Hambantota Port-Why it should not be sold or leased to foreign ownership
Posted on March 17th, 2017

Chamber of Young Lankan Entrepreneurs

16 Responses to “Hambantota Port-Why it should not be sold or leased to foreign ownership”

  1. Lorenzo Says:

    Only an IDIOT will sell INCOME GENERATING assets.

    MR NEVER sold anything. He even BOUGHT BACK the national carrier sold to EMIRATES by CBK!! We must praise him for that.

  2. Ananda-USA Says:

    I have been saying the same thing as this article for some time now.

    It is both ABSOLUTELY UNNECESSARY and a CRIMINAL ACT to sell the Hanbantota Port to the Chinese, when the Port loans can be serviced by its own income, Colombo Port income and, if necessary, a small fuel tax surcharge.

    Don’t sell the INHERITANCE of our people, generations yet unborn, to foreigners, especially when it is UNNECESSARY!

    The Yamapalanaya is both UNPATRIOTIC and composed of FINANCIAL IDIOTS!

    We, the PATRIOTIC Citizens of Mother Lanka, appeal to President Sirisena, to DISMISS this PARA-GATHI AGA-MATHI and his CABINET, to join hands with the JO, and give us a PATRIOTIC GOVERNMENT!

  3. Ananda-USA Says:

    STILL MORE “Crash & SELL” activties by the Yamapalanaya!

    ON THE CHOPPING BLOCK:

    Ceylon Electricity Board (CEB),
    Ceylon Petroleum Corporation (CPC),
    National Water Supply and Drainage Board (NWS & DB),
    Airport and Aviation Services (SL) Ltd. (AASL)
    Sri Lanka Ports Authority (SLPA).

    Is there NO LIMIT to the UNPATRIOTIC ACTIVITIES of this PARA-GATHI government?

    Why are the PATRIOTIC PEOPLE of Sri Lanka STILL WAITING in SILENCE??

    …………………………………..
    Sri Lanka to raise USD 1Bn by listing SOEs: Finance Minister

    LankaBusinessOnline.com
    March 16, 2017

    Mar 16, 2017 (LBO) – Sri Lanka’s government plans to raise one billion US dollars by listing non-strategic enterprises on the capital market this year, Finance Minister Ravi Karunanayake said.

    “Our target is to roughly raise one billion US dollars from listing non-strategic enterprises,” the minister told reporters in Colombo Wednesday.

    “We are not in a hurry to do it, we only want to show that our intent is correct.”

    In the 2017 budget proposals several state-owned enterprises were named such as Mobitel, Hyatt, Waters Edge, Grand Oriental Hotel slated to be listed on the Colombo Stock Exchange.

    Karunanayake, however, stressed that the government will not give up controlling rights of the non-strategic enterprises especially SriLankan airlines.

    “We are only commercializing these institutions and not privatizing them.”

    “The Government has taken a firm policy decision where the President and Prime Minister are very particular about this. We have made a policy decision that we will keep a 51 percent stake in SriLankan airlines.”

    He was speaking prior to signing Statements of Corporate Intent with five large SOEs: Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), National Water Supply and Drainage Board (NWS & DB), Airport and Aviation Services (SL) Ltd. (AASL) and the Sri Lanka Ports Authority (SLPA).

    “We are doing this to encourage and facilitate the SOEs and it is aimed at improving efficiency to achieve the country’s economic goals by enhancing the contribution made to GDP.”

    We want to improve operational and financial efficiency through improved corporate practices, innovative financing, strong and prudent financial management, exposure to competitiveness and international best practices and effective human resource management while enhancing public accountability.”

    When queried about meeting the net interest revenue (NIR) targets set out by the International Monetary Fund (IMF), he said that except NIR, all targets will be met by the end of June.

    “We will get this also rectified. I believe that the reserves will come back.”

    The IMF in its latest evaluation had warned of declining reserves as Sri Lanka prepares to repay 2.6 billion dollars in debt this year.

  4. Ananda-USA Says:

    Lanka must grab business opportunities in region !

    REALLY?
    When the REGIONAL OPPORTUNITIES that were CREATED by the last Government are being SOLD at FIRESALE PRICES to foreigners?

    When our LARGEST INCOME GENERATING ASSETS are SOLD, how will we PAY our DEBTS, and FEED OURSELVES?

    This is a CRIMINAL PLOT of UNIMAGINABLE PROPORTION to GUT our Motherland, and REDUCE Sri Lanka to ABJECT POVERTY!

    …………………………
    Lanka must grab business opportunities in region – Harry Jayawardena

    DailyNews.lk

    Thursday, March 16, 2017 – 01:00
    Shirajiv Sirimane

    Aitken Spence Chairman Harry Jayawardena exchanging a momento with GeoPost SA Executive Vice President Arnold Schroven while DTDC Express Director Suresh Bansal, DTDC Express Chairman and Managing Director Dr. Subhasish Chakraborty, Aitken Spence Deputy Chairman and Managing Director J M S Brito and Aitken Spence Maritime and Cargo Logistics Chairman and CEO Dr. Parakrama Dissanayake look on.

    Sri Lankans must look at opportunities in the neighbourhood as it could be highly beneficial to businesses, Aitken Spence Group Chairman Harry Jayawardane said.

    Speaking at the celebrations held on Tuesday at Aitken Spence House in view of Aitken Spence entering a partnership with World-Leading DPD Group he said the biggest advantage in this is the huge population the neighbouring countries have.

    Sri Lanka companies before trying to do business with Europe and far away countries should try to exploit this huge population benefit especially from countries like India, to do business as it has second largest population in the world.”

    He said that Sri Lanka with peace today is one of the safest countries to do business. The country also developed very fast after the end of the war.Atiken Spence recently bought a brand-new five-star hotel with 143 rooms in Chennai for US$ 25 million. Speaking to Daily News he said it was not difficult to get into India. May be there were more approvals than in Sri Lanka but we have cleared them and remains as the second five star hotel in Chennai.”

    Aitken Spence already manages two hotel properties in India,Hotel Atithi in Coimbatore and Hotel Tamara in Puducherry.

  5. Dilrook Says:

    Nice presentation of facts and figures.

    However, I must say long term leasing Hambantota port to China is the most viable available option for several reasons. It is excellent if locals can do it profitably but the truth is it has not happened and there is no indication it will.

    – From 2017 onwards $1.053 billion capital repayments must be made.
    – From 2017 onwards $222 million interest has to be paid.
    – This money will be saved ($1.275 billion) and a further $1.12 billion will be earned immediately.
    – On going lease payments.
    – 20% profit of the port.

    – Enormous Chinese investments in the port and development in the surrounding areas in future. China only invests in assets they can control. This is peculiar in Chinese investments. Therefore, our investments or other FDIs don’t work with the Chinese port. Chinese efficiency and security guarantee for ships cannot be achieved without effective Chinese ownership of the port. We see this in Colombo South Port. Given the low volume and high debt, China didn’t agree to those terms (SOT) for Hambantota. Very large ships don’t come to ports unless their safety and timely departure are 100% guaranteed. We have seen in the past Sri Lanka cannot do so. China can.

    – An adjacent Export Processing Zone. Once again if the port is substantially owned by us, China would not invest in the EPZ as there is the political and investment risk. This is extremely high in Sri Lanka where Chinese projects had a very bumpy ride when governments change.

    – Indian, Japanese or western FDIs are unlikely in the EPZ as they don’t work with Chinese investments in third party countries (twice the political risk).

    – Security. JVP, LTTE and trade unions have caused physical damage to our ports for the past 35 years. There is high chance of subversion and attacks can be carried out in future. With 80% Chinese investment, China is tied to the risk. We can see elsewhere that China doesn’t run away from this risk. (e.g. Gwardar)

    – Indian and LTTE Rump threat. If investors are allowed to freely invest in Hambantota port, India and Tamil diaspora investors are the only people with means and intention to invest. It poses a tremendous strategic risk to Sri Lanka. Even a controlling stake in local bluechips are held by them now!

    Therefore the proposed long term lease of the port and the large land extent to China is the better of available options.

    Sri Lanka is in debt crisis. Almost all state revenue goes to repay interest (emphasised) on loans. The government has to borrow to pay salaries and all other expenses and carry out capital work. Debt to GDP is not a good indicator. Our GDP is in rupees whereas most of our debt is in hard currency. Debt to balance of payment is a better indicator. That is negative since 2011! For rupee loans, debt to GDP is a good indicator and that too has been worsening for the past 7 years.

  6. RohanJay Says:

    While its never really a good thing to sell national assets to foreign countries and companies. In this case it might not be a bad thing. As China has been a good friend to Sri Lanka. Also China along with Russia helped Sri Lanka win the terrorist war. Lest we forget. Also in the past anything China has done has been extremely beneficial to Sri Lanka. What happened here was, the western puppet regime in Sri Lanka. Initially scrapped the chinese projects which MR had started. However when the winds of political change was starting to spread in the west. The current govt lost any western support. I doubt there was any support from the west to begin with to Sri Lanka.
    So to compensate for their earlier folly they went to China re negotiating the terms from the MR govt. So Chinese investment and development in Sri Lanka would come back. As China was a big part of the post war economic and development success of the MR govt.
    To top things off. The workers at the ports went on strike and rioted as they thought they would lose out long term to China. When anyone knows china has never backstabbed sri lanka. So at the time I thought the protests were a bit stupid. Because they the port workers weren’t going to lose their jobs.
    Reality is Sri Lanka needs China badly for development and having a stable economy. So in my opinion, people should welcome the fact China is investing in Sri Lanka again.
    Personally the elecorate voting for Maithripala Sirisena on Jan 15th 2015. Was far worse than anything to do with re negotiating galle port project with China.
    If stupid people didn’t vote for Maithripala Sirisena we wouldn’t have this big raucous regarding the Galle Shipping Port. In the first place. I am willing to bet a good number of those shipping port protesters voted for Maithripala Sirisena on Jan 15th 2015.

  7. RohanJay Says:

    I mean Hambantota port not Galle Port. Apologies for my mistake.

  8. charithsls Says:

    I think the writers here are much more knowledgeable than me on these issues but the ONE & ONLY question I ask on this issue is Who wants MOST to throw the Chinese away? The Indians! I wonder , like they did to topple MR, all these protests are initiated & powered by the RAW. Others falling blindly to it. RAW & Indians are laughing from their back again. Don’t be fooled by them. We need Chinese to keep the Indians at bay.

  9. Ananda-USA Says:

    Dear Charithsls,

    You are RIGHT; of the foreign powers, it is the Indians who want MOST to deny access to the Chinese to Sri Lanka.

    You are ALSO RIGHT in that we need China to keep India at Bay.

    BUT, our GREATEST NEED as Sri Lankan citizens is to keep Sri Lanka free of PERMANENT FOREIGN residents who have the power to OCCUPY and POPULATE our Motherland, DISPLACING US!

    Therefore, we have to establish alliances with many foreign powers, principally China, but in a way that DOES NOT ENSLAVE our country to them.

    Because of HISTORICAL PRECEDENTS, we are rightfully afraid of VAST NUMBERS of Indians settling in Sri Lanka, for WHATEVER ACTUAL or PRE-TEXTUAL reason.

    The importation of Indian Tamils to Sri Lanka, agains tthe wishes of the Sinhala people by the British Colonialists, has saddled Sri Lanka with the problem of a potential Malaya-Nadu in the future in Hi;ll country.

    Prabhakaran imported 1.5 million Indian Tamils into the North and East to MORE THAN REPLACE the 1.5million Sri Lankan Tamils who were exported abroad as FAKE REFUGEES, to form his TAX-BASE for funding the war. During these EELAM war years the GOSL lost control of our sea coast and it has INCREASED the ACTUAL Tamil population in Sri Lanka instead of DECREASING it through emigration to the West.

    Now the EELAMISTS are demanding police andland powers so they can CONTINUE in PEACE TIME what Prabhakaran did in WAR TIME to permanently change the DEMOGRAPHICS of the country in favor of the Tamils.

    The above immigration of Tamils in the PAST could be dwarfed by the IMMIGRATION of Indian workers, primarily Tamils, into Sri Lanka, if the ETCA agreement under which service workers from India could settle in Sri Lanka, is ever IMPLEMENTED.

    Chinese workers illegally and legally emigrate into countries with good economic prospects EVERYDAY. The LARGEST NUMBER OF ILLEGAL IMMIGRANTS into Australia and New Zealand are Chinese! In every country they migrate to, they form China Towns and import more and more Chinese.

    Under the YAMAPALANAYA SALE of 80% of the Hambantota Port, all jurisdiction over and security for the Port will be Chinese hands. That fact, together with the LEASE of 15,000 acres of land outside the Port, in addition to about 675 acres within the Port, for an Industrial Zone will bring-in perhaps 200,000 Chinese into the country. It has been reported that the Chinese have requested far more visas than that. Sri Lanka will have no jurisdiction over these workers. In time, this area will become a Chinese Colony with a China Town. There will be intermarriage with Sri Lankan citizens, enabling them to serttle outside the confines of the Port and Industrial zones. In time (the lease can be RENEWED in 99-year terms without limit to the number of renewals), it is possible for the Chinese immigrant population to EXCEED even the population of Malaya-Nadu Tamils in Hill Country!

    In short, we will have seeded our country with a non-native foreign population with a powerfu;l foreign protector, that we will NEVER BE ABLE to get rid of!

    Chinese are GOOD ALLIES when they are NOT IN COMPLETE CONTROL, but they will be BAD MASTERS to yield COMPLETE CONTROL TO. The Chinese are being very AGGRESSIVE towards their smaller neighbors …. Vietnam, Phillipines, Indonesia, Cambodia, Malaysia, Singapore and Thailand in ASSERTING Chinese Claims to ALL OF THE SOUTH CHINA SEA that not only straddles that area CRITICAL to marine navigation and sea-borne Commerce.

    Therefore, while Sri Lanka should value China as an IMPORTANT ALLY, Sri Lanka SHOULD NOT CEDE ABSOLUTE CONTROL to China over the Hambantota Port, or ANY LAND within the country.

    Remember that we invited in the Dutch to oust the Portuguese, trading a more powerful colonial power for a weaker colonial power, an unwise process we persisted in until we LOST our Sovereignty in 1815 to the British!

    At present, we are trying to fend off India with China in a similar scenario, but we should MAKE CERTAIN that we NEVER YIELD ABSOLUTE CONTROL over our economy, our land, and our demography through immigratyion to ANY POWER! That will end only in ABSOLUTE DISASTER to our Sinhala Buddhist people.

    Mahinda Rajapaksa’s DEAL with China on Hambantota Port was FAR BETTER: It retained ADMINISTRATIVE CONTROL by Sri Lanka, limited the land to the Port’s 675 acres only, limited China’s equity stake to 49%, and the limited the lease term to 49-years, and assured employment of Sri Lankan workers for the majority of jobs!

    In making deals with foreign countries, India, China, United States or what ever, we have to ask ourselves: Do we want to be SLAVES, or the MASTERS of our own DESTINY? If we want to be MASTERS, then we MUST PRESERVE our control over our country and our NATIONAL INTERESTS PERMANENTLY! That should NEVER BE CEDED to foreign powers no matter how GREAR the SHORT-TERM GAIN, or how GREAT the pain and suffering we have to ENDURE in refusing a DEAL!

    BE WARNED! Yielding irrecoverable control of the Hambantota Port and 15,000 acres of land to China is as BAD AS yielding EELAM to the Tamils!

  10. Dilrook Says:

    I totally disagree with Ananda’s last sentence. I’m sure Ananda made it in light vein to stress the point as it is a ridiculous comparison.

    Yielding (Tamil) Eelam to Tamils is giving away 37% of the landmass (approximately 6 million acres) and 66% of the coastline for Tamils only to live and exploit with no benefit to Sri Lanka and with no control for Sri Lanka is a completely different case. It splits the nation and ends its sovereignty.

    This is not the case with selling an additional 40% stake in Hambantota port to China (bringing their ownership to 80%) and leasing for 99 years 15,000 acreas for export processing zones for China. These have immediate and lasting economic benefits, employment, debt management and technology transfer benefits.

    I agree with Charithsl that RAW agents (and their aspiring faithfuls) are behind the agitation and the strike in Hambantota. This is not the first time India has indirectly disrupted Sri Lanka’s economic progress and will not be the last. When looked at with the deals well known Indian agents in Sri Lanka made recently with certain politicians, it is not at all difficult to see this. A very worrying sign.

    The sad truth of any alliance (business, strategic, political or economic – even personal) is the more powerful/influential party gains more. It is acceptable as long as the other party is not run down and denied what it rightfully deserves. China has always (without fail) come across as a highly beneficial partner in all these fields for Sri Lanka. In addition, due to the strategic location of Sri Lanka (for China), it has a lever that can be used against China if need be. With the Hambantota port and 15,000 acre deal China would commit more than $10 billion (including remaining loans) – a significant investment which will be protected than destroyed by China.

  11. Dilrook Says:

    Due to the middle income trap (at the high end), many industries in China becomes unprofitable.

    China’s GDP per capita (nominal) is $8,216. It is only $3,870 for Sri Lanka. By relocating production to Sri Lanka, China can save (and Sri Lanka can gain) $7,214 per year per employee on average. This is a huge saving for China and a huge earning for Sri Lanka. For Sri Lankans, these are a step up in their salary, skills and technology. In addition, by basing production plants in Sri Lanka, China can cut down freight, insurance and cost of exports to Europe, the Middle East and Africa enormously. The total of saving per employee can be estimated at over $10,000 per person employed in Sri Lanka.

    We must grab this opportunity before others in Cambodia, Vietnam, India, Pakistan and Africa grab it. Although it is not a long term solution, it is a good first step until Sri Lanka reaches the top side of the average of middle income countries.

    A process of consulting people of Hambantota and Monaragala should be carried so that the claim people will be displaced and affected can be put into perspective. All development works displace people.

  12. Ananda-USA Says:

    Dilrook,

    Even if China could save money employing Sri Lankan workers, to make that saving they would have to pay those workers a wage nearer to what they earn in Sri Lanka now, and not any wage near the $7,214 they would pay a Chinese worker in China. So, you have to stop saying that Chinese employment of Sri Lankans would increase their salaries significantly.

    Furthermore, there is no guarantee that they will employ mostly Sri Lankan workers; that is not in the agreement.

    Given that Sri Lanka will own only 20% stake in the project, and will have NO CONTROL OVER THE ADMINISTRATION, how can we ensure, or even verify, the transaction volume on which the earnings are calculated, and the number if Chinese workers employed? We can’t and mostly likely will be cheated.

    You say Sri Lanka will have HUGE EARNINGS From the project, but on what do you base that projection especially when we own so little of the project and cannot exercise any oversight.

    Upto this point, we have been talking only about money. But let us now talk about the potentially huge number of Chinese workers who will settle in Sri Lanka during the first lease period of 99-years and subsequent renewals, the relationships and marriages they will develop with Sri Lankans, permitting them to gain citizenship, and thus form a large priviledged and protected community of foreign extraction in Sri Lanka.

    Today, the Indian Tamil population of Sri Lanka is approximately 840,000. Indian Tamils were initially brought to SL in 1827 and were less than half the current population at independence. If 200,000 Chinese settle in Sri Lanja within the next 20 years of the Hambantota project, they will easily exceed 1,000,000 in number in 99-years! That is ONLY ONE LONG TERM IMPACT of this project as it is configured now.

    Furthermore, unlike the EELAM project, through the Hambantota Port project China will acquire A LEGAL RIGHT to occupy, administer and populate the Port and the Industrial Zone with Chinese. It is not something China will allow us to abrogate abd expel the Chinese willy nilly. It is in that respect that I said above that this project, AS CURRENTLY CONSTITUTED, can have AS BAD IMPACT on Sri Lanka as the EELAM Project.

    We have to SERIOUSLY CONSIDER the LONG TERM IMPLICATIONS of agreements we enter into with FOREIGN POWERS!

    This Yamapalanaya VERSION of the Hambantota Project is FAR WORSE than ANY CHINESE DISEASE the Yamapalanaya claimed to have EXISTED before the ELECTIONS!

  13. Dilrook Says:

    @Ananda

    Sri Lanka has many export processing zones and nothing of that sort has happened. Given the cost, most workers will be Sri Lankan and not Chinese. Some UNP minister had hinted they will have to bring Indians to work in these, an absurd statement. It cannot happen under existing laws. You don’t disrupt business fearing Indians will come here to get those jobs. There is no threat of Chinese workers invasion as Tamils did.

    The others are usual business risks any investor will face.

    In my view all agitations on ground (there is no evidence locals living in that area stage a protest by themselves) are by RAW instigated agents, outside politicians and desperate politicians trying hard to get back into the good books of RAW – an extremely influential group responsible for multiple regime change acts in Sri Lanka.

    The government should hold local government elections promising to do what it is trying to do in Hambantotoa if they win. That will be a good yardstick of what people actually think in the two poorest Sinhala districts of the island where women leave the country in hundreds of thousands even before getting married. Some come home in coffins, some with abuse and others never wanting to raise a family. Men are manipulated by Sajith promising odd jobs. It cannot go on. The Chinese government must be notified about anti-China political elements who try to play both sides.

  14. Fran Diaz Says:

    Especially those enterprises that are considered ESSENTIAL SERVICES should NEVER be sold/long leased out. This attitude is considered a part of Capitalism (per book on Capitalism: “Wealth of Nations” by Adam Smith).

    Right now, the PORTS of Lanka are an ESSENTIAL part for Lanka’s Integrity and Survival. Not even proper Laws have been put in place to safeguard that the PORTS OF LANKA ARE ONLY FOR PEACEFUL PURPOSES.
    LANKA LAND falls into the same category as the Ports.

    Yahap “Crash & Sell” program is taking dangerous turns now. Crashing and Pocket Stuffing is easy, but the Selling part is tough. Watch it Yahap ! The People of Lanka are watchful and alert. This shortsighted Game of Economic Chess to ‘Crash & Sell’ will not work out.

  15. Fran Diaz Says:

    Re Tamil population in Sri Lanka :

    Tamil population of Sri Lanka = 2.3 Million (11.2% of total population) – mostly in N&E & western provinces. (2012 Census).

    Upcountry Tamils = 842,323 (as at 2011)

    Total Tamil population in Sri Lanka as at 2012 = 3.2 Million (approx)

  16. Lorenzo Says:

    I agree with Fran BUT there are NO ANTI-CAPITALIST politicians protesting against H’tota which is a shame.

    I think all ANTI-CAPITALIST politicians SUPPORT selling H’tota to China. VERY DISAPPOINTING.

    Only ASTON MARTIN, LAMBORGHINI, MASERATI, BMW and LEXUS driving, ROLEX wearing and PRIVATE SCHOOL and UK UNIVERSITY EDUCATED ULTRA CAPITALIST politicians OPPOSE H’tota.

    Why?

    Are they REAL?

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