Chinese Ambassador’s statement on loans and development projects
Posted on November 5th, 2016

Chinese Ambassador’s statement on loans and development projects
ණය සහ සංවර්ධන ව්‍යාපෘති පිලිබඳ චීන තානාපතිගේ ප්‍රකාශය.

One Response to “Chinese Ambassador’s statement on loans and development projects”

  1. Ananda-USA Says:

    The Yamapalanaya GoSL seems to be heading for a SHOWDOWN with China that it CANNOT WIN!

    Given that Ranil recently went BEGGING on his KNEES to back to China asking it to restore its ECONOMIC ASSISTANCE. it seems to me this is UTTERLY FOOLISH BEHAVIOR bordering on SUICIDE!

    The BEGINNING of the END of the Yamapalanaya PERHAPS?

    ………………………
    Summons to China’s envoy: Govt. displeased over his remarks

    SundayTimes.lk
    November 6, 2016

    Foreign Minister Mangala Samaraweera will summon China’s Ambassador Xi Xiangliang to lodge the Government’s ‘deep displeasure’ over his remarks at a news conference to a handpicked group of journalists this week.

    A high ranking Foreign Ministry source said yesterday the meeting will take place in the coming week after Minister Samaraweera returns to Colombo from New Delhi. He is in the Indian capital together with Fisheries Minister Mahinda Amaraweera for talks on the illegal fishing by Indian fishermen in the Palk Strait and the Gulf of Mannar.

    Ambassador Xi’s news conference came amid what was described as a “seminar” attended by Sri Lankan and Chinese journalists on the subject of promoting relations between the two countries. There, Mr. Xi was bitterly critical of the Government. He singled out Finance Minister Ravi Karunanayake for some strong criticism over interest rates on loans granted by China. Mr. Karunanayake hit back saying he was not the Finance Minister of China but of Sri Lanka and asserted he would say what is good for the country.

    Finance Minister Ravi Karunanayake told the Sunday Times, “I cannot imagine the envoy of a friendly country has thought it fit to make those remarks. There is no basis for what he says. We are a sovereign nation and we would naturally want to be treated as one.”

    The high ranking source in the Foreign Ministry said, “If Ambassador Xi had any complaint on behalf of himself or his Government, the accepted norm is to make representations to the appropriate source. That is the Foreign Ministry. His conduct is highly unprofessional and does not in any way foster good relations between Sri Lanka and China.”

    The Sunday Times obtained a transcript of Ambassador Xi’s news conference. This is what it says:

    “I want to talk about how to promote relations between the two sides. The Embassy set up this platform for you to talk about your function and role in this most important topic. First I would like to use this opportunity to express my sincere respect and regard to the Sri Lankan people, the media friends and also to my Chinese friends. I came here almost two years ago and this is the second time I am having this briefing meeting or seminar. We appreciate your suggestions and even your criticism which is based on facts. Every day I read six English newspapers because unfortunately I cannot read Sinhalese or Tamil but I get all the information from Chinese, Tamil and Sinhalese, from TV, radio and websites. I check all the details about the relations so I am waiting for your suggestions. I do believe media people are most important relations. After my arrival one year and eight months ago there were four media delegations from Sri Lankan who have gone to China. There are four media bodies’ represented in Sri Lankan but unfortunately there are no Sri Lankan media organisations permanently based in China.

    Q: We have seen many articles about Port City and others Chinese projects in the media here. Some of these articles haven’t been wholly factual. How do you think the Embassy officials can better communicate to get the correct facts?

    A: The Port City was a project worth US $ 1.4 billion. It is most important for Sri Lanka. Unfortunately it was suspended for one and half years but through the efforts from both sides, Chinese President Xi Jinping and Sri Lanka President Sirisena, both attached importance to this project. Since the suspension but we have no change in policy towards Sri Lanka. China and Sri Lanka are dear friends from 1600 years ago. So we have no change of policy, of attitude. So we take efforts in this regards. We requested the company concerned China Harbour to follow the instructions and decisions made of the Sri Lankan Government, respect the regulation of the Sri Lanka Government, and cooperate with Sri Lanka government.

    This project actually had a very serious environment impact assessment. Right now this project is just for reclaiming the land so you should not request EIA for all the projects in the future. In the future it may be Financial City, it might be a logistics city, and it depends on the next step of cooperation. .So right now the EIA is for the claiming of the land. I was informed unfortunately some hard facts in this regard. This goes beyond the interest of Sri Lanka as a state and the Sri Lanka people. We resumed operations on October 29 after a one and half year suspension. A 1000 Sri Lankan people directly and 4000 indirectly lost their jobs. Who will be responsible for those people who lost their jobs for one and a half years? So since we are good friends, we are not asking for compensation for one million one day. But this is a big loss to the Chinese company but what about the loss to the Sri Lankan people. I do believe we should not politicise the business issue, the economic co-operation.

    Q: Did you say the loss is one million dollars per day?
    A: One million dollars one day, direct and indirect because people had to move to China and come back again. The total is about US$ 140 million. The Company submits a report of the loss to the Government every week after the suspension last year.
    Q: Could you elaborate on the plans for Hambantota?
    A: Right now as you already know the news from your newspaper, not my newspaper. The Prime Minister last week announced something but it is still under consideration and in consultation between the two sides. Hambantota port is most important for Sri Lanka not for China. This is your property, a good one and it is really needed by Sri Lanka. How to operate the port, how to revive the port, how to make it useful we need the economic activity in the region close to Sri Lanka so we should upgrade the Sri Lankan economic level. So right now your GDP is about 70 billion dollars. I remember while PM Ranil Wickremesinghe visited Beijing he had meetings with Chinese President and Premier. Both sides agreed that China will help Sri Lankan to establish your basic industry.

    You have 65,000 square kilometres land area. You always say a small island country. No, Sri Lanka is a big country. It is a great country. You have good culture. You have long history. You have a qualified legal system. Education is okay. You should be proud of the culture, history and you country conditions. So why do you call yourself a tiny island. I worked in the Netherlands for eight years. Dutch people say always they are a great country. So based on this idea, I do believe Sri Lanka needs income not only to meet your needs, but to meet the needs of other countries. Right now globalisation becomes greater and greater.

    Right now is the time for Sri Lanka to develop your industries. So that is why the Chinese President and Prime Minister suggested to have this one. So we want to set up some economic zone or industrial zone in Hambantota and other areas like in the western province or other provinces, if the conditions are satisfactory for the investors.

    So I talked with Sri Lankan leaders. If the law, the regulations could be satisfactory for the investors – not only to Chinese, but also the others – Sri Lanka can attract at least five billion US dollars from Chinese investors in the next three to five years.

    But, right now I am worried about the performance of the current administration. So I talked with the Prime Minister, President and ministers about what is the current law on FDI (Foreign Direct investment) on which laws should have some amendments. We also sent some delegations including officials and business people from Sri Lanka to China, perhaps a study tour about economic zones, about the FDI. I am still waiting for a response from your side. I will go to the South next week again to talk with Sri Lanka officials and the Chinese business people on how to speed up the co-operation, because we already lost almost two years during the new administration.

    Q: (Inaudible)
    A: I did not say not well for China. I said good for Sri Lanka, good for China. We insist on a win-win policy. We are never unilaterally interested. Any interest must be bilateral. The benefits must be bilateral. We are open. We are transparent. So I welcome any party to join us to co-operate to develop the economy. That is a strong signal and attitude in our cooperation.
    Q: Can we know the outstanding debt to China and how much repayment is due next year, because a substantial part is government loans and also what they call ‘expensive loans’ from China taken by the previous regime.

    A: Even some ministers say expensive loans from China. We have regulations on fixed interest ratio to any developing countries – it is two per cent, not only for Sri Lanka. If you have some comparison with a commercial loan it is at least five per cent. The Chinese Ministry of Finance gives some subsidies to Exim Bank because they provide loans to the developing countries. It means any country can get this loan. We have some conditions if it is a friendly country. So Sri Lanka can get a significant amount of loans from the Exim Bank. It is based on our relations.
    I talked with Ravi (Karunanayake) Minister of Finance. Ravi criticised this many times publicly. I asked him if you don’t like this one why you again talked to me about another one. Because all the Chinese business people complain to the government why the Chinese government provide loans at two per cent, but for them at least five per cent. That is really unfair. I talked with some close friends in Sri Lanka. Sri Lanka people and government should have some attitude to the Chinese government.

    China did not do anything to damage the interest of Sri Lanka and the Sri Lanka people. So long time we co-operated with Sri Lanka, supported Sri Lanka, assisted Sri Lanka in international fora, in bilateral business. We did nothing to damage the Sri Lanka interests, but the media always have some negative reports without facts. I would like to say if it is on facts, no problem. If totally out of the facts without analysis, without any background, this is not scientific for the media.

    Q: Are you saying that the loans given by China are not accepted?
    A: Yes of course. We have an assessment of the loan. We insist on improving the infrastructure in developing countries. Infrastructure development is important for your social and economic development. So two percent is very low. If you have any comparison. I checked with Ravi. Last year you got some money from European countries – I think 50 million dollars at 5.8 per cent. Some people say this is a cheap loan, but they say two per cent is expensive. Do you think this is fair or unfair?

    Q: But, wasn’t the loans taken during the previous government higher than two per cent.
    A: Some are commercial loans.
    Q: five per cent and above?
    A: Yes. But concessional loans are not sufficient to meet the needs totally. You will have to get commercial loans. But for the Exim Bank it was always fixed at two per cent.

    Q: What is the total debt?
    A: I don’t know. You should check with Ravi. China is not the big source of debt. I read the newspaper last year and it said 22 per cent was borrowed from China. How about the remaining 78 per cent?
    Q: During the previous government Sri Lanka-China relations were developed to a ‘strategic development co-operation’ status. How is it with the current government?

    A: We developed the relations with Sri Lanka based on the interest of the two countries and the people regardless who is in the ruling party. We have no change in that policy. We had good relations with Rajapaksa and all the people. We also have good relations with President Sirisena and Prime Minister Ranil (Wickremesinghe) and with all the ministers. I do believe we should respect each other. Internally you have different political talks. That is not my issue. We insist on no intervention into the internal affairs of any country, particularly Sri Lanka is our friends. This is also the international rule. We insist on that principle.

    Q: One of the allegations that there was corruption in some of the projects funded and also you kept financing economically unviable projects – the Highway project is one of them. You have not countered the allegations.

    A: Bribery is your issue. We have the documents, we have the contracts approved by the AG (Attorney General), cabinet, parliament. If any Chinese company is related to bribery, we punish those persons involved. Three years back China initiated a movement to combat corruption and bribery. I do believe that the political fight between each other should not be linked to the Chinese assistance. All the big companies here are state owned. They must follow the state rules. Also they follow the law here. So many requests come for donations for social projects. One might say these donations are bribery. May be some money was donated to the temple or school and the money was not used for that purpose. So you mean this is the obligation of the Chinese company or your issue.

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