Hambantota and new SL-China deal

According to news reports, the China-Sri Lanka Joint Committee appointed to oversee investment is to set up a new ‘city’ in Hambantota as part of its economic development plans. This development may be seen as surprising to many who have followed the blowback from Chinese-funded investments throughout Hambantota which have been deemed disastrously unproductive.

China has become a major part of Sri Lanka’s development discourse and thereby intrinsically linked with its political landscape. The impact of billions in loans from China continues to play a key role in the country and will likely do so despite the Sirisena-Wickremesinghe Government veering its alignment to accommodate India and the West.

Indeed, despite its bashing of the previous Government’s economic policy, it does seem that the State is eager to keep China as an economic partner and a source of Foreign Direct Investment. Locally and internationally, China has come to the forefront and Sri Lanka has to grapple with this reality. On one hand China is funding investment and development around and world and Sri Lanka cannot sit back and miss crucial opportunities but on the other it cannot get too close and risk being drawn back into geopolitical crosscurrents.

Perhaps more importantly for the Sri Lankan people, the Government needs to ensure it does not repeat the mistakes of the previous regime and ensure that all developments arising out of the China-Sri Lanka Joint Committee are done by the book in an open and transparent manner. The last thing Sri Lanka needs is to slip back into the crony capitalism days of the Rajapaksa regime and to add more white elephants like Mattala Airport to its collection.

All that said, the idea of an economic hub in Hambantota could, if done right, redeem all the money sunk into the south by the previous regime. Even the most critical of experts have voiced their desire to see Hambantota succeed as a hub that could provide jobs and potentially uplift the wellbeing of thousands of Sri Lankans.

The Sri Lankan Government in partnership with China has a shot at redemption in Hambantota and a chance to finish what it started. With the Mattala Airport, Hambantota Port and a network of decent roads, Hambantota is not lacking in infrastructure. What it does need however is the resources to truly boost its productivity and the investment to create more jobs.

Whatever the details of this new Hambantota city project, one hopes that the Government will learn that infrastructure alone will not stimulate long-term growth and stability. This is an area in which the previous Government failed spectacularly. The productive power of cities comes from the people as much as from infrastructure.

Clearly, throwing good money after bad projects will be something to watch closely and the move comes hot on the heels of the Government acquiring loans from the International Monetary Fund as well as a number of other foreign entities. However, Sri Lanka has to join the world in doing smart business with China, and more importantly has to find creative ways of cleaning up the mess of its predecessor without burning bridges.