As India watches keenly, Sri Lanka seeks FDI in Port City

As India watches keenly, Sri Lanka seeks FDI in Port City

Colombo describes it as a ‘fully Sri Lankan project’

Sri Lanka on Friday invited international investment into the Colombo Port City that it described as a “fully Sri Lankan project”, while official sources in New Delhi said they were “keeping a close eye” on the project and its “security implications”.

“If it is only a commercial venture then that is their [Sri Lanka’s] choice… We will continue to engage Sri Lanka, while watching our national interest,” said a government source in New Delhi, awaiting the final version of the Bill whose blueprint the Sri Lankan Parliament’s Speaker signed on Thursday. The ‘Colombo Port City Economic Commission Act’ is yet to be made public.

Addressing concerns around the recently passed legislation on laws governing the Colombo Port City, which critics fear might be a “Chinese enclave” in the Sri Lankan capital, a team of government Ministers said the China-backed $1.4 billion-Port City, pitted as a financial hub, had the potential to create 83,000 jobs and bring in up to $15 billion in investments.

Constitutional experts and opposition legislators argue that the 269-acre “financial hub”, coming up on reclaimed land adjoining Colombo’s seafront, would enjoy, besides a tax-free status, immunity from Sri Lankan law. Sections within Sri Lanka, including from the political opposition, trade unions and the influential Buddhist clergy, see it as a “threat” to Sri Lanka’s sovereignty.

‘Transparent venture’

Seeking to allay prevalent fears about the project, in a meeting titled ‘The Colombo Port City: Angel or Devil?’, senior Minister G.L. Peiris termed the venture “transparent”, and said “there is no exclusivity” in Sri Lanka’s relationship with any one country. Colombo, he said, would pursue a “non-aligned” foreign policy, amid growing public criticism over the government’s “China-centric” policies.

New Delhi too will go by “benchmarks”, the government source said, pointing to “transparency, openness, and financial responsibility”. “No offshore havens…it [the Port City] should respect the territorial integrity of Sri Lanka. And respect international norms,” the source said, requesting not to be named.

Apart from the high geopolitical stakes in the big-ticket investment project in the strategically located island nation, the Colombo Port City has sparked a raging debate within the country over its China policy. Instances of official signage excluding Tamil, an official language, while including Mandarin, drew wide criticism from the public.

China has been among the top lenders to Sri Lanka, especially since the pandemic struck, offering a $1 billion in loan and a nearly-$ 1.5 billion currency swap facility.

Earlier this week, Sri Lanka’s Cabinet awarded a project to build an elevated highway in the capital’s suburbs — estimated cost $ 1 billion — to the State-owned China Harbour Engineering Corporation (CHEC), on a Build–operate–transfer basis, for 15 years.

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