Amunugama on turning Sri Lanka into a financial and trading hub

Saturday, 28 May 2016 00:00 -     - {{hitsCtrl.values.hits}}

Minister of Special Assignments Dr. Sarath Amunugama delivered a special speech at a seminar organised by the international audit organisation KPMG in Frankfurt, Germany. Minister Amunugama represented the President at this seminar which was held on the sidelines of the 49th annual meeting of the Asian Development Bank. Following are excerpts from his speech:

Frankfurt

 

Today, we know that global growth is driven by China and India with that large growing middle class – a market that every manufacturer in the world is seeking to enter and exploit. We in Sri Lanka are only 20 km from the south of India. From the south of Untitled-1Sri Lanka to the South Pole there is no land mass. According to the United Nations Law of the Sea, Sri Lanka has 10 times more sea space than its landmass. So if you do not look in a land map, but a sea map of the world, Sri Lanka will look much bigger than it looks now on a land map. So we have this great advantage. I think you will be surprised to note that absolutely two thirds of the world’s maritime traffic, sea traffic goes past the coast of Sri Lanka. It will be difficult for people to believe when you think of the Atlantic sea traffic and of the Pacific maritime traffic and all that. If you look at the oil consignments that go daily from the Middle East, then you will agree with me that the statistics that I quote, two thirds of the world’s maritime traffic going past the coast of Sri Lanka is absolutely true.

Now, even in that situation, how do we create an economic growth strategy? One of the crowns of our development strategy is to create two smart cities. One city will be created in Colombo and the other will be in the Southern-most point which is called Hambantota. Now, here comes another surprise. We have just signed an agreement with a major Chinese company which will create a new 380 hectares of land from the sea in the city of Colombo. So what you know as the City of Colombo now in another five years will be only half of what will be known as the Megapolis of Colombo.

Then in the South, we are developing a new port which is being assisted by the Bank of China, where we will be having ship building, oil refining and also providing oil to ships which now have to fuel themselves in the Middle East till they reach Singapore. But we are very much closer. Refuelling at Hambantota will be much easier. Now for that, we have built there a new harbour. There is also a new airport and a new city there.

If you take the proposed megapolis of Colombo, we have to remember that between Singapore and Dubai, there is not a single place where people can meet, can eat like this, and where people can discuss financial matters in a financial hub. So we are trying to position the megapolis of Colombo as a financial and a strategic hub between Dubai and Singapore. Now this means we have to create an entirely new city. What are the advantages of a new city? The first is that we have invested very much during the last ten years in providing infrastructure support. Ours is a small country, it is comparatively easy to invest on roads, on rapid transport, on electricity, on water – all those elements that keep a big city functioning and alive. If you come to Colombo now, you will see that the new island in the sea, reclaimed entirely from the sea, is already being built. We have got very good terms there; 380 hectares will be reclaimed from the sea. It will not cost the Government anything for the 380 hectares; 30 hectares will be given to the Chinese company on lease. As you know, China is very good at creating new islands. You know that a new island is now being created in the South China Sea. Anyway, in Sri Lanka, we have no problems concerning new islands, as elsewhere, because from the south of Sri Lanka right up to the South Pole there are no islands except for the one we are going to create in Colombo.

So one objective is to establish the Colombo Megapolis as a financial centre because the growing middleclass in India, the growing middleclass in China and the growing middleclass in the rest of Asia, need a financial hub and I must say at this juncture that the Asian Development Bank has been a partner in the development of the city. We have what is called a PPP – a joint venture, partly funded by the Government of Sri Lanka through funding from the Asian Development Bank, where we build a new breakwater and the rest of the development will be done by the private sector. So there is a lot of opportunity in Colombo for investment. It will be in the next decade, a major investment centre in South Asia as we have planned. We have to have buildings, we have to have banks, and we have to have global management. We want to make the new megapolis of Colombo, a vital centre in South Asia. So we need your assistance.

When we come to the south of Sri Lanka where we have a new harbour and a new airport and a host of new hotels like Shangri-La, and very soon Four Seasons, it is very important that we develop that as a vital seaport. Already we have Chinese companies and Japanese companies which are negotiating to set up ship building in that port. There are also Japanese companies which will be building cranes – highly sophisticated cranes – for selling to the rest of the world. You cannot begin export development growth unless you develop a top-class harbour and a harbour city. So we have set apart 100 acres for investment round the harbour of Hambantota. Already, 100 Chinese companies have signed up to establish their plants in Sri Lanka. Only three weeks ago, the Prime Minister of Sri Lanka and I visited China, meeting with the President and the Prime Minister of that great country. They have assured us that they will work very closely with us in developing these two hubs, the hub of metropolitan Colombo and the hub of Hambantota.

So these are some of the ideas that we have. We are very open with this strategy – the leapfrog theory which India has borrowed. That is to say, in the modern world, it is always better to start late because when you start late you don’t have to go through the errors that your predecessors have gone through. We don’t have to go through the problems of the industrial revolution. We can immediately go into the post industrial revolution and the representative body here has that knowledge and that knowledge and experience they can transfer to Sri Lanka. It will be of mutual benefit. We are going to have very open investment policies. We have enacted what are called strategic investment laws where with mega investors we can negotiate the terms and conditions. So Sri Lanka as we envisage it in the next few years, together with agencies like ADB and hopefully KPMG, will be able to develop as a very important financial and trading hub in South Asia.

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