Features
Unpacking port patriotism: Lack of internal process and its external effects
by Rajan Philips
The first consequential announcement that the ECT deal is kaput came from Prime Minister Mahinda Rajapaksa. Early last week he was reported to have assured the port workers that the East Container Terminal (marked East on the map) “will neither be sold to any country nor handed over to any country for administration.” The PM’s announcement came as a surprise to everyone, most of all to the Indian High Commission in Colombo. It was not clear if, when and how India and Japan were formally advised of the government’s decision. It was clear, however, that the Prime Minister was trying to diffuse a gathering political storm at home and was not worrying about diplomatic niceties.
Both local politics and diplomatic caution were clearly lost on the Indian High Commission spokesperson who blurted out the same day that he wanted “to reiterate the expectation of the Government of India for expeditious implementation of the trilateral Memorandum of Cooperation (MOC) signed in May 2019 among the Governments of India, Japan and Sri Lanka for the development of ECT with participation from these three countries.” It was hardly the way to express India’s position given the context in which the Sri Lankan Prime Minister had announced his government’s decision. Indian diplomacy can still learn a lot from the Chinese about being suave in dealing with smaller countries with worrisome politics. That difference first showed up way back when in Bandung, between Jawaharlal Nehru’s impatience and Zhou Enlai’s charm.
Never mind. By Wednesday, Prime Minister Modi (Nehru’s current antithesis) was calling the Sri Lankan PM to felicitate Sri Lanka’s 73rd Independence anniversary. He was the first foreign leader to do so, beating Xi Jinping to the wire. The Chinese President later sent a message of felicitations to President Gotabaya Rajapaksa. Mr. Modi may have taken the high road in his call with the Sri Lankan PM, without harping on the ECT deal cancellation, and leaving it to his High Commissioner in Colombo to formally register a protest with the Sri Lankan government. High Commissioner Gopal Baglay has reportedly done just that, and has called on the President and the Prime Minister separately in a double registration of India’s protest.
What will India do?
What will India do? For now, it is all a matter of speculation. Will it retaliate by reducing the transhipment of Indian goods via Colombo? Indian goods account for the largest volume (70%) of cargo in Colombo, and according to Indian commentators “Colombo tranships more Indian goods than all of India’s own ports.” Sri Lankan commentators have noted that without the Indian volume, Colombo will not be able to maintain its current port-status in the world – 25th largest container port and 19th best-connected.
The new port in Vizhinjam, Kerala, has been touted as a response to this regional imbalance, and as a new deep water (20-24 metres) port Vizhinjam is anticipated to be India’s first Mega Transshipment Container Terminal. Coincidentally or not, the private developer of the port is none other than Adani Ports apparently India’s leading private sector port developer and operator. The USD 930 M port is being developed as a Public-Private BOT undertaking with the Kerala State government as owner and the Central government providing USD 110 M gap funding support. Prime Minister Modi is also reported to have mused about a new transhipment port in the Great Nicobar Island, which too could be a threat to Colombo’s current status.
How will the Vizhinjam port affect Colombo? According to former Prime Minister Ranil Wickremesinghe, who joined the ECT fray with his own little statement, the now defunct 2019 ECT Memorandum of Cooperation (MOC) that his team had negotiated included a condition that committed India to treat the Kerala and Colombo ports equally without giving preference to the new Kerala port. Will India continue to do that? Or will it divert and reduce Indian transhipment through Colombo? Could it be that India cannot do anything about its cargo that now passes through Colombo because it suits India’s own distribution requirements. For example, increasing the country’s cargo handling in Kerala, at the expense of Colombo, might require significant expansion in the ground transportation infrastructure within India. So, Sri Lanka might be left with the better of both worlds. Keep the ECT as a sovereign enterprise and still receive the same volume of Indian transhipment cargo.
More speculatively, how will India and Japan respond to what the Indian media is calling Sri Lanka’s “compensatory offer” of the West Container Terminal (WCT) to be developed as a Public Private Partnership undertaking. As can be seen in the map above, the contentious East Terminal is partially developed, whereas the West Terminal (that will be to the left of CICT in the map) will be an entirely new undertaking involving a full construction component. Colombo government sources have apparently touted it as a bigger and better deal for India and Japan. According to the same media reports, sources in Colombo have indicated that the Indian response to the WCT offer has been “ambiguous” and “almost rejecting.” Indian officials, on the other hand, are said to have countered that there had been “no formal communication about WCT” from the Sri Lankan side. I have not seen any formal government announcement about the compensatory WCT offer by Sri Lanka.
As well, to Indian media queries about the likelihood of a future political opposition to WCT down the road, the Sri Lanka government sources have reportedly ruled out “chances of any further trouble on the cabinet-proposed West Terminal offer.” Can anyone be so sure that the ECT history will not be repeated for a future WCT deal? If an apparently smaller ECT is so crucial to be kept under 100% Sri Lankan control, how could the bigger WCT be given to foreigners in the future, and that too to the Adani group that is allegedly in cahoots with the Modi government?
Port Development
The first major development in the Colombo harbour was the late 19th century (1872-85) construction of the Southwest Breakwater. It was directly undertaken by the colonial government without hiring contractors to keep costs within estimates and loans repayable. Both were accomplished successfully. The loan repayment was made entirely out of the port revenue. The cost of construction was kept lower than normal because the labour used was convict labour supplied cheap by the Prisons Department, which collected less than minimum wages as its revenue and fed the convicts with “wholesome food”. The convicts were preferred apparently because of their “superior physical strength … and a certain degree of regimentation.” It was also because of the short supply of regular “coolies,” local or Indian, and their alleged lack of physical strength and regimentation. The harbour expansions thereafter were few and far between. Notable milestones are the conversion to a “sheltered harbour” in 1912, and the completion of the Queen Elizabeth Quay and expansions in 1954.
Much container cargo has trans-shipped through the Colombo port in the intervening years, but all of the current container terminals were added only after 1985. Three of them under the protection of the old breakwaters – the Jaye Container Terminal (JCT), Unity Container Terminal (UCT) and the South Asia Gateway Terminal (SAGT) – were developed between 1985 and 1999. The South Asia Gateway Terminal is the expansion of the old Queen Elizabeth Quay and is the first and perhaps the most successful Public-Private Partnership undertaking in the Port and in Sri Lanka.
The subsequent expansion of the port facilities has been under the umbrella of the South Harbour Development Project, the technical studies for which were completed in 2006. The South Harbour expansion is a significant addition to port’s terminal and operational capacities. The expansion is based on the construction of new breakwaters and the development of three new container terminals, viz., The Colombo International Container Terminal (CICT, already built, and known previously as the South Container Terminal); the now famous East Container Terminal; and the now-touted-compensatory West Container Terminal.
But the procurement process for developing these facilities has been getting murkier and murkier with every passing cargo ship. Not everything was transparent in the selection of the consortium for the CICT facility, although the main consultant and the contactors apparently did a good job of work, at least according to the project evaluation report of the Asian Development Bank, which has been the prime lender for the South Harbour undertakings. And nothing was made transparent about the negotiations and the eventual agreement for the ECT. Why?
The answer may lie in the internal decision making processes of the government of Sri Lanka. Rather, the answer is in the lack of any process for the procurement of public goods and service, big or small, local, or foreign. Things get complicated when public undertakings are large and involve foreign participation. Add to the lack of process in procurement, the lacuna of parliamentary scrutiny and overall transparency. In fact, there is no better and more compact example for the deteriorations in process, scrutiny, and transparency in the matter of public undertakings in Sri Lanka than what you can find in the saga of the development of the port of Colombo and its terminals.
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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