Features
Significance of Ceylon-China Trade Agreement of 1952
by Dr. J. B. Kelegama
Excerpts from the keynote address at the 50 th anniversary celebrations of the historic “Rubber-Rice Pact” between Sri Lanka and China at the BMICH on December 20, 2002
I am honoured by the invitation of the Sri Lanka-China Business Cooperation Council and the Sri Lanka-China Society to deliver today the keynote address on the occasion of the golden jubilee celebrations of the historic Rubber-Rice Pact between Sri Lanka and China signed in December 1952.
I accepted this invitation with alacrity and pleasure, firstly because I have conducted negotiations with China and actually implemented the Agreement over a period of about 12 years in my capacity as a senior government official, secondly, because I have visited China seven or eight times both as a government official and a UN consultant and thirdly, because I have been a student of China’s economic development for many years and written and published several articles on China’s economic and trade issues, under my own name as well as under pen-names.
Further, I had the privilege of speaking on this subject at the death anniversary of Mr. R. G. Senanayake some years back, on the invitation of no less a person than Mrs. R. G. Senanayake herself.
The Ceylon-China Trade Agreement of 1952 was undoubtedly the most useful trade agreement negotiated by Sri Lanka and one of the most successful and durable trade agreements in the world, having been in operation for 30 years. It is therefore useful to assess the significance of the agreement and to refresh our memory regarding the circumstances that led to it and the person who played the key role in bringing it about – R. G. Senanayake.
Rice shortage
1952 was a very bad year for Sri Lanka. Premier D. S. Senanayake had died and Dudley Senanayake had just formed a new government when the country had to face a world shortage of rice.
The Government was committed at that time to provide every adult person with two measures of rice per week at a subsidised price, but rice was not available from the traditional suppliers – Burma, Thailand and Indo-China – and the world market price of rice had risen by 38 per cent between 1951 and 1952.
Sri Lanka was therefore compelled to buy 60,000 tons of rice from the USA and 10,000 tons from Ecuador at high prices, although this variety of rice was not suitable to the Sri Lankan palate. She was however not in a position to buy all the rice she needed at this high price as her foreign exchange resources were limited; besides, distribution of this rice would have pushed the food subsidy bill to intolerable levels.
The country was also facing a foreign exchange crisis in 1952 caused by a dramatic fall in her export prices brought about by the quick end of the Korean War boom. The end of the Korean War and the drastic reduction of commodity purchases by the West – in particular, of natural rubber by the United States – led to a collapse of Sri Lanka’s export prices by 23 per cent between 1951 and 1952.
The price of natural rubber declined by 36 per cent, of tea by 10 per cent, and of coconut oil by 40 per cent. Import prices increased by 8 per cent and terms-of-trade fell by 28 per cent. The trade surplus of Rs. 345 million in 1951 turned into a trade deficit of Rs. 200 million in 1952 and external assets fell by 30 per cent. In this critical situation Sri Lanka attempted to negotiate with the USA for a loan of US$50 million and for favourable prices for rubber exports and rice imports, but failed. The country was facing an unprecedented crisis: she could not find enough rice to feed her people and she had no prospect of a favourable market for her rubber exports.
It was in this grim setting that R. G. Senanayake, the then Minister of Commerce, played his master stroke. He found out that China was prepared to sell rice to Sri Lanka in exchange for rubber. At that time China was unable to obtain rubber as a result of prohibition of rubber exports from Malaya following a UN resolution preventing the sale of rubber to China. Thus China wanted rubber as badly as Sri Lanka wanted rice. R. G. Senanayake was quick to realise the mutual benefits of trade with China, and negotiated the Ceylon-China Trade Agreement or the Rubber-Rice Pact in Beijing towards the end of 1952. He stated in Parliament.
“We waited for foreign aid, foreign assistance. As you know Sir, over and over again, we made appeals for Point Four aid, we waited four long years. We have got in the form of assistance only a cook for the Kundasale Girls’ School. Therefore in these circumstances, it was necessary that we should go where it was possible to get our requirements.”
Opposition
The Agreement was negotiated in the teeth of opposition from some of his own colleagues in the Cabinet. Indeed, the opposition of J. R. Jayewardene, the Minister of Finance, was well known. The Cabinet was advised by the newly created Central Bank under an American Governor. Opposition also came from R. G. Senanayake’s predecessor in the ministerial post, from the American Government, and from some of the local newspapers which carried on a virulent press campaign against any dealings with Communist China. S. P. Amarasingham’s informative book “Rice and Rubber: The Story of China-Ceylon Trade” provides a detailed account of the strong opposition R. G. Senanayake had to face in negotiating the Agreement.
The American Government invoked the Battle Act which prevented it from giving aid to countries selling strategic materials to Communist countries and cut off aid to Sri Lanka. In addition, she stopped selling sulphur needed by Sri Lanka’s rubber plantations. This was the price that had to be paid for trading with China.
Prime Minister, Dudley Senanayake, however, fully backed his Minister of Commerce and was prepared to pay this price; he realised that the benefits to Sri Lanka from the agreement far outweighed losses consequent to the cutting-off of American aid. He argued:
“Ceylon’s old trade pattern has been knocked out by changes in the world market and we have to seek new markets for our needs of essential foodstuffs and for our exports.”
Rebutting the charges that the Trade Agreement was opening the door to communist influences in Sri Lanka, he pointed out:
“Communism thrives in many places not through an understanding of that particular ideology but through poverty and want. I am confident that our Trade Agreement with China will instead of opening doors to communism help us to stand firmer against it.”
It is a tribute to the two Senanayakes that they displayed remarkable pragmatism and courage in negotiating the Trade Agreement. They did not allow their prejudices or ideological considerations to stand in the way of deciding what was in the best interests of the Country; nor were they intimidated by threats of big powers.
R. G. Senanayake stated:
“I have always held the view that political ideologies should not stand in the ways of countries trading with each other if that trade is to their mutual advantage.”
He foresaw as far back as 1952, the emergence of China as a world power. He stated in a speech: “Talking of China in particular, it would be unrealistic to ignore a nation of 500 million in our continent with a united and cohesive government for the first time in many centuries. She is bound to be a major factor in world trade.”
As he foresaw, China has now become the seventh largest exporter in the world and the largest trader among developing countries whose purchases and sales influence the world markets. In 2000 for instance, her exports were US$249 billion and imports US$225 billion. If we include Hong Kong’s trade with China (as the greater part of Hong Kong’s trade is entrepot trade with China) then China becomes the fourth largest exporter in the world after the USA, Germany and Japan, its exports amounting to $452 billion.
The Agreement
The Trade Agreement signed in 1952 was for five years and renewable; there was, however, an annual Trade Protocol specifying the quantities of commodities to be exchanged in the ensuing year, which had to be negotiated every year. The trade was based on barter – exports and imports to balance every year; only the outstanding balance at the end-of-the-year was to be settled in foreign exchange.
Trade however was rarely balanced in the following years but the outstanding balance was generally carried forward to the next year without settlement in foreign exchange.
In the first part of the agreement there were specific commitments by Sri Lanka to purchase rice, and for China to buy rubber; the values were to balance. Thus in 1953, Sri Lanka agreed to buy 270,000 tons of rice from China which in turn agreed to purchase 50,000 tons of rubber; these quantities were exchanged on the basis of world market prices and were equal in value. In addition, China agreed to pay a premium price for rubber over the world market (Singapore) price and further, handling charges for rubber exports in Colombo.
Thus in 1953, China paid for Sri Lanka rubber Rs. 1.74 per lb. whereas the average world market price was Rs. 1.05 per lb. This premium varied with every five-year agreement. The handling charge which was fixed at five cents per lb. too varied in subsequent years. China also agreed to supply rice to Sri Lanka below market prices – at 54 pounds or Rs. 720 per ton in 1953.
Thus Sri Lanka benefited both ways from the agreement. The second part of the agreement covered trade in other commodities – those Sri Lanka and China wanted to buy and sell – but without specific commitments; the total value of exports and imports however were expected to balance every year. In view of the substantial mutual benefits, the Trade Agreement was renewed every five years by R. G. Senanayake’s successors in his ministerial post – in 1958, 1962, 1967, 1972 and 1977 – and was wound up, in the sense that the barter element was given up, in 1982 when it was found that the barter of rice and rubber was no longer in mutual interest. Sri Lanka had almost reached self-sufficiency in rice and needed only very small quantities from abroad while China was able to purchase rubber from several rubber producing countries without restriction and without paying a premium.
R. G. Senanayake paid an important tribute to China after negotiating the Trade Agreement, when he concluded his Cabinet paper on the subject in the following words:
“We noted on the Chinese side the absence of the spirit of bargaining and haggling on comparatively small points. On the other hand, they gave us the impression of being large-minded and forthright in their dealings.”
I can confirm this as I conducted trade negotiations with China over a dozen times. Benefits
The significance of the Ceylon-China Trade Agreement lies in the positive benefits Ceylon received during the thirty years of its duration. Those benefits exceeded expectation as China expressed her gratitude to Sri Lanka for supplying her rubber when other rubber producers were not prepared to do so and in spite of the opposition and denial of aid by the US Government. These benefits are discussed in detail below.
(1) The premium over world market price for rubber was estimated between Rs. 68 and Rs. 95 million in 1953 alone. It was about 56 per cent more than the world market price in that year. No estimates are available for successive years, but the premium was substantial, for even a ten cents premium meant Rs. 200 per metric ton and Rs. 10 million for 50,000 tons.
(2) The handling charge of 5 cents per lb., in 1953 was equal to Rs. 100 per metric ton or Rs. 5 million for 50,000 metric tons of rubber. As the charge and quantity varied from year-to-year the total sum too changed, but it was significant.
(3) The sale of rice by China to Sri Lanka at prices below the world market resulted in a net benefit of about Rs. 92 million in 1953 alone. Although there was a net benefit in the following years, no estimates have been made. China agreed to sell rice at the same price Burma sold rice to Sri Lanka with certain adjustments for differences in quality and transport costs. China never tried to exploit the rice market to her advantage.
Even when she did not have an exportable surplus, she supplied Sri Lanka with rice direct from Burma under a triangular trade arrangement, but charged us only the price she paid Burma – not a cent more – even when she had reason to charge something more.
(4) As a result of the agreement a grant of about Rs. 125 million was extended by China during the ten-year period 1958-68 to meet part of the costs of rubber replanting. Thousands of acres of uneconomic rubber land were replanted thereby revitalizing our rubber industry.
(5) China continued to purchase Sri Lanka’s rubber at a premium even when other markets were prepared to sell her rubber at lower prices.
(6) Sri Lanka found an assured market for her rubber and an assured source of supply for her rice and insured herself to a great extent against vagaries in the world market. She also diversified her export and import markets.
(7) The Trade Agreement benefitted the Ceylonese traders as against non-national traders by creating a new market for them. In spite of the opposition from non-national trading establishments – particularly British managing agency houses – R.G. Senanayake reserved the export of rubber to China for the Ceylonese traders. He also reserved China for the Ceylonese importer under his policy of Ceylonizing the external trade of the country.
(8) The Trade Agreement laid the foundation for expanding trade between Sri Lanka and China even after the barter agreement ceased to operate. In 2001 for instance China and Hong Kong (which mainly re-exports China’s products) constituted the largest supplier of imports valued at Rs. 64 billion to Sri Lanka.
(9) Economic co-operation between Sri Lanka and China began with the Trade Agreement. It was expanded by leaps and bounds with establishment of diplomatic relations with China by S.W.R.D. Bandaranaike and closer relations under Sirimavo Bandaranaike as symbolised by the Bandaranaike Memorial International Conference Hall (BMICH), textile mills at Veyangoda and Pugoda, other grants and interest-free loans. Economic co-operation thereafter is demonstrated by the superior courts complex, Gin ganga scheme and assistance to restore Abayagiri dagaba.
(10) The Ceylon-China Trade Agreement with its price concessions for both Sri Lanka’s exports and imports and assistance to rubber replanting by China was perhaps the first instance of a developing country giving economic assistance to another developing country. In other words, it was the first time where economic co-operation among developing countries or South-South co-operation took place.
(11) Finally, Ceylon-China Trade Agreement and closer commercial and economic relations laid the foundations for a firm friendship between Sri Lanka and China, which was strengthened, expanded, and cemented by the Bandaranaike governments. China’s friendship for Sri Lanka has been demonstrated not only in trade and economic co-operation but also in times of national crisis. There was only China to warn other countries to ‘keep their hands off Sri Lanka’ at the height of the Indo-Lanka crisis in June-July 1987. This friendship was demonstrated again thereafter by the visit of Prime Minister of China and his offer of Rs. 375 million in economic assistance.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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