From the day the new Government took office, China’s dominance in Sri Lanka has been slowly pushed to the back seat. The suspension of the mega Port City project was the biggest blow the Chinese faced. In an interview with The Sunday Leader, the Deputy Head of Mission at the Chinese Embassy in Sri Lanka, Ren Faqiang, expressed regret over the manner in which China has come under fire over several development projects and said that while China had only intended to assist Sri Lanka, the allegations raised against some Chinese projects are tarnishing China’s image. He said that if the Port City project dispute cannot be resolved, then the two parties should resolve it in court as there is a legal agreement and that can have drastic consequences if either party fails to uphold their part of the bargain.
Following are excerpts of the full interview:
By Camelia Nathaniel
Q: China has been in recent times been accused of being a close ally of former President Mahinda Rajapaksa and his regime. Is this true?
A: No, that is certainly not true. China is a friend of Sri Lanka and irrespective of who is in power, we will assist them in the best possible manner. It just so happened that when China offered its assistance to rebuild Sri Lanka after the war it was the Rajapaksa’s who were in power that was elected by your own people.
Even if President Sirisena or Prime minister Ranil Wickremesinghe or for that matter anyone else was in power China would offer its assistance regardless. In fact that is the bipartisan policy to build friendly relations with China.
Q: Do you think that the stance taken by the current government on the projects initiated by the previous regime, especially involving Chinese investors will have a negative effect on Sri Lanka?
A: Yes certainly this will have a negative impact on future potential investors. Recently we received four provincial business delegations who wanted to invest in this country, but when they found that the port city project had been suspended for the last 1 ½ months, and that the policy is not continued when governments change, they were reluctant to invest. They decided to wait and see what happens with the port city project.
Q: There is belief that after the election is held the investors will come, but under these circumstances, who would want to take the risk and come here to invest?
A: This sort of attitude will not only affect Chinese investors but others too. The port city investor is also a Honk Kong listed company and they have a good reputation and China harbour too has a very good reputation.
What they should have done is to allow the construction to continue while re-evaluating the project. But if they want to stop it then by all means stop it and resort to legal action, where both sides go to court and resolve the issue. That is fair play. So we believe that before the election it is better to let it go, otherwise people will say that they were using this as a stepping stone, using the Chinese companies and investment to gain political mileage. That not only hurts the Chinese people, its leaders and the Chinese government, but how can any investor have confidence in your government? Other than these large investments there are many private investments that have yet not come, who were interested in investing in Sri Lanka after the visit of the president, but under these conditions, I doubt they will now feel confident to come.
Q. How much has China invested in Sri Lanka?
A: First we should identify the difference between investment and loans. These are two different concepts. In terms of investments, during and now five years after the war, no one wants to take the risk of investing in this country. But after the war Sri Lanka has made gradual progress. As far as China is concerned there are two major investment projects with Chinese backing.
One is already accomplished, which is the Colombo South Container harbour. That is the most successful direct investment story post war. The first terminal under new expansion in the Port of Colombo is built by Colombo International Container Terminals Ltd., (CICT), a joint venture Company between China Merchants Holdings (International) Co., Ltd. (CMHI) and the Sri Lanka Ports Authority (SLPA). It is developing the new port under a 35 year build, operate, and transfer (BOT) agreement with the SLPA and is one of the biggest in the World with the total length of the new Breakwater at 6830m and the berth Depth at 18m.
China Merchants Holdings (International) Co., Ltd. (CMHI) is a Hong Kong based company and their investment was 85% that is 250 million US dollars. The Sri Lanka Port Authority investment was 15%, while the constructors were the China Harbour and they finished it in just twenty eight (28) months, whereas the scheduled construction period was 60 months. In the last 1 ½ years since its opening, you have the largest deepest container harbour in the whole of the south Asia region.
Let me explain why we say this is a success story for Sri Lanka. The proposed Colombo South Harbour is situated west to the existing port of Colombo comprising an area of approximately 1500 acres. The proposed harbour has 3 terminals each having 1,200m length and facilities to accommodate 3 berths alongside. The proposed small boat harbour at the end of secondary breakwater has 400m length of quay wall. Last year the Colombo South Container Harbour was the fastest growing container harbour in the world.
Moreover less than 20 managers and engineers are working there while over 300 Sri Lankan workers are employed operating the cranes, and they draw big salaries. They were also trained in Shenzhen China. 60% of the goods dealing by this harbour is from and to India. Each ship costs $200. It has also put Sri Lanka on the map as having the best transfer port in the region.
Q. With regard to the Port city project apart from the environmental concerns that are also security concerns especially by India. Is there cause for concern, and is China trying to establish its dominance in this region?
A: China does not need to; we just want to have good relations with all countries. Our interest here is simple, first to do business and promote trade and investment and tourism. Because there are so many cargo ships and it’s close to the main cargo route, it is customary for out navy to escort cargo vessels and other ships, against piracy. We have no hidden agenda but some countries misunderstand china. China is a peace loving country and it is unfair to point fingers at us.
Q. China has always been a friend of Sri Lanka dating back many years. Can you tell us a little bit of the historic friendship and the links between our two countries?
A: China and Sri Lanka have always been good friends, good partners and good neighbours. Our friendship with Sri Lanka dates back to way back around 2000 years ago. 1600 years ago during the Ming Dynasty the famous Chinese monk Faxian visited Sri Lanka and studied Buddhism in Anuradhapura for two years and brought back doctrines of Buddhism. Then During the Ming Dynasty Admiral Zheng also visited Sri Lanka at least five times and there is a stone script (we call it the three language stone script) now stored at the National Museum.
Then in 1950, one year after the founding of the Peoples Republic of China it was the UNP government under D. S. Senanayake recognised the Peoples Republic of China among the first group of countries in the world to recognise new China. on the 18th December 1952 R. G. Senanayake, the then Minister of Commerce signed the Ceylon-China Trade Agreement or the Rubber-Rice Pact in Beijing which laid the mutual foundation for mutual trust between the two countries.
Following that during Bandaranaike’s government, Chinese Prime Minister Chou En-lai, visited Sri Lanka in January 1957 to sign the agreement with Sri Lankan Prime Minister SWRD Bandaranaike, establishing diplomatic ties between the two countries. Our bilateral relations grew steadily thereon. Then under the leadership of Sirimavo Bandaranaike, on her request China helped Sri Lanka build the BMICH. In the 1990’s we build the second phase and the BMICH and many other constructions too. In recent times the Supreme Court complex is also being built by the Chinese and in 2011 Nelum Pokuna was built by China for Sri Lanka. Nelum Pokuna Centre for Performing Arts, the Bandaranaike Memorial International Conference Hall with the extension of the Sirimavo Bandaranaike Hall, the Supreme Court Complex in Colombo, all of them gifts from China. Apart from that many other projects such as the Hambantota Port and also the 2.4 million TEUs capacity Colombo South Container Terminal. However not only has China helped Sri Lanka but Sri Lanka too has stood by China in times of need as a true friend.
Even during the war, China played a positive role in helping Sri Lanka to put an end to the 26 year miserable war and crush down terrorism. We are happy to say that Sri Lanka won the war and we hope that your peace can last forever. Even after the war Chinese loans and Chinese companies came to the assistance of Sri Lanka to rebuild after the war ended. We finished not only many large scale projects but many small scale projects too that benefitted the ordinary people of this country. Moreover over 50% of this country’s electricity requirement is met due to the Chinese coal power plant in Norochcholai.
Q. However there were many issues being raised regarding the Norochcholai Coal power plant and the repeated failures that plagued it. What happened there?
A: Yes I agree that the first phase of Norochcholai had many problems and both sides learnt a lot by them and made progress. However the second and third stage which came into operation last August has had no issues for the last nine months. Not a single power outage. Moreover this coal power plant not only provides this country a steady electricity supply, but also dramatically reduced the cost of electricity which is beneficial to the ordinary people. One KW of coal power is only Rs. 8 while diesel power generation costs between Rs. 30-50. We provided the loans, technology and construction and today even the operations are handed over to Sri Lankans. However the first phase had many issues as the Sri Lankans were not very familiar with coal power generation. Then we sent our technicians and operators to assist the Sri Lankans operate all three phases as per our agreement, free of charge.
Q. But there were a lot of allegations that the Chinese were sabotaging the operations at Norochcholai and not letting the Sri Lankans take over in a bid to manipulate the Sri Lankan power sector. Is this true?
A: The fact is on the contrary. The reason why the first phase of the Norochcholai coal power plant had to be shut down over 20 times was that at the request of the CEB we completed construction of the first phase one year ahead of schedule, as your country was facing a crisis situation due to the drought and needed electricity very badly. But speeding up the construction also posed some problems and also additional costs. Secondly the location where the coal power plant was to be built was not chosen by China but by Sri Lanka.
The High salt percentage in the area was not taken into consideration when choosing the location which later caused some machines to corrode. However although China had built many coal power plants in China we too did not predict the highly salty vapour in the air due to its proximity to the sea.
But we eventually worked very hard to rectify the issues and get the power plant working efficiently. Both sides leant valuable lessons in the first stage and this helped us too in the second and third stages and it is clear in the smooth running that we have managed to overcome the issues that were faced in the first phase.
The Sri Lankan engineers and workers are very capable people but they did not have the experience to handle the first stage of the Norochcholai coal power plant as this was the first power plant of this type to be built in this country. The engineers spent three months in China but the time is not enough.
I think both sides learnt lessons. The next most crucial issue that caused so many issues in Norochcholai is sabotage. It certainly was not China and for us this was just a small coal power plant. The CCTV footage will prove it as the evidence is on those recordings, but we did not want to get anyone into trouble.
Q: One of the allegations that have been levelled against the port city project is the environmental concerns with such a large area being reclaimed from the sea. However with the Colombo South Container Harbour, the area reclaimed was twice as much. How come there were no environmental concerns raised then?
A: Yes the Colombo South Container Harbour is 600 hectares whereas the Colombo Port City is approximately 183 hectares, but there have not been any environmental implications.
Q. What is the current status of the Colombo Port City project?
A: This project is a direct foreign investment from China Harbour mother company CCCC also a Hong Kong listed company listed among the top 500 companies in the world. China Harbour has worked to uplift the livelihoods of the Sri Lankan people for the past 18 years. They started by building a small fisheries harbour in the South, but it stood the test during the Tsunami. This won the hearts of the Sri Lankan people and the government.
They have completed many projects with high quality and low cost, and they also provide so many Sri Lankans employment opportunities, and train them to be professionals. Even in the Hambantota harbour project over 10,000 Sri Lankan workers were hired and trained too. These workers not only earn a living but they train not only on work but they also learn new technology.
The first phase of the project investment is $ 1.4 billion, and they invested this because they trusted Sri Lanka. However at the moment they are greatly disappointed. They had followed all the procedures directed by the Sri Lankan government and they signed an agreement that was approved by the cabinet and your attorney general approved it too.
All documentation is well in place. The environmental evaluation was done by the Sri Lankan government as it’s not the responsibility of the Chinese Company.
Secondly this agreement is a legal agreement and if one side unilaterally suspends the project then they will have to face the legal consequences.
These legal consequences that will call for compensation to be paid will certain be a burden on the people of Sri Lanka, if this company decides to go to court. These are not agreements that are just haphazardly signed, these involve huge investments and no one likes to lose on these projects.
However the Chinese Embassy has asked this company to be reserved and to respect the decision taken by the Sri Lankan government. We hope that after they re-evaluate they can give the green light for these projects.
These are international agreements and which ever government comes into power they should honour these agreements.
The spirit of contract is the foundation of international economy cooperation and the foundation of business.
Q. With regard to the road projects, there again China has come under fire alleging that the amounts were largely exaggerated, in order to facilitate kick backs and bribes. Is this true?
A: I cannot speak on behalf of the company, but I think that all the allegations should be based on facts and figures. Without a proper evaluation it’s not fair to target anybody. To put dirty water on their face is unfair, when all they have done is assist your country.
For instance the Katunayake expressway, without Chinese loans and Chinese technology and equipment who could have finished in on time and realise this dreams of several generations of Sri Lankans? The quality of the road is very high. It’s easy to talk with two tongues but have these people visited the construction site and actually seen how much work goes into building these roads. I have personally been there three to four times while they were building it and seen firsthand how difficult the work was.
This road is above the lagoon and it had to deal with so much soft land and marsh land that needed to be treated. I am no expert or technician, but I saw mountains of sand and rocks put there and they treated this land day by day for half a year painstakingly before they built the pillars to construct the road. It also has four lanes and so many bridges. It’s an expressway and not a country side road. This is not a flat or road with two lanes.
They are also criticising the Colombo outer circular road. But in comparison with other road constructors ours is the lowest and that is why China was selected. This road of 9.5 km 6.5 km is with bridges and suspended areas and only three kilometres was on flat land. Another factor is that it is also six lanes, so the cost cannot be compared with a two lane road. So these people who are making these allegations do not have that knowledge.
Do not look down upon your own people, your own public servant, your own negotiator and their loyalty when you criticise that the cost is high you put dirty water on their face too you hurt their heart. It is not China that forced the price on your country, but these prices are negotiated many times before selecting a contractor. China has come to assist you and you put dirty water on China’s face and this is unfair, but in the process you put dirty water on your people too.
Sometimes after the construction of bigger roads when money remains they utilise even that small balance to build a smaller road, so that not a single rupee is wasted. During the construction of these roads even when the cost of Bitumen (tar) went up, the loss was borne by these companies. That was their commitment.
Q: Why did China come forward to help Sri Lanka in rescuing those stranded in Yemen?
A: The Sri Lankan government made a request to China for assistance to evacuate the people stranded in Yemen. The Chinese government agreed and offered our hand as we believe that a friend in need is a friend indeed.
In all we have evacuated around 500 Chinese Nationals stranded in Yemen by last week, and we have also assisted in evacuating people stranded there from 10 countries including Pakistan Ethiopia and some western countries. Last Monday around 3 pm 45 Sri Lankans, the last of them were evacuated aboard a Chinese frigate Ling Yi headed to Djibouti. The Chinese Ambassador and our last group of around 25 Chinese Nationals left from the Port of Hodeidah.
Q. Is there a big demand among the Chinese for Sri Lanka as a tourist destination?
A: Yes there has been a boom in Chinese tourists especially during the last two years. Last year we saw a growth of 136% (138,000) Chinese tourists ranking China as the third highest. This year in February 27,000 Chinese tourists arrived in this country and we are certain that by the end of the year China will rank highest in terms of tourists. Further expenditure wise the Chinese tourists spend a lot especially on garments and gems. Hence it also promotes the local economy.
(Courtesy The Sunday Leader)