Is Sri Lanka’s effort to become a tourism and business hub costing the country too much?


Sri Lanka owes the Chinese more than $8 billion

By Kathy Melvin | Presbyterian News Service

Chinese dredging machines operate 24 hours a day in Sri Lanka to produce reclaimed land, possibly causing irreparable environmental harm. Photo by Kathy Melvin

COLOMBO, SRI LANKA – China is investing billions of dollars to build infrastructure all over Asia — Malaysia, the Philippines, and most recently, Sri Lanka. China says it is building a modern-day “silk road” (a nod to its ancient trade route), but some believe there are staggering consequences to signing away too much control to the Chinese, including irreparable environmental harm and debt so large it can never be repaid.

Today, estimates are that Sri Lanka owes Chinese companies about $8 billion, and about 90 percent of the country’s revenues go to debt service. It began in Sri Lanka with a man who is no longer president and an international airport that hosts more wild animals than passengers.

After the end of the country’s 27-year civil war, then-president Mahinda Rajapaksa believed that the key to Sri Lanka’s future prosperity was to use its beautiful natural resources to become one of Asia’s hubs for tourism, business and conferences.

So in 2013, Sri Lanka spent more than $270 million dollars to build Mattala Rajapaksa International Airport, the second largest airport outside the capital city of Colombo. The airport features beautiful architecture, modern facilities, gift shops and restaurants. What it doesn’t have is passengers. The old saying, “build it and they will come,” didn’t hold true. The airport is poorly located, not near major attractions, and only one airline currently flies there. Statistics show in 2016, there were fewer than 5,000 passenger arrivals for the entire year.

When traveling around Sri Lanka, you will likely hear more than once that the airport’s major revenue comes not from travelers but from renting out unused terminal area for rice storage. Unfortunately, the visitors never came, but the bills from China arrived right on schedule. To service the overwhelming debt, the country turned over control of the port of Hambantota to the Chinese with a 99-year lease in return for a $13 billion investment in housing, retail and schools, creating more than 80,000 jobs.

Chinese dredging machines are working 24 hours a day, 365 days a year to build out the shoreline for the planned new hotels, restaurants, shops and businesses. The machines grind up the material on the seabed and turn it into fine sand that forms the foundation for the reclaimed land. The chemicals and waste from the construction go directly into the port’s water. Damage to marine life threatens to be enormous.

At a recent conference Sri Lankan advocacy groups see a map representing China’s rapidly increasing expansion in Asia. Photo by Kathy Melvin

The construction jobs that were promised to the Sri Lankans never materialized. The Chinese claim that local workers do not have the skills to work on their projects, so they brought in ships filled with construction workers from China. The Chinese don’t even buy local food to feed the crews or house them in local hotels. Everything is brought directly from China on the ships.

A state-owned Chinese firm, China Communications Construction Company Limited, is developing the port city project. In a 2016 article in Finance Asia, the company promised the project would “offer unmatched potential for business, leisure & tourism and a high quality of living, not only for local inhabitants, but also for the countless numbers of global human family from across the shores.”

Rob Fohr, the PC(USA)’s director of faith-based investing and corporate engagement and lead staff person to the committee on Mission Responsibility through Investment (MRTI) recently visited Sri Lanka with a group from the Church.

“From both an economic development and economic justice perspective, the deal the former Sri Lankan government made with Chinese investors is highly problematic,” he said. “While these investments may serve the Chinese government’s interests, including increasing its regional influence, they are harming the Sri Lankan people. Some of the immediate observable harm is through the environmental damage to the coastline which is decimating the fisheries on which many Sri Lankans depend for their livelihoods. Also at issue is the fact that the Sri Lankans are being excluded from the expanded labor market these Chinese investments have created.”

President Rajapaksa was defeated in the last election and Maithripala Sirisena was elected. He promised a more balanced foreign policy. The project was suspended, but in 2017 it began moving forward again.

At a conference in Sri Lanka in January, “Port City: For What? Whose Benefit?” concerned religious groups and NGOs came together to discuss China’s rapidly advancing presence in the Indian Ocean and the China Sea. Many fear the advancement has more than an economic goal, possibly a military strategy as well.

Valery Nodem, the Presbyterian Mission Agency’s associate for international hunger, was also recently in Sri Lanka, and with Fohr, is following the developments there closely.

“With the previous regime in Sri Lanka, it was very risky to publicly protest against any action or position from the state. Activists doing that were persecuted, threatened, and many disappeared,” he said. “A new generation of Sri Lankans is rising and demanding that the people’s real needs be addressed by the state, rather than investments in white elephants that might benefit the elite, but further impoverish people. The church plays a big role in that struggle and has been very involved and prophetic. The question is: Will all these voices be heard?”

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