Amid need for Chinese capital, Sri Lanka sets sights on manufacturing

Development Strategies and International Trade Minister Malik Samarawickrama – Embassy of Sri Lanka in China

China and Sri Lanka have seen more cooperation in the economic field in recent years. But many media outlets in India have hyped up the ‘concern’ that China could outpace India's influence in Sri Lanka. How does Sri Lanka view China and India's presence? What kinds of Chinese investments does the country want most? Global Times reporters XieWenting and BaiYunyi (GT) interviewed Development Strategies and International Trade Minister Malik Samarawickrama (Samarawickrama) on the topics. 

GT: What are the priorities on your agenda during your trip to China? 

Samarawickrama: First, I think I came here primarily to attend the Summer Davos in Dalian. I was there on Monday and Tuesday. Then I went to Beijing to meet Chinese Vice Minister of Commerce Wang Shouwen and attend an investment forum organised by the Embassy of Sri Lanka. 

Discussions with the Vice Minister are based on continuing negotiations for the potential free trade agreement. We would also like to assist Chinese businessmen to invest in our nation with the idea of exporting [products] to other countries from Sri Lanka.

GT: Is there any breakthrough on the free trade agreement (FTA) between China and Sri Lanka? Do you have a timetable for the FTA?

Samarawickrama: I had discussions with the Vice Minister. It has been stalled for a while. We had some difference in opinions, but I think we can come together on that. And we would appreciate it if China can look at Sri Lanka as a small and vulnerable economy and take negotiations forward on that basis. 

We haven't fixed the timetable yet. We are also discussing regularly with our stakeholders back home. We don't want to fix a timetable, but we must ensure that we have a good agreement in which both parties can win. 

GT: What kind of Chinese investments does Sri Lanka want most?

Samarawickrama: China has invested heavily in our infrastructure. But now we hope to see more Chinese to come and invest in manufacturing. We need to provide better jobs to our people. So, we would like to see Chinese entrepreneurs in manufacturing business. 

GT: As for the Colombo Port City, the first phase of the construction ended in January. How is it going now? What is Sri Lanka's plan to build the city?

Samarawickrama: Yes, the first phase is over. Now we are in the process of finalising the law, which can be completed in about a month or two. I'm told that the Attorney General's department has sent it up to the Cabinet. We'll have a look at it and then have it approved by Parliament.

So within the next two to three months, we will define the law applicable to the port city. We are assisting the Chinese firm China Harbor Engineering Company, which is doing the marketing for the port city. 

We have received information that at least two major buildings at a cost of about $ 800 million will be constructed. We are waiting for the law and tax concessions to be finalised before giving the approval. 

We are looking at a special economic zone and a special authority to run it. We will have investor-friendly laws and tax regime there, and we are still debating whether we should have a separate authority to manage that port city. 

Within about a month or two, we'll be able to come up with the details. It would definitely be a business-friendly setup, which will be similar to Singapore or Dubai. We are looking at investment from all over the world, not only from China.

GT: Some media reports said that Japan and India are discussing a partnership with Sri Lanka to expand the Port of Colombo, and a memorandum of understanding (MOU) will be signed this summer. Could you confirm this? How are talks going?

Samarawickrama: We have, as you know, one terminal that the Chinese merchants are running; one terminal that we have a local company which has a joint venture with a European company running it. For the next terminal, we are holding discussions with Japan and India to develop a joint venture, but the terminal will be owned by Sri Lanka and the operation will be through a joint venture company.  We will hold majority shares but for operations we're looking at getting Japan's expertise. And as you know, about 75% of the cargo at Colombo port is from India, so it's very important for us to ensure that India is also on board.

We have signed an MOU. We want to start it as soon as possible because it has been delayed and we have received conditional financing from Japan for the equipment. We will buy the equipment from Japan. I think they will start the project in the next couple of months. 

GT: Some media outlets have hyped up the competition between India and China in Sri Lanka. What's your take on it?

Samarawickrama: We have very good relations with all the countries in the world. India is as important as China. To us, India is the closest neighbour. They've been friendly with us. We have worked together with everyone. There's no competition as such. But we would like all Indians, Chinese to come and invest in Sri Lanka and improve our economy and help our young people to get better jobs. But commercial competition is good for all countries, including Sri Lanka.

GT: How do you evaluate the operation of the Hambantota port? What measures would you take to attract investment?

Samarawickrama: The Chinese merchants have done better than we expected, and they expect another six to eight years before they can really start making good profits. It'll be difficult to make profits from the port alone, and they must also have other industries coming in to make sure they can maximise the use of the port.

We are in discussions with a company to set up refineries. In the meantime, a cement manufacturing plant is being set up, but we would also expect Chinese merchants to bring in some investments from which they can also benefit.

Chinese merchants are one of the best port operators in the world. They have a lot of experience. So I believe they will do a good job. We are also looking at some other petrochemical industries coming up with the refineries.

GT: Is Sri Lanka seeking more funds from China to finance any other project? 

Samarawickrama: We need to develop more infrastructure. We are now looking at the next freeway, which the Cabinet had earlier decided to give to China. So, hopefully we can start the project next year. At the same time, there are lots of water supply projects which have been undertaken, and we need some funding from China for those. 

GT: Do you have any plans for economic recovery after the Easter bombings in April? 

Samarawickrama: We were very quickly back on track as far as the terrorist attacks are concerned. Some of terrorists killed themselves and some have been killed. So that part of it is now behind us. I don't see any problem remaining from the bombings, but naturally the tourists will take a little time to come back. 

Now the travel advisories have been lifted by most countries. So we expect things to get back to normal in three or four months. Recently, a tourist group with more than 100 people – the largest international tour group since the bombings – visited Sri Lanka. (China Global Times)