In the wake of massive Chinese investments in Malaysia and other South Asian countries, analysts have said India would want to scramble towards possibilities in Sri Lanka.
While China has placed its money bags on the table to invest in Sri Lanka, it has said that fast tracking projects on the part of Sri Lanka would encourage future investors.
Delivering the 13th Sujatha Jayawardena Memorial Oration organized by the Colombo University Alumni Association held at BMICH last week, Chinese ambassador Yi Xianling expressed concerns over protests over the Hambantota Economic Zone while adding that such acts may hamper possible investments in the future.
The Ambassador had reportedly said that the Chinese President had advised him to be patient during the delay of Colombo Port City project and work cordially with the government and its people. “I have time and I have patience, but I am worried about the patience of the business community,” he had said.
“If protests continue how can I persuade them? When they approach me I asked them to get the answers from the Sri Lankan leaders, not from me,” he had reportedly said.
Analysts recently said China’s rapid investment growth in the Asian region, namely, Malaysia, Nepal, Myanmar and Pakistan has threatened India, which has now initiated fresh moves to strengthen economic ties with several countries including Sri Lanka, as examined in detail in our Business section lead article.
India’s Foreign Secretary J. Jaishankar who is expected to arrive in the country on February 18 is to hold key discussions with Sri Lankan government authorities on strengthening economic ties. Analysts also comment on the possibilities related to this visit where India should take notice of the massive Chinese investments in the Asian region and walk the talk by investing in Sri Lanka without further vacillation.
Indian reports said that Jaishankar’s visit to Sri Lanka was to push the Indo-Sri Lankan relationship at a time when China was looking at a strong re-entry into the country through fresh projects. Sri Lanka’s resilience to Chinese projects is largely due to the lack of transparency and fears that properties would be sold to the Chinese.
However, Yi Xianling assured that the Chinese government would not buy lands from Sri Lanka and all projects would be carried out according to the government’s procedure and consensus of the people.
“The port belongs to Sri Lanka. The Chinese investment of USD 1.1 billion is to operate 80 percent of it. No contract or agreement is made yet. Only the framework agreement has been signed,” he reiterated. Meanwhile, economists said that Sri Lanka should very strongly address the fundamentals of economic and political stability and clarity and consistency in relation to policies to attract Foreign Direct Investments.
Professor at the Department of Economics of the Faculty of Arts of the University of Colombo, Prof. Sunil Chandrasiri said these aspects have been consistently and repeatedly highlighted by the World Bank’s development reports and reports compiled from various sources such as those using the Enabling Trade Index.
“For the past five to six years, Sri Lanka has maintained a low level with regard to FDIs. In fact, along with Pakistan, even Bangladesh attracts far more FDIs than Sri Lanka,” he said.
Chandrasiri who lectures on international trade and finance and international economics, noted that this was due in part to the fact that those aforementioned countries have a bigger market while Sri Lanka has a smaller one, and also because the country has a poor investment climate, thus giving rise to more negative conditions.
“Any investor who has expressed his will to make investments in a host country would take into account factors such the socio-political-economic climate. Factors prevalent at present including the presence of protests in the country are discouraging,” he pointed out.