{"id":61838,"date":"2016-12-27T11:47:50","date_gmt":"2016-12-27T18:47:50","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=61838"},"modified":"2016-12-27T11:47:50","modified_gmt":"2016-12-27T18:47:50","slug":"china-and-the-magampura-port","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2016\/12\/27\/china-and-the-magampura-port\/","title":{"rendered":"China and the Magampura Port"},"content":{"rendered":"

By Shivanthi Ranasinghe\u00a0Courtesy Ceylon Today<\/strong><\/em><\/span><\/h2>\n

In 1638, we got the Dutch to dislodge the Portuguese and ended in a worse situation. Then, with the Treaty of Amiens in 1802, which had nothing to do with Sri Lanka, the English took over from the Dutch. Thereafter, we lost the last vestiges of our sovereignty and came under their complete subjugation. During World War II, certain local elitists believed a Nazi victory would lead to our liberation. Today, there is a thought that leasing 20,000 acres from our southern coast, including our Magampura Port, to the Chinese will balance the Indians.<\/p>\n

However, the Chinese presence is not coming with this leasing agreement. They have been present since the port project came to life. Ironically, then their presence was a contentious issue, for it was seen that the Chinese were taking the locals’ jobs.
\nThe Chinese got involved with the Magampura Port construction almost by accident. Initially, the Rajapaksa administration was trying hard to get support from India to take this project off the ground. India too was very keen and tried their best. Despite the highest level authorities’ efforts from both ends, for over six months, they could not make any progress.
\nIt was during this time that President Rajapaksa visited China. There, whilst speaking of the various investment opportunities in Sri Lanka, he casually mentioned the plans to construct the Magampura Port.<\/p>\n

Ego Venture<\/strong><\/p>\n

Many had derided this project as an ego venture of President Rajapaksa, for he is also from Hambantota. In reality, this project has been in the pipelines for more than 100 years. Very few understand this port’s strategic value. Sri Lankan ports had marvelled the world for thousands of years. In fact, the Magampura Port was not the first on the southern coast. Just three kilometres away was the original port, using the estuary of the Walawe River that functioned for over 2000 years.<\/p>\n

Contrary to popular belief, it was not the spices that attracted the Portuguese to Sri Lanka. It was the ports that serviced the sea routes. These brought ships from all corners of the world to one converging point \u2013 Sri Lanka \u2013 with valuable and exotic merchandise like spices and gems. The British realized the importance of developing the southern port. Yet, the business community was concentrated in Colombo that already had the 2000-year old Colombo Port.<\/p>\n

After Independence, various administrations wanted to revive this port. This was also in the Southern Development plans of the 2001-2004 administration when the United National Party, under the incumbent PM, Ranil Wickremesinghe’s leadership, was in power.<\/p>\n

The inhibiting factor was the cost, for the sea there is very deep. With no landmass between the South and Antarctic, the need for a breakwater was imperative. The construction cost for this breakwater alone made the project prohibitive.
\nThen a dynamic and innovative team during the Rajapaksa administration came up with the solution to bring the harbour inland than build it in the sea. It was not the perfect solution and attracted much criticism. Still, it made a project heretofore infeasible, doable.<\/p>\n

However, Sri Lanka had neither the technology nor the experience to handle this complex project. It was to bridge this gap that India’s help was sought. It was out of India’s depth as well. China on the other hand, quickly got its act together and the project commenced shortly afterwards. Though, Chinese expertise and technology was used, the Sri Lankan engineers played a huge role in the design and consultancy, which was a huge saving for the project. This is attested by the SLPA \u2013 China Harbour seal on every engineering drawing. Furthermore, there was a significant transfer of knowledge that our engineers benefitted from.<\/p>\n

Solid Business Plan<\/strong><\/p>\n

Many pronounced that the loans taken have plunged the country into a debt trap. Perhaps they were ignorant of the solid business plan that was in action.<\/p>\n

The Hambantota Harbour has four terminals for general, cars, bunkering and containers. China Merchant Co. and China Harbour Engineering Co. had jointly signed a 40-year lease agreement for the container terminal. It is these two very companies that also bid for the whole port with the incumbent government.<\/p>\n

The agreement was on a Supply, Operate and Transfer basis, where the two companies provided all the equipment for the container terminal. The commitment of the Sri Lanka Ports Authority was providing only the basic infrastructure. SLPA was to get 35 per cent plus a royalty of US $ 2.56 per container, that was to increase by one per cent each year, as well as US $ 30 per container as wharferage. There was also to be a yearly rental for 150 hectares outside the harbour.<\/p>\n

Overall plan<\/strong><\/p>\n

The overall business plan for the port, besides the four berths, included cement, fertilizer, sugar, LP Gas, Ro-Ro handling facilities, shipbuilding and repair as well as other port related activities. There was opportunity for cement grinding plants, cement storage and bagging plants, fertilizer storage and bagging plants and LP Gas distribution facilities with three tanks of 2000-ton capacity with gas handling facility at the berth. This was to utilize 2000 hectacres of the land within the harbour, which was to be a free trade zone. Thus, within this zone, value addition, packing and assembling can be done free of duty and tax payments. The only payment was for the port charges for the exports within the port. The local market can also be tapped from here, but that will be subject to Sri Lanka’s prevailing duties and taxes. There were such agreements with 11 different companies.<\/p>\n

Yet, vested interest groups propagated stories that the port was wilting without business. It was even said that in a desperate attempt to generate revenue, vehicle carriers from the Colombo Port were diverted to Magampura.<\/p>\n

In truth, Colombo Port did not have the space to accommodate more than 2,000 vehicles at a time and that too after using every conceivable space available inside the port and along the road. Until these were cleared, the next ship could not be taken. Sometimes, these ships waited out at sea for two or three weeks. That cost was passed on to the consumers. Sometimes vehicle carriers would dump their load in Dubai, Chennai or Singapore. Then, it had to be re-shipped to Colombo.<\/p>\n

Once the operations were diverted to Hambantota, volumes that were limited to 1,000-1,500 unit transshipments increased rapidly. In the first year, the number of vehicles were around 12,000, in the second year it was 67,000 and 200,000 in the third year. Out of that 200,000 vehicles, 70 percent was transshipment.<\/p>\n

Not a White Elephant<\/strong><\/p>\n

Therefore, Magampura Port is not a white elephant, but a project that was already tapping the tip of its huge potential. There was already a solid business partnership with Chinese and other companies that guaranteed Sri Lanka a good and progressive income. Thus, there was no economic need to lease 80 per cent of the shares of the port for 99 years to a Chinese company, for a one-time, lump-sum payment. This may be the reason for some to think of this as a geopolitical balancing act.<\/p>\n

It is a thought not without merit. India had never been able to enjoy the good historic relations Sri Lanka had with China. Both China and India are rising superpowers and are currently in a ‘ceasefire’, as they are consolidating their strengths. In the latter part of last century, India was with Russia, and China was with America. Today, India is with America and China with Russia.
\nIn the ’70s and ’80s, India for domestic political survival, sponsored terrorism against Sri Lanka. To counter, Sri Lanka leaned towards America. Since then, America has had a schizophrenic relationship with Sri Lanka \u2013 alternating between supporting and opposing Sri Lanka’s war with terrorism.<\/p>\n

Today, Sri Lanka’s relationship with America is in a total flux. The Obama regime unabashedly took credit for bringing this government to power. When the Republican candidate Donald Trump won, FM Mangala Samaraweera is on record expressing his personal disappointment. Thus, currently our foreign policy stand with the Americans is not clear. Neither are we sure where we stand with Britain, as again the incumbent government openly supported the side that lost the Brexit battle.<\/p>\n

Meanwhile, China is making a concerted effort to build relations with Russia. Trump’s foreign policy is not stated yet and difficult to guess given his unpredictable temperament. However, he has promised to be only America’s President and no longer the world’s policeman. Also, Russia and America are in the process of burying the hatchet, which offers much hope to an otherwise grim situation. At the same time, Trump has already irked China by calling the Taiwanese President.<\/p>\n

The billions of dollar question is can India and America continue their honeymoon with Trump as the groom. Obama’s last days are spent scuttling Trump’s plans to keep American jobs in America. When both Lockheed Martin and Boeing are offering to take their entire production lines of their fighter jets – F-16 Fighting Falcon and F\/A-18 Super Hornet to India, it is obvious who the major industrialists support. Though US military is phasing out the F-16, the demand for it, from other countries, remains. The timing is perfect for India, which is seeking to modernize its rapidly aging Russian-built fleet.<\/p>\n

Both aviation companies have vowed that it will not affect the net jobs already in US, but will create new jobs in India. Also, if these production lines were set up in India, then the sole producer of the single-engine combat aircraft will be India. This works for India with its ‘Make in India’ programme that is seeking to expand its manufacturing base to 25 per cent of the gross domestic product within six years.<\/p>\n

However, Trump has warned American companies that shifting their operations overseas would prove a costly mistake. At the same time, Iran has sealed a US $ 17 billion deal with Boeing. With this deal in place, work is cut out for Trump to balance his political pledges with international relations. With India surpassing the British economy, it will not be easy for Trump to ignore India’s expectations.<\/p>\n

In short, the relationship America so far had with Russia and China are changing drastically. The good relationship that was blossoming between America and India is reaching a crossroad. At times, Trump seems edgy with Iran, but he is not free to act at will because of the huge deal with Boeing. He cannot upset Iran and still hope to save the jobs guaranteed by the Iran deal.<\/p>\n

Not Isolated<\/strong><\/p>\n

Looking at these geopolitical movements, we are not as isolated as we fear. China, Russia, Pakistan and Iran had always been good with Sri Lanka. Pakistan and India have crossed swords again. Though, India is powerful and perhaps the darling of the West right now, Pakistan is still a force to reckon with. Indeed, India is not good with most of our friends. Thus, strengthening our relationships with them and their stand with the Indian Ocean is important to balance India, who may be tempted to support a secessionist move in Sri Lanka.<\/p>\n

This government, explains<\/strong><\/p>\n

Dr. Dayan Jayatilleke, thought China was dispensable. The recent spat Ravi Karunanayake had with the Chinese Ambassador, to which Mangala Samaraweera also chipped in foolishly, simply aggravated matters. With a smarter foreign minister, with better understanding of geopolitics such as Dr. Sarath Amunugama or Susil Premajayanth, we could negotiate better, is Dr. Jayatilleke’s opinion.<\/p>\n

China as an Ally<\/strong><\/p>\n

The need to have China as an ally is undisputed. The damage caused by the incumbent government’s maiden moves has put us on a weak footing. However, would genuflecting to the Chinese correct our course, is the question we need to carefully answer.
\nIt is pertinent to remember, despite our solid relationship with China, we cannot welcome the most venerated Dalai Lama without ruffling Chinese feathers. As the holder of the Sacred Tooth, we are the capital of Buddhist countries. Still, while Dalai Lama is ‘banned’, the Catholic Pope is free to visit at will. Imagine then, what our position would be, if we have no say in our strategic investment, with only the crumbs Chinese choose to throw at us for our survival.<\/p>\n

Therefore, we must network with all our friends and balance them on our own terms. The last thing we should do is blindly write off our investments for others to enjoy the returns and for us to pay the loans.<\/p>\n

(ranasingheshivanthi@gmail.com)<\/p>\n","protected":false},"excerpt":{"rendered":"

By Shivanthi Ranasinghe\u00a0Courtesy Ceylon Today In 1638, we got the Dutch to dislodge the Portuguese and ended in a worse situation. Then, with the Treaty of Amiens in 1802, which had nothing to do with Sri Lanka, the English took over from the Dutch. Thereafter, we lost the last vestiges of our sovereignty and came […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,102,6],"tags":[],"class_list":["post-61838","post","type-post","status-publish","format-standard","hentry","category-business","category-economy","category-politics"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/61838","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=61838"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/61838\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=61838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=61838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=61838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}