{"id":57178,"date":"2016-07-31T14:55:48","date_gmt":"2016-07-31T21:55:48","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=57178"},"modified":"2016-07-31T14:55:57","modified_gmt":"2016-07-31T21:55:57","slug":"china-to-sri-lanka-we-want-our-money-not-your-empty-airport","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2016\/07\/31\/china-to-sri-lanka-we-want-our-money-not-your-empty-airport\/","title":{"rendered":"China To Sri Lanka: We Want Our Money Not Your Empty Airport"},"content":{"rendered":"

Courtesy Forbes<\/em><\/span><\/h2>\n

Sri Lanka has a debt problem. After more than a decade of taking out huge loans to build large-scale infrastructure \u2014 most of which hasn\u2019t yet produced adequate returns \u2014 the country is now struggling to make payments, and is looking for another way out.<\/p>\n

A potential exit strategy was to offer China debt for equity swaps<\/a>, which Sri Lanka\u2019s Prime<\/a> <\/span>Minister Ranil Wickremesinghe recently proposed<\/a> to China\u2019s Ambassador Yi Xianliang. China was offered varying degrees of control over some of Sri Lanka\u2019s biggest infrastructure projects, including Mattala International<\/a> Airport and portions of the Hambantota deep sea port, and Sri Lanka would receive some debt relief.<\/p>\n

China\u2019s response to this offer was publicized earlier today in Colombo\u2019s Sunday Times<\/em>: We\u2019re not interested<\/a>. The Chinese ambassador replied that it was not possible according to China\u2019s laws.\u201d<\/p>\n

However, China was clear that it extends its fullest cooperation\u201d and that such deals should be conducted via investors on proper commercial terms.<\/p>\n

This point is key: while China\u2019s government will not swap debt for equity they will help clear the road for Chinese companies to take over key projects in Sri Lanka.\u00a0IZP, a Chinese informational technology company, has been put forward as a potential purchaser of Mattala International Airport,<\/a> while COSCO is looking intoexpanding operations at the Hambantota deep sea port<\/a>.<\/p>\n

<\/div>\n
\n

\"IMG_20160218_111424_DCE\"<\/p>\n

Not a passenger in sight. It is still the morning and no more flights are to arrive or depart. Mattala International Airport may just be the world\u2019s emptiest. Image: Wade Shepard.<\/p>\n<\/div>\n

The problem, both for Sri Lanka and for any would-be investor, is that many of the large projects in question are losing money fast, and may ultimately prove to be economically unsustainable \u2014 at least without a massive amount of additional investment, more infrastructure, and a miracle or two. With just two flights per day, Mattala International is more than likely the most underused international airport on the planet<\/a> and the Hambantota port is also running at severe under-capacity, while the brand new and fully modern highways that run through this region are mostly devoid of vehicles.<\/p>\n

However, not all hope is lost for these projects \u2014 yet. Although China declined a debt for equity swap, their participation in Sri Lanka\u2019s infrastructure development is more than likely just getting started. Colombo Port City<\/a> has been green-lighted once again and just last week China requested 15,000 acres of land in Hambantota<\/a>for the building of a massive, million worker special economic zone. The latter seems to run flush with the original Hambantota idea:<\/p>\n

If you\u2019re going to have a bulk port you need to have industry around the bulk port to take advantage of it,\u201d said Deshal de Mel, a senior economist at Hayleys Plc in Colombo. That is where the whole idea comes from; that we\u2019ll have industry coming in to kind of match up to the port. So the shipping port can still be made to work if they can get the right industries to invest in it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Courtesy Forbes Sri Lanka has a debt problem. After more than a decade of taking out huge loans to build large-scale infrastructure \u2014 most of which hasn\u2019t yet produced adequate returns \u2014 the country is now struggling to make payments, and is looking for another way out. A potential exit strategy was to offer China […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,102],"tags":[],"class_list":["post-57178","post","type-post","status-publish","format-standard","hentry","category-business","category-economy"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/57178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=57178"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/57178\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=57178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=57178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=57178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}