going eastwards to
the Western coast of Australia…Myanmar…Bangladesh….west coast of the Indonesian islands of Sumatra & Java….eastern coast of India…etc…
From article – Quote – ” Sri Lanka two adjacent ports competing for hub status, something Lew Kwan Yew once advised Vietnam against. ”
Because Singapore does not want competition from Vietnam Ports….
Vietnam ignored the “advice” of Lee Kwan Yew….
for today Vietnam has 3 hub ports….Hanoi…Danang…Ho Chi Minh City ( Saigon )….
Hambantota Port will lead in the economic development of Sri Lanka….
[...] Indi Samarajiva (thesundayleader) var mappress0 = new [...]
Indi…seriously man…if your gonna criticize about SLPA or Mahinda you’ve got to be able to at least provide some alternative solutions to improve the current SL Port systems if you disagree with Mahinda’s. The SL opposition parties, media, cheerleaders and supporters are nothing but trash talkers!
…the more I read this tourist’s articles the more he sounds like Ranil.
No matter how many ports are put in, SL is still considered a fly infested thrid world country. I visited it recently and did not stay long and I got sick from the pollution, mosquitos and garbage bins. I came back to my clean westen country and finally breath fresh air.
SL is still way behind and still an under develped country and will always be that.
Every project everywhere has detractors and protesters. When they leveled two islands to make a platform for Hong Kong’s new international airport, they faced massive protests against it by people who wanted to save some frogs endemic to the island. Some said it’s stupid because Shenzhen and Macau airports are close by. Others said its a British ploy to milk HK and put it in debt before they leave. HK picked up all the frogs, relocated them and built the world’s most modern airport. The world’s second-busiest airport is minting money for HK to the tune of multi-billions. Hambantota port will do the same for Sri Lanka. It’s a good thing.
Stomper, Good that you high-tailed it outta here fast before u got done in by our pets – the dengue moskies.
By the way, are you related to Romper. Romper Stomper skinheads!