The Colombo Port City Special Economic Zone (SEZ) development in Sri Lanka has become both, an exciting new venture hoping to bring about the economic recovery so urgently required post-pandemic, while also becoming an issue of sovereignty.
The debate surrounding the Port City has raged on since 2015, culminating in the recent passing of the ‘Port City Bill’ this week in the Sri Lankan parliament. Parliamentary debates were held on Wednesday and Thursday last week, following which a majority of lawmakers voted to approve the Bill as amended in-line with recommendations from the Supreme Court. Many who oppose the project have already enrolled in Chinese and Mandarin classes, as they believe the landscape of the island nation is about to transform drastically.
Special Economic Zones (SEZ) are virtual economic tools used the world over to boost economies and to secure a significant spot in the trading map internationally. Sri Lanka, under the leadership of the Rajapaksa brothers, has been on the roadmap towards trying to develop into just that.
The first SEZ in the world was established nearly 70 years ago in Ireland; the Shannon Airport exclusive zone set up in 1950. Following on from this, special zones aimed at achieving economic emancipation spread throughout Latin America and East Asia. Chinese leader Den Xiaoping moved towards launching the first-ever exclusive trading zone in China in 1979 during the Chinese civil war, a first step towards the extension of the ancient trade route linking China and the Roman Empire. Furthering economic interests through the establishment of effective trade routes and agreements has been a long-standing goal for every country on the path to development.
The objective of special economic zones is to encourage rapid growth leveraging tax benefits and relaxation of exchange control regulations in a bid to attract foreign direct investments (FDI). It also had an added advantage of transferring technological advancements to the host country. As part of its wider policy of export diversification and expansion, in 1978 the Government of Sri Lanka established its first Economic Processing Zone at Katunayake under the authority of the Greater Colombo Economic Commission (GCEC). Besides this, two further zones became operational: one at Biyagama in 1986 and the other at Koggala in 1991. Foreign investment was expected to play a key role in the zones and, in addition to the normal practice of access to duty-free imports of inputs required for production, significant tax concessions were offered to attract investors. This worked well for the country in the past with garment industries booming. The greatest benefit of all? It was all Sri Lankan owned.
Dr. Ganeshan Wignaraja, who holds a doctorate in economics from University of Oxford, believes that the Colombo Port City (CPC) SEZ can be a “game-changer for modern services-led development in Sri Lanka.” With the development set for completion in 2041, it aims to be South Asia’s premier residential, retail and business destination. The 269-hectare project, with environmentally friendly public spaces and infrastructure facilities, is touted to create finance, business and tourism sector jobs. The Colombo Port City will comprise of five precincts: a Financial District, Central Park Living, Island Living, The Marina and the International Island, all offering office, health care, education, retail and entertainment facilities, as well as hotels and restaurants.
Despite boasting utopian level ideals and selling the ultimate economic dream, the Port City project has been embroiled in controversy since its onset. The government has been stressing on the project’s ability to provide employment right across Sri Lanka. The availability of high-level positions and service sector jobs is expected to benefit the next generation of Sri Lankans, with long-term environmental sustainability being made a priority. The Port City hopes to position itself as Colombo’s “green lungs” by implementing various eco-conscious practices. A third of the development has been dedicated as verdant public parks, open spaces with lush greenery, waterways and beaches.
In the fortnight preceding the presentation of the Bill to Parliament, President Gotabaya Rajapaksa told his Chinese counterpart Xi Jinping that Sri Lanka wanted to learn from the Chinese Communist Party’s ‘governance experience’. Media reports also quoted President Xi telling President Gotabaya that China was ready to work with Sri Lanka. As the common man watches the strengthening of these ties between the Lankans and the Chinese flourish, it is difficult to ignore the growing political discontent along the sidelines. US Ambassador to Sri Lanka, Alaina B. Teplitz, stated that the SEZ could become a ‘money-laundering haven’, thereby echoing the concerns of several within the country. The US ambassador’s comments may have come as a result of the Gotabaya government having gone back on their commitments towards the Memorandum of Understanding (MoU) on the US $450-million US investments, which required fewer concessions than the SEZ.
Neighboring India is also showing signs of concern. The Sri Lankan government had cancelled the tri-nation East Container Terminal (ECT) agreement also involving Japan, citing ‘sovereignty-security’ protests by labour unions and Sinhala nationalists, led by some Buddhist monks. Both groups are now opposed to the SEZ Bill but the government is going ahead with it. The passing of the Port City Bill is considered a major diplomatic and strategic concern for India, as China’s influence increases in neighboring subcontinental countries such as Sri Lanka, Pakistan and Tibet.
It appears as though China is the rich best friend that most nations in our region are inviting to birthday parties in the hopes of receiving amazing gifts. What remains to be seen is whether this new best friend then eventually leaves our house or chooses to stay and change the name on the post-box outside. Pakistan has much to take-away from the events unfolding within Sri Lanka. Economic support, and the kind that China is bestowing upon the countries it is choosing to partner with, is always welcome. However, when does economic support cross that thin line in the reclaimed land of the upcoming Port City, and eventually move towards becoming economic colonization? Only time will tell if this Chinese footprint will be one made in sand, or concrete.
The writer is a lawyer, teacher and political commentator based in Colombo, Sri Lanka. She can be reached on Twitter @writergirl_11