Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Colombo Port City: A new Dubai or a Chinese enclave?

Colombo Port City: A new Dubai or a Chinese enclave?

"An economic game changer" is how officials describe Colombo Port City, a shiny metropolis soaring out of the water along the Sri Lankan capital's seafront.

Next to Colombo's leafy business district, the huge expanse of sand reclaimed from the sea is being transformed into a high-tech city which will host an offshore international financial centre, residential areas and a marina - prompting comparisons with Dubai, Monaco or Hong Kong.

"This reclaimed land gives Sri Lanka a chance to redraw the map and to build a city of world class proportions and functionality - and compete with Dubai or Singapore," Saliya Wickramasuriya, a member of the Colombo Port City Economic Commission, told the BBC.

But critics question how much of an economic game changer it will really be for Sri Lanka.

For a start, in order to reclaim the 665 acres (2.6 sq km) of new land, the country needed the China Harbour Engineering Company (CHEC) to invest $1.4bn. In return, the firm has been given 43% of it on a 99-year lease.

After several years of dredging, construction activity is gaining momentum and the new city is taking shape.

Huge cranes supervised by Chinese engineers are moving concrete slabs, while earth movers fill trucks with tonnes of sand. A river passing through the reclaimed land has already been dredged, allowing access for small boats and yachts.

Officials estimate it will take about 25 years to complete the project, the first of its kind in South Asia.

Sri Lanka says the land under its control and the area given to the Chinese will be leased to multinational firms, banks and other companies. The government may also charge a levy on their revenue.

About 80,000 people are expected to live in the new city, which will offer tax holidays for those who invest and do business there. All transactions in the special economic zone, including salaries, will be in US dollars.

The Port City project was officially unveiled during Chinese President Xi Jinping's visit to Colombo in 2014, a year after he launched his Belt and Road Initiative - an ambitious plan to build road, rail and maritime infrastructure links across Asia and Europe to boost trade.

Sri Lanka turned to China for financial help to rebuild after a long war with Tamil separatists ended in 2009. Western nations had raised concerns over human rights abuses.

The offshore centre trading only in dollars will be the first of its kind in South Asia


At the time of the Xi Jinping visit, Mahinda Rajapaksa was Sri Lanka's president but he lost elections later that year, with concern over Chinese loans - in particular for a vast port in the south at Hambantota - one of the issues on voters' minds.

Eight years later, and Mr Rajapaksa is now back in power, as prime minister, with his younger brother Gotabaya as president.

But Hambantota port is no longer in Sri Lanka's hand. Under the last government in 2017, Sri Lanka handed it over to Chinese control after struggling to pay off the debt to Chinese firms, with some of the money earned reportedly being used to pay off other debts.

So perhaps it is not surprising that not everyone in Sri Lanka shares the enthusiasm Port City officials have for the project.

Concerns over the scheme are numerous, and include the environmental impact of a project of this size.

Others fear the benefits of such a development will not benefit the country as much as supporters suggest it will.

"One potential negative around the Port City is the fact there are very significant tax holidays that are built into its law. There's a possibility of up to 40 years' worth of tax holidays for some investors," Deshal de Mel, an economist with Verite' Research, said.

"Having this large tax concession does not enhance Sri Lanka's overall revenue proposition."

The tax regime has triggered other worries. The US has warned that the relaxed business environment could become a haven for money launderers.

Mohamed Ali Sabry, Sri Lanka's justice minister, disagrees.

"There's no way that can happen because the normal criminal law applies here. We have our money laundering act and we have our financial intelligence unit. So, with all those things there is no way that somebody can get out of it," he told the BBC.

With China increasingly assertive on the global stage, there are also concerns over its long-term strategic ambitions.

The growing Chinese footprint in Sri Lanka is a worry for India in what has traditionally been seen as its back yard.

The Port City aims to lure away multinational firms and investors already based in India, which could dent investments and job opportunities there.

The new city will change the Sri Lankan economy forever


But some say Sri Lanka also has much to fear from Colombo Port City.

In 2020, Laos avoided bankruptcy only by selling part of its energy grid to China to help fund a railway linking the two countries.

As with Hambantota, could Colombo Port City end up becoming a Chinese outpost in the long run?

"At the moment the way this government has agreed to the Chinese, China has taken over as much as everything in the Port City, the whole thing," opposition MP Rajitha Senaratne told the BBC.

"One day, actually Sri Lanka won't have any say in this project."

Chinese academic Zhou Bo disagrees, saying the aim is for both countries to benefit.

"China's Belt and Road Initiative is not a charity. We also want to be mutually beneficial. That means we also want our investments to have economic returns," Mr Zhou, a former People's Liberation Army senior colonel who's now with Tsinghua University in Beijing, told the BBC.

"China has no intention to trap any country into debt."

Sri Lankan officials take the same line.

"The entire area is under Sri Lankan sovereign control. The right to patrol, police, immigration and other national security duties lie with the Sri Lankan government," said Saliya Wickramasuriya, of the Port City Economic Commission.

The project is not expected to be finished until the 2040s


But Sri Lanka, currently going through an unprecedented economic crisis, has limited options.

The Covid pandemic has devastated its lucrative tourism sector and dented overseas employment, sending foreign exchange reserves plummeting.

The country's external debts have surged to more than $45bn and it owes around $8bn to China alone.

Amid appeals for financial help, Sri Lanka last week asked visiting Chinese foreign minister, Wang Yi to restructure its debt repayment to Beijing.

But with repeated downgrades by international ratings agencies, Colombo's chances of going to international investors for further loans appear slim.

Only China has long-term ambitions - and deep pockets.

But there could be strings attached - some believe a city like Hong Kong in Sri Lanka would help China tighten its grip in this part of Asia in the years ahead.


The land set aside for the development in Colombo Port City


AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
×