Chinese envoy says SL is ‘unfair’ to term Chinese loans as expensive
Posted on November 2nd, 2016
Adaderana November 2, 2016 10:26 am
I have noted that some media and ministers have termed these loans as expensive. As you know we maintain a regular interest rate of 2 percent, not only for Sri Lanka,”
I have already spoken to Ravi Karunanayake, Sri Lanka’s Finance Minister. I know he has criticized this issue many times, publicly. All the Chinese business people complain to the Chinese government as to why loans are given to other countries at 2 percent. For them it is atleast 5 percent. So this is really unfair for Sri Lanka to call these rates expensive,” the Ambassador said.
Sri Lanka’s previous government, headed by Mahinda Rajapaksa who was dubbed as a pro-China ally, borrowed millions of dollars from China’s EXIM Bank and other lenders for development projects. However the present government, who is facing a debt crisis due to the large borrowings by the Rajapaksa regime, especially for projects which have not generated any profit, is now renegotiating the loan terms with China.
Relations between China and Sri Lanka were strained when the new government of President Maithripala Sirisena was sworn in last year, as Sirisena had suspended many Chinese projects started by Rajapaksa, citing corruption.
This included a mega 1.4 billion dollar Port City Project, now known as the Colombo International Financial City.
After obtaining the necessary environmental permits and changing the original agreement, the project was given a nod in March this year. The project formally resumed on Oct 29, with Ambassador Xianliang stating that the Chinese investor was burdened with a loss of 1 million dollars per day due to the suspension of the project. The total loss incurred for the 1.5 year suspension is 140 million dollars.
However due to the close ties shared between China and Sri Lanka, the Chinese investor had dropped its compensation claims from the Sri Lankan government, Xianliang said.
China which held a tight grip over the island nation during the Rajapakse period, has over the year’s become Sri Lanka’s largest Foreign Direct Investor. According to the the Chinese Ambassador, China has completed infrastructure construction projects worth 15.5 billion US dollars in Sri Lanka by the end of 2015.
China also has direct investments of 409 million US dollars, which is increasing rapidly.
In addition, China has also largely contributed to Sri Lanka’s Tourism industry which suffered a severe blow due to the 30 year civil conflict. Statistics showed that nearly 200,000 Chinese tourists traveled to Sri Lanka from Jan to Aug 2016.
Following China’s development contribution to Sri Lanka, the Chinese Ambassador said that the Sri Lankan public and the government should have a more ‘thankful attitude’ towards China
For a long time, we have supported and assisted Sri Lanka in international forums and bilateral business fields. We did nothing to damage Sri Lanka’s interests. But the media always have some negative reports without facts. We are willing to accept criticism if its based on true facts.”
Speaking further on the loans provided by China’s EXIM Bank to Sri Lanka, the Chinese envoy said that his country had conducted serious assessments on these loans granted and these loans were granted to improve the country’s infrastructure as infrastructure was crucial for social and economic development.
He stressed that an interest rate of 2 percent interest was very low. Ambassador Xianliang further said that China and Sri Lanka shared strong relations and said that both countries should respect each other.
We insist on zero intervention in the internal affairs of any country. These are the international rules described in the UN Charter. We have no hidden agenda here, our system is very transparent.”
The Ambassador further dismissed allegations that Chinese companies involved in mega development projects were involved in bribery in Sri Lanka.
We have agreements and contracts which were checked by the Attorney General, the Sri Lankan Cabinet, the Sri Lanka Parliament. If there are any bribery allegations against Chinese companies, China will of course punish those people involved.”
Three years ago, China, initiated a movement to combat bribery and corruption. I do believe that Sri Lanka’s political situation should not be linked to China’s cooperation and assistance. If you talk about Chinese projects in Sri Lanka, some media automatically link it to bribery. All the Chinese big companies involved in projects in Sri Lanka are state owned.
They must follow the strict rules set by China. They also have to follow the law here.”
Meanwhile, the Chinese Envoy said that Sri Lanka can attract up to 5 billion dollars worth of Chinese investments in the coming 3 to 5 years if it maintains a clear and consistent business policy.
He said both countries were discussing a FTA and the next round of talks would be held in China this month.
He further said that to attract more foreign investments including those from China, investments promotion policies, management system and legal system were expected to be further improved in Sri Lanka.
(Courtesy – Newsin Asia)
-Agencies
November 2nd, 2016 at 4:40 am
Not only Ravi Karunanayake who said Chinese loans are expensive, it was Pacha Sirisena, Dirty Harry Rani and Pacha Chamipka Ranawake who cheated unsuspecting voters to vote for them to get loans cheaper from the IMF. We all sitting here, outside Sri Lanka, knew very well that Ranil’s IQ is so low that he will never ever understand the intricacies of economic principles to run an economy of a country, but poor masses believed it and they now have to suffer for a considerable period.
Not only UNP-Sirisena clan, but, some of the Lankaweb readers were also believed that Rajapakse brothers were getting commission for every Chinese project they started. However, I did not believe it, and I was the only one who refused to believe this, since I personally trusted Chinese more than Sri Lankan politicians. China as a nation has got very powerful anticorruption and ant graft legislation even those who breach them can face death sentences.
Sirisena is so pathetic that even in his very first address to the nation after he became the President of Sri Lanka, he not only reiterated this diabolical lie, but he even went further than this to accuse Mahinda Rajapakse for ordering a private plane for his personal use which later found to be another political lie formulated by Sirisena’s private army of so called anticorruption league.
Under these circumstances. All Sri Lankans should suffer for the heinous crime they have collectively committed by believing these diabolical lies that the Americans and Indians perpetuated and propagated in order to install a pro-wester puppet regime under their well-known strategy of “Regime Change”.
November 2nd, 2016 at 5:46 am
Neela; it is an Indian, Indian colonial parasites and vermin job. America is run by Indian when it comes toSri Lanka, Burma, Maldives etc..
November 2nd, 2016 at 6:01 am
I did not believe it, and I was the only one who refused to believe- I told so many my Sinhala mates living here that I do not believe D. A. Rajapaksa family steal any cents from public money but not one accepted . all gave me example Basil is commission man, Namal is pay boy etc…. but told then this is same Sadam/ Kadafi’s WOMD blam to “Regime Change” plane by India&Western world.
Kaput now !
November 2nd, 2016 at 6:02 am
Chinese Ambassador is right.. If Chinese interest rate is too high, why does Ravi Karunanayake begging Chinese for more loans..??
This government is full of incompetent ministers who don’t have a clue how to manage the day to day affairs in the country. Ravi Karunanayake is one of them who miss-managed country’s finances starting with VAT fiasco to half-assed budget so far. He should be fired and give this portfolio to someone who is knowledgeable in finances, budgets and taxes. I wonder if there is anyone in this government with such credentials who is capable of managing country’s finances.
Ranil W is another idiot who talks about the grand financial and trade schemes with other countries only to sell out the country to India, to save his political life and stay in power. His “pie-in-the-sky” economic proposals are half-assed schemes to please the hidden agenda of the IMF and the world bank, which control country’s finances and thus the economy.
If the country is to move forward with financial and political freedom, which we are rapidly losing to India – orchestrated by the West to keep SL under their control and to wade off China’s increasing economic influence in the region.. Sri Lanka needs to get out of the trap set up by the West through IMF and World bank, as soon as possible.
November 2nd, 2016 at 3:10 pm
Nihal is right, IMF and World Bank is setting a TRAP for SL just as they have done to many developing countries. When the trap closes, the stage is set for total control of the economy, the politics and the governance of the country.
Taking loans from China is much safer; China does not want kill the country it gives loans to, bease they use their lons to establing friendly relations with the majority of the citizens of a con try. As a result, China is a trusted lender to developing countries.
If SL had taken the loans China gave us from the IMF and World Bank and started to complain about the terms, today we would have had politicians of Western Powers making threats against Sri Lanka.
Like Nihal, I too agree with the Chinese lenders; if their loans are too pricey, why is Ranil asking for MORE?
Ranil and his PIN-HEADS had better not SPOIL THE EGG SOUP we are all depending on!
MR/UPFA would never had made these kinds of stupid statements. They KNOW how much we Sri Lankans OWE China for the massive help we received to WIN THE WAR and to fend off Tamil Tiger supporters like CLINTON, MILLIBAND, KOUCHNER, CAMERON, BAN-KI-MOON etc etc ad infinitum, ad nauseam!
November 2nd, 2016 at 3:18 pm
Oh, BTW, my last comment above is motivated by the emotion of GRATITUDE that Dilrook said is fast vanishing among younger generations of Sri Lankans.
WOE to us, if we LOSE ALL SENSE OF GRATITUDE as a people.
We should know that the Chinese, as an ancient cultured people who still have not forgotten their roots, value GRATITUDE HIGHLY.
We DISPLAY INGRATITUDE to China AT OUR OWN RISK!
November 2nd, 2016 at 5:28 pm
Now, HERE IS WHAT I MEAN about China. A $1 Billion grant to help Sri Lanka put this continuing Kidney Disease illness
that affects mostly poor farmers in the country.
NOT $1 million as the BIG TALKERS of the STINKING RICH West give, NOT even a respectable $10 million, NOT EVEN a generous $100 million, BUT a MASSIVE $1000 million to research something that benefits the people of Sri Lanka!
A FRIEND in NEED, is a FRIEND INDEED!
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China to provide Sri Lanka US$ 1 billion for kidney disease research
Wed, Nov 2, 2016, 09:43 pm SL Time, ColomboPage News Desk, Sri Lanka.
Nov 02, Colombo: The Chinese government will provide USD one billion to set up a special laboratory at the Peradeniya University to carry out research and testing on Chronic Kidney Disease of Unknown Origin (CKDu), Minister of Health, Nutrition and Indigenous Medicine, Dr. Rajitha Senaratne said.
The Minister said during his recent visit to China, a memorandum of understanding (MoU) was signed between the Sri Lanka Health Ministry and the Chinese Academy of Sciences to identify the possible causative factors for CKDu.
The MoU was signed between Minister Dr. Rajitha Senaratne and Vice President of Chinese Academy of Sciences, Prof. Zhongli Ding.
According to the Minister a high level delegation with relevant expertise from China is due to visit Sri Lanka between 15th and 20th December 2016 to initiate the research activity.
The MOU focuses on conducting further research to identify the possible causative factors for the occurrence of Chronic Kidney Disease of unknown origin. It also provides capacity building of Sri Lankan healthcare staff on preventive and curative aspects with regard to CKDu.
Some of the other important areas of the MOU are exploring biomarkers for detection of CKDu, strengthening the existing Renal Registry and updating the relevant statistics.
With the Chinese assistance a new laboratory would be set up on a land extent of seven and half acres and it would be affiliated to the Chinese Academy of Sciences. Two mobile laboratories will also be provided under the same project.
In addition, equipment to treat patients and training for Sri Lankan health staff will also be provided under this project.
November 2nd, 2016 at 5:41 pm
ADB grants Sri Lanka US$ 60 million for clean drinking water in kidney disease prone areas
Wed, Nov 2, 2016, 07:43 pm SL Time, ColomboPage News Desk, Sri Lanka.
Nov 02, Colombo: The Asian Development Bank (ADB) has agreed to provide an additional US$ 60 million to provide drinking water facilities to chronic kidney disease (CKD) prone areas, the Finance Ministry said.
Country Director of the ADB’s Sri Lanka Resident Mission Sri Widowati Wednesday signed the grant agreement on behalf of ADB while Dr. R.H.S. Samaratunga, Secretary to the Treasury, Ministry of Finance, signed for the Government of Sri Lanka.
The additional funds are expected to be utilized in projects related to provide safe drinking water as a solution to the Chronic Kidney Disease. The projects will be set up in the districts of Anuradhapura, Polonnaruwa, Matale, Badulla, Monaragala, Puttalam and Kurunegala.
In addition, the project will also contribute to improving priority infrastructure and basic services delivery in 29 local areas in the Western, Southern, Central, North Western and Uva Provinces.
November 2nd, 2016 at 11:22 pm
Sri Lanka-China relations go beyond UNP’s shortsighted anti-China rhetoric.
$1 billion is the largest donation ever in the fields of science and medical this country. Glad helpless CKD victims are considered at least now.
The geographical distribution of fund allocation is commendable. From 2010 to 2015 areas outside the north and east were relatively deprived of development. A cancer hospital was built for the exclusive use of Tamils in the north but CKD was disregarded despite killing many times more people than cancer in the north. CKD deaths was a major cause of Mahinda’s election defeat.
November 6th, 2016 at 6:12 pm
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?
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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.