10
Mar
Sri Lanka’s new leadership is not targeting China and only wants its help to fight corrupt deals orchestrated by the last government, the island nation’s finance minister said, even as he ratcheted up rhetoric against Chinese companies he said were once given “carte blanche” in his country.
“Sri Lanka is trying to do what Xi Jingping is doing: Root out corruption. We are not against China but against the Chinese companies manipulated by the Mahinda Rajapaksa regime into corrupt deals that are bleeding the taxpayer. The Chinese government might have been unaware of the activities of Chinese companies here,” Finance Minister Ravi Karunanayake told the South China Morning Post in an exclusive interview, referring to the former president.
“Our relationship with China goes back to the 1950s, when we defied the West to forge the rice-rubber pact with China. But Chinese investment is as good as any other investment, we cannot give it preferential treatment.
“You can’t come here and demand carte blanche, as the last government gave them. If a project costs 1 million dollars, you cannot make the taxpayer pay 6 million dollars,” said Karunanayake, who is scheduled to head to Beijing soon as part of Colombo’s efforts to renegotiate the contracts the Rajapaksa government signed with Chinese companies and financing bodies.
The construction site for the US.5 billion Colombo Port City project, a luxury real estate development inaugurated by President Xi Jinping in September and being built by China Harbour Engineering Company. But work has now been suspended by Sri Lanka’s new government. Photo: Reuters
He said Chinese projects are not the only ones being reviewed. “We are also examining a housing project by Indian conglomerate Tata. The Tatas come in and say they will put in US$250 million, but they put in US$20 million, use our land, and sell it back to us for a higher price. How does that work?”
Last year, Tata started a US$400 million housing project in central Colombo that involved the displacement of 65,000 people. The scale of displacement and the compensation offered have been a sore point with Rajapaksa’s opponents.
Karunanayake said the fears over China losing its investments in Sri Lanka were misplaced. “These are not Chinese investments. These are loans, it’s we who are paying for it.”
On whether his government will try to renegotiate the loans, he said: “That’s what we are asking China: ‘Please help us’.”
Chinese funding has come under scrutiny since Rajapaksa was dislodged from power in an election in January in the South Asian nation that Beijing considers an important component of its Maritime Silk Road plan, linking China with Europe via the Indian Ocean, the Red Sea and the Mediterranean Sea.
Billions of dollars of Chinese money have flowed into Sri Lanka since the end of a three-decade civil war in 2009 between Colombo and Tamil separatists, with Chinese state-owned companies building massive infrastructure projects such as ports, power stations, airports and highways.
The new government, headed by President Maithripala Sirisena, alleges widespread corruption by the previous administration, particularly those involving big-ticket Chinese-funded projects. The cabinet last week suspended the controversial US$1.5 billion Colombo Port City project, a luxury real estate development on reclaimed land the size of Monaco.
President Xi Jinping in September inaugurated the project, which is being built by China Harbour Engineering Company, a unit of state-controlled China Communications Construction Co (CCCC), which is listed in Hong Kong.
The alliance now in power had criticised the project and others like it before the election, saying these entailed exorbitant interest rates that deepened Sri Lanka’s debt to China.
According to the finance minister, there is no record of the mandatory environmental impact and feasibility studies for the project, nor is there any document that shows the government cleared it. “That’s why we have asked them (CCCC) to show us any document that they may have been issued illegally, which they have failed to do so far.”
CCCC maintains all necessary project studies had been conducted and approved by the previous government.
Asked if any foreign company can start a project of this scale without a go-ahead from the Sri Lankan government and if blocking the project is tantamount to reneging on contractual obligation, Karunanayake put the onus squarely on CCCC.
“There was no clearance. And, I am told this company is blacklisted in other countries. You cannot just jump into the Indian Ocean and start filling it up.
“We want to work with China to fix the problems with projects like these and move on.”