By Nishel Fernando
The majority of Sri Lanka’s private sector wants the government to play a supportive role in facilitating and promoting joint ventures between Chinese and local firms to fully harness China’s benefits of the Belt and Road Initiative (BRI).
According to a survey conducted by the Ceylon Chamber of Commerce (CCC) among the local business community, 28 percent of the participants viewed that facilitation of joint ventures between Chinese and local firms as the top priority of the government for local businesses, to derive the benefits from the BRI projects.
Presenting the findings of the survey, CCC Chief Economist Shiran Fernando said 22 percent of businesses also sought the government’s support to initiate businesses on the reclaimed land of Colombo Port City, a key BRI project in Sri Lanka.
Fernando said this at a seminar themed ‘Sri Lankan perspective on the Belt and Road Initiative’, jointly organised by the CCC and Pathfinder Foundation, on Monday.
For the BRI projects to succeed, Fernando pointed out that introduction of laws to facilitate joint ventures/PPPs, facilitation of business arbitration, availability of land for investors, higher level of technical skills for service delivery (logistics) and Chinese language skills would be crucial in Sri Lanka.
Although 91 percent of local businesses were aware of the BRI, only 60 percent were aware of how Sri Lanka is linked with the BRI projects and mere 10 percent viewed that developments with regards to the BRI would impact their businesses.
Sri Lanka has three key BRI projects under implementation - Hambantota Port, Hambantota Industrial Zone and Colombo Port City.
Half of the business community viewed that Colombo Port City would be most beneficial for their businesses, followed by the Hambantota Industrial Zone.
Fernando emphasised that the BRI projects present many opportunities for local firms, including links to value chains via partnership with Chinese firms, transhipment and value addition, potential reductions in logistics and transport costs, enhanced market access and potential to further expand into service industries in areas of logistics-related services, legal services
However, he cited the concerns among local businesses on trade liberalisation and trends of anti-globalisation sentiment as challenges to fully reap the benefits of the BRI.
According to the available data, Sri Lanka was the third highest recipient of China’s financial diplomacy between 2000 and 2017, in South and Central Asia.
Sri Lanka has received a record US$12.7 billion from China during this period, as both concessional and non-concessional loans, through government agencies, policy banks, state-owned commercial banks or investment funds, as well as grants and technical assistance.
Commenting on the BRI projects and allegations of lack of standards in development financing by China, Prof. Wang Yiwei, Director of Institute of International Affairs and Director of Centre for European Studies at Renmin University of China, stressed that China has a different approach to development financing, which allows developing nations to develop faster compared to the western model.
“Development first and then the developing nations can set rules gradually,” he said.
Foreign Relations Additional Secretary to President Admiral Jayanath Colombage blamed the mismanagement of borrowed funds by successive governments for Sri Lanka’s current debt problems.