The white elephant syndrome Hambantota Port
Posted on August 3rd, 2017

A possession where the maintenance outweighs its benefits and cannot be got of rid of in a hurry is often referred to as a “White Elephant’. It should be noted however; the application of this phrase is relative to the competence or the capability of the user/manager.


This phrase is often used in Sri Lanka, these days, for underperforming assets. For example, the Prime Minister described the Hambantota Port as a white elephant and explained the lease for 99 years was for the benefit of the ‘under developed Southern province, as well as for the whole country, especially younger generation of Sri Lanka’. The astute buyer, the Chinese however, considered the transaction as a miraculous windfall and grabbed the long-term lease with both hands. Sri Lankans can now expect a rapid growth in the harbor area, which was languishing for nearly two years without proper direction and management. It is hoped that some benefits will flow on to Sri Lankans, particularly in terms of employment opportunities, and hopefully would not open gates for a Chinese colony in Sri Lanka. The general experience of Chinese investments is that they prefer their own labour confident of the work ethics and commitment of their own kind when it comes to employment. The transaction has also sparked several warnings on the security impact on the island from competing foreign powers.

In these circumstances it is natural for prudent analysts to investigate the reasons for the collapse of the economy, within a short period of only two years, to the extent that the country has to sell/lease its assets for survival. From day one the Yahapalana govt. blamed the previous regime for the state of the economy. The incoming government was aware of the national debt and any discerning party interested in the welfare of the country, contesting the election, would have a robust plan with funding sources to develop the economy and reduce the debt liability. Instead the Govt. was only talking up the rhetoric of economic repositioning of Sri Lanka on the lines of Singapore promising an unprecedented growth in employment so that every Sri Lankan would lead a prosperous life. The ‘how’ of the plan was not explained to the masses. The election promise of a salary hike of Rs10,000 a month for an estimated group of 500,000 public servants was beyond the affordability of any country in the developed world, let alone in a small country like Sri Lanka, in particular,when this expenditure is arguably not for the most productive sector of the economy. In hindsight there is reason for many Sri Lankans to believe that the Yahapalana election campaign with the added unsubstantiated bribery and corruption allegations against the previous regime was mainly an attempt to grab power and not for any advancement of country or its people.

The previous regime too needs to take responsibility to the regime change. They were unprepared for the onslaught in part for not explaining to the people their future plans for development. I remember visiting the Hambantota Port in 2014 and being very impressed with the 10 Year plan to develop the region. It was a disappointment that none of this was explained to the people even as a newspaper article. Critics attributed this muteness as an over confidence, or more likely as arrogance of the part of the previous regime.After the lease was signed, the previous President asserted that `..There was never any problem about meeting the payments for the Hambantota port because it was paid out of the profits of the Ports Authority’. This assertion came a bit too late for the previous President. Also, the previous regime did not refute the unsubstantiated allegations of corruption with the conviction that ‘Truth will prevail’. What was not realized at the time was that one cannot sit back and wait for truth to prevail, with the modern social media, as it would be too late for the accused. It was in this perplexed environment that Yahapalana Government was born without a plan or a strategy for development.

After the change the perplexity continued with the formation of the National Government joining two disparate parties, as a payback from the President to the PM for the former’s ascendency to the throne. It was indeed a pay back time at the expense of the state coffers. The number of Ministries was increased. Defeated candidates were appointed to some ministries, devaluing principles underpinning democratic elections.Several key Government officials were sacked and replaced by Yahapalana supporters. Unprecedented salary increases,expansion of ministry staff and advisers and perks like luxury cars, foreign travel were used to retain 2/3 majority, for the government. It appeared as if the Yahapalanaya does not have much care for the increased bottom line of Govt. Expenditure.

In addition the Yahapalana leaders who were to eliminate bribery and corruption were immersed in it from the outset of the new govt. The Govt. bond scam engineered with great precision not only eroded the country’s coffers but also resulted in a drain of foreign reserves and investments. The Govt. was compelled to borrow excessively to subsist and there was no money or investors for capital investments.

The reality of state of the economy is well expressed in the following selected key economic indicators – 2014 – 2016, published in Central Bank Annual Report 2016.

The above figures indicate that both Govt. Debt and Govt. Expenditure have increased by 4.2% and 2.4 percent of the GDP during the period. The critical observation is the decrease in reserves for imports mainly for sustenance to 3.7 months from 5.1 months.

Despite this dismal performance the Govt. shamelessly continued to mislead the electorate that the Yahaplana negative performance is due to the previous regime debts. In talking up the economy the Govt. once again has resorted to impart unsubstantiated investment canards to relieve the debt liability in the next two years!

It is also unfortunate that the Govt. has not stopped its selling spree of nation’s assets. The Mattala Airport, Colombo Harbour, Trinco Oil Tanka, the Sri Lankan Airline are all listed as ‘White Elephants’ to be sold in the short term. This indeed is a national tragedy perpetrated by yahapalanaya as against the current and unborn future generations of Sri Lankans.

Janaki Chandraratna

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