Credit: AP Photo/Eranga Jayawardena, File, China’s investment in Sri Lanka is often portrayed as “debt trap diplomacy.” While it’s true that. Southeast While there are important areas for improvement to protect the environment and the local labor force, the BRI offers Sri Lanka benefits and opportunities for the future. These include the construction of the USD1.5 billion cargo port at Hambantota, in Sri Lanka’s far south, the first phase of which predated the formal launch of B&R and opened in 2010. This requires some deft manoeuvring by Colombo: “Now we’re partners [with China], let’s get in place the rules, regulations and policies to make sure it’s a balanced relationship.”. “The problem is it’s David and Goliath,” says McCabe. One view is that the Chinese investment that comes with OBOR has been a much-needed tonic for the development of lower … Divya Hundlani is an independent researcher and Pabasara Kannangara. Sri Lankan politicians praised China-proposed Belt and Road Initiative (BRI) for its benefits to their country. But there are hints Tokyo is taking action behind the scenes. In this Jan. 2, 2018, file photo, a Chinese construction worker stands on land that was reclaimed from the Indian Ocean for the Colombo Port City project, initiated as … Here’s what the international community can and should do about it. In particular, Sri Lanka should consider the environmental and labor impacts of Chinese investment to ensure they get the most out of the Belt and Road Initiative (BRI). While the National Human Resources Development Council does research on the inflow of migrant labor based on market demands, it lacks the requisite capacity to act on policies. Chinese investment in Belt & Road (B&R) projects in Sri Lanka has generated some controversy, but stakeholders focused on the long-term potential for Sri Lanka see growing opportunities for business in the country. Through cooperation, BRISL determined to create mutual benefit and win-win cooperation for every community through BRI. Accompanying this was Sri Lanka’s USD253 million second international airport, at Mattala, some 20km from the port. A recently published analysis by the London-based independent policy institute Chatham House provides a closer look at Chinese investment and the BRI in Sri Lanka. “Green Belt and Road” has received considerable attention, the environmental impact of Chinese investment projects in Sri Lanka has been mixed. As such, it has been estimated by the Chamber of Construction Industry of Sri Lanka that the country needs 400,000 workers to meet the. Brave Girls hit it big after a viral video popularized a four-year-old song. More recently, however, Chinese investments have shown positive environmental signs. All rights reserved. Some Chinese companies in Sri Lanka have initiated programs to transfer know-how and best practices, although these programs are ad hoc initiatives rather than mandated by law. The initiative was unveiled by Chinese leader Xi Jinping in September and October 2013 during visits to Kazakhstan and Indonesia, and was thereafter promoted by Chinese premier Li Keqiang during state visits to Asia and Europe. With topics around urban transformation, energy transition, the future of transport and critical infrastructure across Asia, Africa and the Middle East, this content series will unearth fresh trends and showcase how we are supporting clients in the transition towards a more sustainable and inclusive future. In the past five years, China and Sri Lanka have made important progress in negotiating and joining hands for the belt and road initiative. While it might be difficult to … The initiative was given intensive coverage by Chinese state media, and by 2016 had become often featured in the People's Daily. These impacts should be prudently managed to ensure that Sri Lanka maximizes the gains and minimizes the risks of the BRI. Ongoing discussions around further investment in a refinery, which would be Sri Lanka’s largest, and an investment zone of about 6,000 hectares, suggest jobs creation and growth opportunities for ancillary businesses. The outward looking Belt and Road initiative, seeking common prosperity, will have a massively transformative impact on the economies of the vast Asian and African regions encompassing 68 countries with over 65% of the world's population. While there are a few reported cases of Chinese workers not possessing valid work permits, available data indicates that illegal workers in Sri Lanka come mostly from neighboring countries like India and Pakistan and only a small (single digit) percentage from China. Belt and Road Initiative, China, environmental fragility, political instability, political violence, Sri Lanka 1 | INTRODUCTION We are writing this at the end of a five‐year research project on road building as a mode of nation building in post‐war Sri Lanka. The concern about large numbers of illegal Chinese migrants appears to be unfounded. Sri Lanka Nepal Bhutan ... Two of those -- a 2018 memorandum of understanding and a 2019 agreement on the Belt and Road Initiative -- were … Chinese migrant labor is beneficial and indeed necessary for the Sri Lankan construction sector, which is valued at roughly $8 billion (2018). Asia, South These issues have taken the headlines, but stakeholders focused on the long-term potential of the B&R for Sri Lanka have looked beyond short-term problems to the growing opportunities for business in the country. This article will discuss the impact of China's debt diplomacy in Sri Lanka through the Belt Road Initiative (BRI) which has an impact on China's control of the Hambantota Port for 99 years. Chinese investors have also shown agility in adapting and responding to public concerns. “Once the land is reclaimed and set up, it will usher in a whole new mindset,” McCabe says. The most striking case is that of Sri Lanka. Divya Hundlani is an independent researcher and Pabasara Kannangara is a research associate at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI). Sri Lanka, which has a debt-to-GDP ratio of 77 per cent, partly because of borrowing for BRI infrastructure projects, is turning to China for an extra $1.25bn in funds to finance its liabilities. In 2017 China was second only to India as a source of tourists to the country, with nearly 270,000 visitors – compared to just 12,000 in 2010. reveal benefits and costs for the local environment and labor force. Over the last few years, both economic and historical ties between Sri Lanka and China have grown with China becoming a significant economic partner of Sri Lanka. With this mechanism in place, Sri Lanka could look to regulate inward migration by identifying priority sectors. Background of China’s BRI Colombo should look to maximize these advantages by strengthening domestic laws, setting overarching policies and guidelines, and improving interagency coordination to monitor, tackle and evaluate the apparent challenges. For example, although Environmental Impact Assessments (EIA) are legally required for development projects, the Colombo Port City appears to have been initiated, and subsequent EIAs for the project were criticized for, due consideration of project alternatives, More recently, however, Chinese investments have shown positive environmental signs. This false debt trap narrative has dominated discussion of the Belt and Road Initiative in Sri Lanka, at the expense of important questions about the wider impact of Chinese investment. As well as investments in transport infrastructure and real estate, China’s long-term commitment to the country suggests the positives for local business will outweigh the problems. Asia, Asia More than an overstated “debt trap,” Sri Lanka should consider the environmental and labor impacts of Chinese investment. Inconsistent policies and double standard are confusing Mongolia's pandemic response at the most critical time. of labor in the construction sector and the influx of Chinese workers has helped to fill this gap in the labor market. After Suharto’s fall in 1998, Indonesia's military did what Myanmar’s Tatmadaw needs to do, but won’t: relinquish an overt role in politics. Two common perceptions about Chinese investment projects in Sri Lanka are that they rely on Chinese labor, displacing local workers, and that among this labor force there are many illegal migrants. Better coordination and monitoring would allow for more current data to continually feed into the policymaking process. The Belt and Road in Sri Lanka Chinese investment in Belt & Road (B&R) projects in Sri Lanka has generated some controversy, but stakeholders focused on the long-term potential for Sri Lanka see growing opportunities for business in the country. Chinese investment in Sri Lanka has not led to a debt trap, as such, but concerns around its impact on the local environment and labor force in Sri Lanka reveal areas for improvement. Chinese projects recruit substantial numbers of local workers, although the figures tend to vary by stage of the project. The project was financed by Sinosure, even though it was a comparatively small sum for the Chinese export credit and insurance group. What the Belt and Road initiative means for business in Sri Lanka. The Belt and Road Initiative (BRI) is closely connected with this. The scale of China's Belt and Road Initiative (BRI) is striking: involving nearly two thirds of the world's population, 68 countries and over 40 per cent of global GDP1. “There’s no going back: it’s already significantly developed, and the only thing left to determine is how fast the country will drive.”, Key to this is the promotion of Belt and Road investment as a partnership, a narrative that is necessary to reinforce given the vastly different size of the two nations’ economies (at USD84 billion Sri Lanka’s GDP ranked above only four Chinese provinces in 2017). In recent years, and especially since the launch of the China-led Belt and Road (B&R) initiative, closer economic ties have become the focus of this longstanding relationship, with successive governments in Colombo seeing the long-term potential and ancillary benefits of the country becoming a vital link in the Maritime Silk Road (the ‘road’ in the Belt and Road initiative). Belt and Road Initiative: China builds US$300m factory near Sri Lanka port The tyre plant will be built near the Hambantota port, which heightened concerns in the … “We have observed a lot of investor interest in the special economic zone (SEZ) around the port and much related to capacity building in terms of power plants and roads.”, Though Chinese firms will obviously continue to play a large role, “local corporates will have the opportunity to engage with those interested in capital investments and possibly partner, or set up joint ventures,” explains Jim McCabe, Standard Chartered CEO in Sri Lanka. As McCabe says, “As investment flows in then the economic boost from the projects will be evident, giving Sri Lanka the chance to integrate more heavily into trade flows from China, through ASEAN and the Belt and Road.”. These projects, along with a colossal 25-year initiative to develop 269 hectares of reclaimed land in Colombo (known as Port City), the first USD1.4 billion-phase of which is being undertaken by a subsidiary of China Communications & Construction Co, were initiated by Sri Lanka’s previous government. Chinese projects recruit substantial numbers of local workers, although the figures tend to vary by stage of the project. Research paper 24 March 2020 ISBN: 978 1 … The Belt and Road Initiative and Sri Lanka-China Relations. View, About Only a handful remain. Sri Lanka has comprehensive domestic environmental legislation, encompassing a wide range of regulations and standards. Japan has been criticized for seeming inaction following the coup and ensuring crackdown. If you’re looking for a career with purpose and want to work for a bank making a difference, we’d love to hear from you. Sri Lanka Browsing. We found there to be significant environmental and labor implications of Chinese investment in Sri Lanka, which reveal benefits and costs for the local environment and labor force. For one thing, Hambantota sits near one of the world’s busiest shipping lanes – through which China currently imports two-thirds of its oil. Previously referred to as the One Belt, One Road initiative, the vast plan has been estimated by PwC to require infrastructure investment of approximately $5trn. View in online reader. Report, Trans-Pacific A look at developments in the stronghold of Mahinda Rajapaksa’s southern region of Hambantota. But what are the risks and opportunities arising from BRI for corporate treasuries, particularly for those in the real estate sector? The detail and implementation of such legislation, however, is wanting. One quick impact is likely to be in the tourism sector, a key part of Sri Lanka’s economy. China’s Belt& Road Initiative Is Being Blamed For Sri Lanka’s Hambantota Port Problems. According to environmental advocates, early infrastructure projects, including the construction of Hambantota Port and, international environmental standards with respect to feasibility studies and domestic legislation processes, some sources reported that construction of Colombo Port City (a commercial and residential project on reclaimed land near the Colombo port) resulted in a. severely impacting the livelihoods of local fishermen. To address the significant data gap, a centralized data-gathering mechanism should be introduced across relevant government agencies. Sri Lanka Economy Analysis . But rather than a new normal, his generation may be the last gasp of old-school Maoism in the country. Untangling the truth about Chinese debt and Sri Lanka means cutting through some misleading media narratives. Its impact on the environment and human health significantly affects sustainable economic growth. However, BRI presents both opportunities and challenges for Sri Lanka. But The Real Story Is Rather Different It is safe to say that claims around China’s predatory “debt diplomacy” strategy, does not stand up to scrutiny. According to environmental advocates, early infrastructure projects, including the construction of Hambantota Port and Norochcholai Power Plant did not meet international environmental standards with respect to feasibility studies and domestic legislation processes. This renewed commitment to the B&R vision suggests the government is focusing on the long-term opportunities it will present for the country. The government is currently considering the future operations of Mattala airport. We maintain a strong conduct framework and invest in our people to deliver fair outcomes for all our stakeholders, We work with local partners and employee volunteers to deliver programmes focused on health and education. In particular, the CHEC Port City Colombo (CPCC), a local subsidiary of China Communications Construction Company, which is developing Colombo Port City, spent about $3 million from 2016 to 2019 to support around 9,000 fishing families as part of their corporate social responsibility measures. But it is almost certain that negotiations on this front will bear fruit – as did Sri Lanka’s earlier FTA with Singapore, signed in January. These include improving the availability of data about investment projects, ensuring the clarity and implementation of existing legislation (for example, on environmental protection), and adopting new legislation (such as on inward migration). This paper examines the benefits and costs of the BRI and its projects to Sri Lanka and the lessons that may improve future BRI projects in Sri Lanka and elsewhere. As recently as mid-May news emerged of a further USD1 billion loan from China to build a highway linking Colombo to the central town of Kandy. We’ve got the global network, deep expertise and innovative vision to meet all your banking needs and more, Simple, flexible banking services that help you make the most of life, We have the local market expertise and global reach to help your company fulfil its true international potential, Our Saadiq Islamic banking services are both innovative and fully Shariah-compliant. China’s One Belt One Road Initiative: Implications for Sri Lanka Nipuni Perera Jun 22, 2016 Trade along the Ancient Silk Road can be traced back to historical times when land and sea routes between China and Europe were vibrant with the movement of a range of goods including silk, spices, precious stones, etc., as well as cultural exchanges. “A developed and vibrant civil society is needed if we want to build a democratic society.”. Eventually home to 120 structures including a brand new international financial centre, “Port City will be game-changing for Colombo,” reckons McCabe, with the investment expected to bolster tourism and investment from across Asia. that there are approximately 7,500 Chinese workers in Sri Lanka, accounting for just 0.1 percent of the total labor force. is a research associate at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI). “Hambantota is a clear positive,” says Saurav Anand, Standard Chartered Economist for South Asia. in a Chinese debt trap — Sri Lanka’s debt to China amounts to only 6 percent of GDP. Defense, China We have the financial expertise, governance frameworks, technology and geographical reach to unlock capital for sustainable development. (This paper was presented by Ms. Shalika Dias, Jr. Research Associate of the Bandaranaike Centre for International Studies at the International Conference on ‘One Belt One Road’ Initiatives and New Modes of Globalization, organized by the Guangzhou Academy of Social Sciences and Open Times Journal, China, 10 th -11 th December 2016) It’s fair to say that such long-term benefits have been overshadowed by concerns about various infrastructure projects that have been emblematic of China’s B&R push in many countries. While China’s “Green Belt and Road” has received considerable attention, the environmental impact of Chinese investment projects in Sri Lanka has been mixed. And, at Standard Chartered, so will you. Since the initiation of the Belt and Road Initiative, Sri Lanka has been an active participant and conducted multiple cooperation programs with China. Industry experts observe that Sri Lanka has a high rate of external migration to foreign countries, and those workers that remain see little appeal to working in the industry or lack relevant, . For instance, Colombo Port City, which is still being constructed, has roughly 1,637 workers, of which about 22 percent are Chinese. The Belt and Road Initiative is a major foreign policy and economic scheme put forward by the Chinese government in 2013. Colombo Port City has committed to a long-term Sustainability Master Plan, setting standards and protection measures for pollution, waste control, and biodiversity. According to available data, Sri Lanka is not in a Chinese debt trap — Sri Lanka’s debt to China amounts to only 6 percent of GDP. Enjoying this article? Standard Chartered Foundation aims to tackle inequality and promote economic inclusion for young people around the world. 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