Democratic Socialist Republic of Sri Lanka : News & DIscussions

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India ready to continue to assist Sri Lanka wherever possible
In a special ceremony held today at Nonagama Cultural Centre in Ambalantota in Hambantota District, Mahinda Amaraweera, Minister of Fisheries and Aquatic Resources Development, and Taranjit Singh Sandhu, High Commissioner of India, jointly launched a project to provide livelihood support to nearly 70,000 people from the farming and fishing communities in Hambantota District.
Secretary to the Ministry of Fisheries and Aquatic Resources Development, Jagath P. Wijeweera, Chairman Ceylon Fisheries Harbours Corporation, Amarananda Abeygunasekara, Senior Leaders from the Southern Province, Officials from the Government of Sri Lanka and a large number of beneficiaries attended the function.
The project envisages supporting livelihood activities by providing useful tools and equipment to the beneficiaries. In particular, 7000 bicycles, 1000 sewing machines and 60000 grub hoes are being disbursed to beneficiaries. Ceylon Fisheries Harbours Corporation is the implementing agency for the project and Government of India has provided 138 million SLR as grant assistance for this purpose. It is expected that close to 70,000 persons/families will be able to improve their incomes and enhance their livelihood thanks to this project.

Speaking on the occasion, High Commissioner Sandhu emphasized the importance of capacity building and recalled the numerous projects being implemented all over Sri Lanka with Indian assistance. He reiterated India’s readiness to continue to assist Sri Lanka wherever possible and whenever needed. He highlighted the enormous strides made by India in the field of agriculture, and offered to share expertise and technical assistance in this sector. Hon. Minister Amaraweera thanked India for its support for this important project.

This project is in continuation of Government of India’s commitment to assist the Government of Sri Lanka as part of our bilateral development partnership. India’s overall commitment for development assistance to Sri Lanka stands at a total of around US$ 2.9 billion, out of which US$ 545 million is pure grant assistance. (Colombo Gazette)
India ready to continue to assist Sri Lanka wherever possible
 
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Malnutrition in Sri Lanka: A persistent problem
Although Sri Lanka performs well in most health indicators, child nutrition is still a major challenge.
Sri Lanka Human Development Report 2012 revealed that poor nutrition is the chief cause of multidimensional poverty, accounting for 30 percent of the multidimensionally poor (based on 10 indicators representing health, education and living conditions).

Well-nourished people are healthier, better learners and more productive in life. Recognising the importance of improving the nutritional levels, the National Nutritional Policy (NNP) was initiated in 2010.

However, the recent nutritional estimates of Demographic and Health Survey (DHS) 2016/17 do not paint a positive picture about the current status of Sri Lanka. Despite the countless initiatives to alleviate malnutrition, child nutritional levels have not improved considerably over the years (Figure 1).
Also, these numbers worsen when it comes to certain population groups, such as the estate sector, where the prevalence of malnutrition is more severe, irrespective of how malnutrition is measured. For example, 30 percent of children under five years of age are underweight while 25 percent babies have low birth weight (Figure 2).

In such deprived regions, there are deep-rooted socio-economic factors, which affect the health and well-being of communities. As revealed in the ‘Socio-Economic Determinants and Inequalities in Child Malnutrition in Sri Lanka’, the socio-economically poor are more likely to be malnourished.

The recent DHS-2016/17 data reveals, a child of the ‘socio-economically poorest’ quintile is twice as likely to be underweight than a child in the socio-economically richest quintile; among the poorest, 27.6 percent of under five-year-olds are underweight, while among the richest, only 12.5 percent of the under five-year-olds are underweight. This means that those who are socio-economically better off, are less likely to be underweight or malnourished.

Further, the IPS research on the ‘Causes of Malnutrition in the Estate Sector’ revealed that the main reasons for child and maternal malnutrition in the estate sector were imbalanced diets – consisting of more starchy and fatty food and not enough high-protein food and high alcohol and tobacco consumption.

Further, it says these factors, coupled with the households’ poor socio-economic conditions and lack of education among women, perpetuate a vicious cycle of malnutrition in the estate sector.
Following the previous research findings and given the higher prevalence of malnutrition in the estate sector, this blog revisits current status of income security, dietary practices and financial management of those belonging to the estate sector.


Socio-economically poor

A main reason for malnourishment in the estate sector is they are socio-economically poorer. Although in the recent years, the poverty levels in the estate sector have reduced nearly fourfold, from 32 percent in 2006/07 to 8.8 percent in 2016/17, this sector is still lagging behind compared to the other parts of Sri Lanka.

As reported in the Household Income and Expenditure Survey (HIES) 2016/17, 64.6 percent of the estate sector households are among the poorest 40 percent households of the country.

Also, the HIES 2016/17 reveals that the mean monthly per capita income for the estate sector is remarkably low, at around Rs.8,566, when compared to the national average of Rs.16,377. It shows that while the estate sector is just pushing out of poverty, low income may still hinder their food security.


Poor dietary habits
Those in the estate sector continue their cultural dietary practices and consume more wheat flour. The estate sector households’ average wheat flour consumption is steep, at around 10kgs per month, whereas the average household wheat flour consumption is around 1.9kg (Figure 3a).

On the other hand, those in the estate sector consume less animal protein; their expenditure for animal protein is much less when compared to the expenditure patterns of the other regions (Figure 3b). These poor dietary habits negatively affect their nutritional status.


Poor financial management

Although the estate sector lags behind economically, the expenditure on alcohol and tobacco in this sector is roughly double, when compared to the average Sri Lankan (Figure 4). The estate sector people are addicted to alcohol due to many reasons, such as being engaged in labour-intensive work, habit and cooler climate.

Also, there are many liquor shops available in close proximity, which also acts as a motivator for people to consume alcohol. The estate sector households’ average monthly expenditure for liquor and tobacco, as a percentage of their monthly food expenditure, is over 11 percent, negatively impacting the households’ food security.


Poor sanitation facilities
The DHS 2016/17 reveals that 57 percent of the estate sector households do not have access to a safe drinking water facility, while 21 percent do not have access to sanitary toilet facility, which negatively affect the health, well-being and nutrition of this group.


How to tackle problem
The NNP has recognized the importance of targeting of nutritional interventions to underserved areas, the plantation community, urban poor and conflict-affected areas. Further, it has identified the necessity to promote behavioural change among the population, enabling them to make the right food choices and care practices.

To be more effective, the policies must recognize and remove the individual causes of malnutrition within the community. For better targeting, it is important to identify food shortages and diversities in diets that exist among the community.

Also, educational programmes on nutrition should be strengthened to focus on the importance of nutritious food – what foods to select, how to prepare and feed children in relation to frequency, density, utilization and the hygienic and nutrition value of food. Such awareness programmes on health and nutrition should also cover complementary feeding and health promotion among children and adolescents.

Further, the NNP has recognised the role of community organisations in programme planning, implementation and monitoring of nutrition intervention programmes. For better targeting, the community must answer the root causes of malnutrition, with the help of trained individuals and develop long-term solutions to the nutrition problem. Formation of women’s groups, with the backing of referral facilities is important to empower women to make the right nutritional choices.

Especially, the community-driven programmes have a major role to play in improving the food security of the deprived estate sector. In addition, the NNP proposes to implement an evidence-based community nutrition package through community workers.

Interventions to increase household food security through better financial management and campaigns against behaviours and practices such as alcoholism should be carried out amongst the youth in estates.

Also, the living conditions in the estate areas should be enhanced by providing better housing and increasing access to safe drinking water, sanitary facilities, drainage and waste management.
Malnutrition in Sri Lanka: A persistent problem
 

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Sri Lanka trade deficit widens 12 percent in January 2018 despite double-digit growth in exports
Despite a double-digit growth in exports, Sri Lanka's trade deficit widened to exceed US$ 1 billion mark in January 2018 for the second consecutive month due to significant level of imports offsetting the increase in export earnings, according to the Central Bank data released in its External Sector Performance Review for the month.
The external sector demonstrated an improvement in January 2018 with higher inflows to the financial account in spite of the widening of the trade deficit, the Bank said.
The trade deficit widened 12.3 percent to US$ 1.049 billion in January 2018 from US$ 934 million a year earlier.
Earnings from exports increased by 11.6 percent in January 2018 to US$ 965 million from US$ 865 million earned in January last year. Export earnings from food, beverages and tobacco, petroleum products, rubber products and tea contributed largely to the growth in exports.
However, expenditure on imports also increased significantly by 12.0 percent (year-on-year) to US$ 2.014 billion in January 2018 from US$ 1.8 billion a year ago, particularly due to expenditure incurred for high volumes of crude oil imports and significant price increases recorded in all categories of fuel.
In January 2018, tourist arrivals increased notably by 8.9 percent recording the second highest number of arrivals in a given month with earnings from tourism increased, year-on-year, to US$ 443 million.


Workers' remittances grew by 8.8 percent, year-on-year, to US$ 729 million in January 2018 compared to US$ 670 million in January 2017.
Foreign investments in the government securities market witnessed a net inflow for the eleventh consecutive month in January 2018 in comparison to the net outflow recorded in January 2017.
The gross official reserves of the country declined to US$ 7.7 billion, equivalent to 4.3 months of imports, at end January 2018 compared to US$ 8.0 billion at end 2017, primarily due to a periodic payment for the obligations at the Asian Clearing Union (ACU) during the month.
The Sri Lankan rupee depreciated by 2.0 percent against the US dollar up to 5 April 2018.
Sri Lanka : Sri Lanka trade deficit widens 12 percent in January 2018 despite double-digit growth in exports
 
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Sri Lanka’s debt burden is higher than Ethiopia, Uganda & Ghana
Sri Lanka’s government revenue as a share of GDP is lower than many peers, while the government debt-to-GDP ratio is much higher, Moody’s Investors Service said in a statement.
Debt-to-GDP ratio in Ethiopia, Uganda and Ghana among other countries is lower than Sri Lanka even though revenue-to-GDP ratio in these countries higher than Sri Lanka.
Moody’s Investors Service said Sri Lanka’s very large debt burden and weak debt affordability weighing on country’s sovereign credit profile.


Moody’s Investors Service, however, said new Inland Revenue Act which took effect on 1 April, will rationalize the existing income tax structure and help broaden the income tax base by removing exemptions, a credit positive.
The government expects the removal of tax exemptions and the introduction of new taxes, including a capital gains tax, to increase government revenue by 0.5 percent of GDP in 2019 following its first full year of implementation.
“We consider this target to be achievable. In addition, tax revenue will be strengthened by improved administration through the rollout of Sri Lanka’s new technology systems and value-added tax compliance strategies,” Moody’s said.
“We expect that these measures will strengthen Sri Lanka’s fiscal metrics, which are weak compared with many similarly rated sovereigns.”
Moody’s Investors Service said they expect government revenue to rise 0.4 percentage point to 15.2 percent of GDP in 2018 and increase a further 0.8 percentage point to 16 percent of GDP in 2019.
They, however, expect government expenditures to remain flat at 20 percent of GDP and forecast the fiscal deficit to narrow to 4.8 percent of GDP this year and shrink to 4.0 percent of GDP in 2019, from 5.2 percent in 2017.
Along with the Inland Revenue Act, Sri Lanka will introduce a new Taxpayer Identification Number system.
“Such initiatives will help to raise tax compliance, broaden the current narrow tax base and improve the composition of the revenue base by raising the share of direct taxes,”
“We expect the cumulative revenue gains from the IR Act and other revenue-enhancing measures, along with improved tax administration, to gradually reduce debt burden to about 74% by 2021 from 79.3% of GDP in 2017.”
Still, government debt will remain well above the median of about 55 percent of GDP for B-rated sovereigns and will remain high for an economy of Sri Lanka’s size and income level.
Moody’s Investors Service said a sustainable rebound in real GDP growth will be essential to help support future revenue gains.
“We expect real GDP to grow about 4.7% in 2018, up from 3.1% in 2017, which was one of the weakest years on record because bad weather hindered agricultural output,”
“As weather conditions normalize, a rebound in agriculture production and exports will boost growth this year.”
Moody’s Investors Service said stronger growth and higher revenue are key for Sri Lanka to sustainably reduce its government deficit to its target of 3.5% of GDP by 2020.
Sri Lanka is currently in an International Monetary Fund (IMF) program in which reforms that contribute to fiscal consolidation are central to meeting IMF program targets.
Sri Lanka’s debt burden is higher than Ethiopia, Uganda & Ghana
 
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Sri Lanka gets 700,000 tourists
Sri Lanka received 707,924 tourists in the first three months of this year, an increase of 17.1 per cent compared with the corresponding period last year, a minister said on Monday.
Tourism Development Minister John Amaratunga told Xinhua news agency that the country could have attracted more tourists in March if not for the outbreak of communal violence in Galle and the subsequent declaration of the state of Emergency.
India, China, Germany, France and the UK are the biggest tourist markets for Sri Lanka.
Quoting the latest statistics released by the Sri Lankan Tourism Development Authority, he said the country received 233,382 tourist arrivals in March.
"It is a drop against 235,618 tourists we received in February. Despite the slight decline, we can sustain the growth momentum for the future as the country is now normal," Amaratunga added.
Sri Lanka gets 700,000 tourists
 

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VAdm P Ajit Kumar VCNS at the Commissioning Ceremony of SLNS Sindurala at Colombo. SLNS Sindurala is an Advanced Offshore Patrol Vessel made by Defence PSU GSL & was delivered to Sri Lanka navy in end Mar.



 

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India assisted housing project expands for Sri Lanka's Indian origin Tamils
India has laid the foundation for the construction of 250 more houses for Sri Lanka's Indian-origin Tamils in the country, the High Commission said here.

Prime Minister Narendra Modi during his visit to Sri Lanka in May last year announced the construction of additional 10,000 houses in upcountry areas and the extension of Emergency Ambulance Service.

India has committed a total of 14,000 houses in the plantation areas in the Southern Province. Around 1000 houses out of these are nearly complete. The UN Habitat is the implementing agency for the housing, the High Commission said.
India assisted housing project expands for Sri Lanka's Indian origin Tamils
 

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No more flights from Sri Lanka's second airport
Sri Lanka's second international airport Mattala International was left without a single scheduled flight on Friday after the only airline using the remote facility scrapped its daily service.

Dubai's flydubai gave no reason for the pullout from Mattala International, built by former strongman president Mahinda Rajapakse and financed with Chinese loans.

The airport -- a five-hour, 250-kilometre (150-mile) drive from the capital Colombo -- is located inside a wildlife sanctuary and smack in the middle of a migratory route for birds.

Several aircraft have hit birds since it opened in 2013 and two years ago the military deployed hundreds of troops to clear deer, wild buffalo and elephants off the sprawling facility.

The airport, which cost an initial $210 million and employs some 550 workers in Rajapakse's home district, has failed to generate enough business to pay staff, let alone make a profit.

Rajapakse's administration had offered hefty concessions and initially attracted Air Arabia -- which pulled out after only a few weeks -- and flydubai.

Even Sri Lanka's national carrier Sri Lankan Airlines stopped flying to Mattala in 2015 saying the move saved them $18 million annually.

Mattala will however remain an emergency alternate landing location for flights heading into Colombo International. Earlier this year the world's largest aircraft, the Antonov 225, refuelled there.

Other Chinese investments have also turned sour for the island nation, leading the government to warn last month of a looming debt crisis as it struggles to pay back the loans.

Last August, China took over the loss-making deep-sea port of Hambantota in the south of Sri Lanka on a 99-year lease under a $1.1 billion deal, sparking particular concern in neighbouring India.

China has also lent other countries in Asia and further afield vast amounts of money for infrastructure projects being built under President Xi Jinping's signature Belt and Road initiative.

In April the International Monetary Fund warned China about saddling other countries with a "problematic increase in debt".
No more flights from Sri Lanka's second airport - Times of India
 

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Sri Lanka defends contract offered to China to build houses for war affected
Sri Lanka has defended a contract offered to China to build houses for war affected families in the North and East.

Minister of Resettlement, Rehabilitation, Northern Development and Hindu Religious D.M Swaminathan said that the the project was offered to a Chinese Company after careful consideration.

He said that China Railway Beijing Engineering Group Co. Ltd had been awarded the contract to build 40,00 houses for the war affected families.

The Minister said that the Chinese company has agreed to complete the project in two years and that will help meet the urgent requirement for housing for the families.

Swaminathan said that while the Government had begun constructing houses for the war displaced families there was still a need for over 160,000 houses.

The Minister said that it was in this backdrop that an agreement was reached with the Chinese company after the company met all the specifications.

Swaminathan also said that the Chinese housing project will also see some 7000 locals in the North and East receiving employment to construct the houses.

India is also involved in providing houses for the war affected families in the North and East.

A local media report had said this week that India had raised concerns at the highest levels of the Sri Lankan Government about the manner in which the contract to build 40,000 houses in the North and East was recently awarded without tender to the Chinese company that has no history of building houses in the country.

The Sunday Times reported that the Indian Government had questioned the decision to give the hefty tender to a company that has “not even built one house yet in Sri Lanka”. It has also been queried how a company which is unfamiliar with conditions in those areas, including that of the soil and weather, could be given the contract without a comprehensive study.
http://www.thesundayleader.lk/2018/...ed-to-china-to-build-houses-for-war-affected/
 

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Behind on payments to China, Sri Lanka coughed up territory instead
Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes.

Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Rajapaksa.

Over years of construction and renegotiation with China Harbor Engineering Co., one of Beijing’s largest state-owned enterprises, the Hambantota Port Development Project distinguished itself mostly by failing, as predicted. With tens of thousands of ships passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012.

And then the port became China’s.

Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.

The transfer gave China control of territory just a few hundred miles off the shores of a rival, India, and a strategic foothold along a critical commercial and military waterway.

The case is one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect.

The debt deal also intensified some of the harshest accusations about President Xi Jinping’s signature Belt and Road Initiative: that the global investment and lending program amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behavior in struggling democracies.

Months of interviews with Sri Lankan, Indian, Chinese and Western officials, and analysis of documents and agreements stemming from the port project, present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing.

During the 2015 Sri Lankan elections, large payments from the Chinese port construction fund flowed directly to campaign aides and activities for Rajapaksa, who had agreed to Chinese terms at every turn and was seen as an important ally in China’s efforts to tilt influence away from India in South Asia. The payments were confirmed by documents and cash checks detailed in a government investigation seen by The New York Times.

Though Chinese officials and analysts have insisted that China’s interest in the Hambantota port is purely commercial, Sri Lankan officials said that from the start, the intelligence and strategic possibilities of the port’s location were part of the negotiations.

Initially moderate terms for lending on the port project became more onerous as Sri Lankan officials asked to renegotiate the timeline and add more financing. And as Sri Lankan officials became desperate to get the debt off their books in recent years, the Chinese demands centered on handing over equity in the port rather than allowing any easing of terms.

Though the deal erased roughly $1 billion in debt for the port project, Sri Lanka is now in more debt to China than ever, as other loans have continued and rates remain much higher than from other international lenders.

Rajapaksa and his aides did not respond to multiple requests for comment, made over several months, for this article. Officials for China Harbor also would not comment.

Estimates by the Sri Lankan Finance Ministry paint a bleak picture: This year, the government is expected to generate $14.8 billion of revenue, but its scheduled debt repayments, to an array of lenders around the world, come to $12.3 billion.

“John Adams said infamously that a way to subjugate a country is through either the sword or debt. China has chosen the latter,” said Brahma Chellaney, an analyst who often advises the Indian government and is affiliated with Center for Policy Research, a think tank in New Delhi.

Indian officials, in particular, fear that Sri Lanka is struggling so much that the Chinese government may be able to dangle debt relief in exchange for its military’s use of assets like the Hambantota port — though the final lease agreement forbids military activity there without Sri Lanka’s invitation.

“The only way to justify the investment in Hambantota is from a national security standpoint — that they will bring the People’s Liberation Army in,” said Shivshankar Menon, who served as India’s foreign secretary and then its national security adviser as the Hambantota port was being built.

The relationship between China and Sri Lanka had long been amenable, with Sri Lanka an early recognizer of Mao’s communist government after the Chinese Revolution. But it was during a more recent conflict — Sri Lanka’s brutal 26-year civil war with ethnic Tamil separatists — that China became indispensable.

From the start, officials questioned the wisdom of a second major port, in a country a quarter the size of Britain and with a population of 22 million, when the main port in the capital was thriving and had room to expand. Feasibility studies commissioned by the government had starkly concluded that a port at Hambantota was not economically viable.

“They approached us for the port at the beginning, and Indian companies said no,” said Menon, the former Indian foreign secretary. “It was an economic dud then, and it’s an economic dud now.”

But Rajapaksa greenlighted the project, then boasted in a news release that he had defied all caution — and that China was on board.

The Sri Lanka Ports Authority began devising what officials believed was a careful, economically sound plan in 2007, according to an official involved in the project. It called for a limited opening for business in 2010, and for revenue to be coming in before any major expansion.

The first major loan it took on the project came from the Chinese government’s Export-Import Bank, or Exim, for $307 million. But to obtain the loan, Sri Lanka was required to accept Beijing’s preferred company, China Harbor, as the port’s builder, according to a U.S. Embassy cable from the time, leaked to WikiLeaks.

That is a typical demand of China for its projects around the world, rather than allowing an open bidding process. Across the region, Beijing’s government is lending out billions of dollars, being repaid at a premium to hire Chinese companies and thousands of Chinese workers, according to officials across the region.

There were other strings attached to the loan, as well, in a sign that China saw strategic value in the Hambantota port from the beginning.

Nihal Rodrigo, a former Sri Lankan foreign secretary and ambassador to China, said that discussions with Chinese officials at the time made it clear that intelligence sharing was an integral, if not public, part of the deal. In an interview with The Times, Rodrigo characterized the Chinese line as, “We expect you to let us know who is coming and stopping here.”

In later years, Chinese officials and the China Harbor company went to great lengths to keep relations strong with Rajapaksa, who for years had faithfully acquiesced to such terms.

In the final months of Sri Lanka’s 2015 election, China’s ambassador broke with diplomatic norms and lobbied voters, even caddies at Colombo’s premier golf course, to support Rajapaksa over the opposition, which was threatening to tear up economic agreements with the Chinese government.

As the January election inched closer, large payments started to flow toward the president’s circle.

Most of the payments were from a sub-account controlled by China Harbor, named “HPDP Phase 2,” shorthand for Hambantota Port Development Project.

After nearly five years of helter-skelter expansion for China’s Belt and Road Initiative across the globe, Chinese officials are quietly trying to take stock of how many deals have been done and what the country’s financial exposure might be. There is no comprehensive picture of that yet, said one Chinese economic policymaker, who like many other officials would speak about Chinese policy only on the condition of anonymity.

Some Chinese officials have become concerned that the nearly institutional graft surrounding such projects represents a liability for China, and raises the bar needed for profitability. Xi acknowledged the worry in a speech last year, saying, “We will also strengthen international cooperation on anti-corruption in order to build the Belt and Road Initiative with integrity.”

In Sri Lanka’s case, port officials and Chinese analysts have also not given up the view that the Hambantota port could become profitable, or at least strengthen China’s trade capacity in the region.

Ray Ren, China Merchant Port’s representative in Sri Lanka and the head of Hambantota port’s operations, insisted that “the location of Sri Lanka is ideal for international trade.” And he dismissed the negative feasibility studies, saying they were done many years ago when Hambantota was “a small fishing hamlet.”

Hu Shisheng, the director of South Asia studies at the China Institutes of Contemporary International Relations, said that China clearly recognized the strategic value of the Hambantota port. But he added: “Once China wants to exert its geostrategic value, the strategic value of the port will be gone. Big countries cannot fight in Sri Lanka — it would be wiped out.”

Although the Hambantota port first opened in a limited way in 2010, before the Belt and Road Initiative was announced, the Chinese government quickly folded the project into the global program.

Shortly after the handover ceremony in Hambantota, China’s state news agency released a boastful video on Twitter, proclaiming the deal “another milestone along the path of #BeltandRoad.”

By 2012, the port was struggling to attract ships — which preferred to berth nearby at the Colombo port — and construction costs were rising as the port began expanding ahead of schedule. The government decreed later that year that ships carrying car imports bound for Colombo port would instead offload their cargo at Hambantota to kick-start business there. Still, only 34 ships berthed at Hambantota in 2012, compared with 3,667 ships at the Colombo port, according to a Finance Ministry annual report.

“When I came to the government, I called the minister of national planning and asked for the justification of Hambantota Port,” Harsha de Silva, the state minister for national policies and economic affairs, said in an interview. “She said, ‘We were asked to do it, so we did it.’ ”

Determined to keep expanding the port, Rajapaksa went back to the Chinese government in 2012, asking for $757 million.

The Chinese agreed again. But this time, the terms were much steeper.

The first loan, at $307 million, had originally come at a variable rate that usually settled above 1 or 2 percent after the global financial crash in 2008. (For comparison, rates on similar Japanese loans for infrastructure projects run below half a percent.)

But to secure fresh funding, that initial loan was renegotiated to a much higher 6.3 percent fixed rate. Rajapaksa acquiesced.

The rising debt and project costs, even as the port was struggling, handed Sri Lanka’s political opposition a powerful issue, and it campaigned heavily on suspicions about China. Rajapaksa lost the election.

The incoming government, led by President Maithripala Sirisena, came to office with a mandate to scrutinize Sri Lanka’s financial deals. It also faced a daunting amount of debt: Under Rajapaksa, the country’s debt had increased threefold, to $44.8 billion when he left office. And for 2015 alone, a $4.68 billion payment was due at year’s end.

The new government was eager to reorient Sri Lanka toward India, Japan and the West. But officials soon realized that no other country could fill the financial or economic space that China held in Sri Lanka.

The Central Bank estimated that Sri Lanka owed China about $3 billion last year. But Nishan de Mel, an economist at Verité Research, said some of the debts were off government books and instead registered as part of individual projects. He estimated that debt owed to China could be as much as $5 billion and was growing every year. In May, Sri Lanka took a new $1 billion loan from China Development Bank to help make its upcoming debt payment.

Government officials began meeting in 2016 with their Chinese counterparts to strike a deal, hoping to get the port off its balance sheet and avoid outright default. But the Chinese demanded that a Chinese company take a dominant equity share in the port in return, Sri Lankan officials say — writing down the debt was not an option China would accept.

When Sri Lanka was given a choice, it was over which state-owned company would take control: either China Harbor or China Merchants Port, according to the final agreement, a copy of which was obtained by The Times, although it was never released publicly in full.

China Merchants got the contract, and it immediately pressed for more: Company officials demanded 15,000 acres of land around the port to build an industrial zone, according to two officials with knowledge of the negotiations. The Chinese company argued that the port itself was not worth the $1.1 billion it would pay for its equity — money that would close out Sri Lanka’s debt on the port.

Some government officials bitterly opposed the terms, but there was no leeway, according to officials involved in the negotiations. The new agreement was signed in July 2017, and took effect in December.

The deal left some appearance of Sri Lankan ownership: Among other things, it created a joint company to manage the port’s operations and collect revenue, with 85 percent owned by China Merchants Port and the remaining 15 percent controlled by Sri Lanka’s government.

But lawyers specializing in port acquisitions said Sri Lanka’s small stake meant little, given the leverage that China Merchants Port retained over board personnel and operating decisions. And the government holds no sovereignty over the port’s land.

China had a stake in Sri Lanka’s main port as well: China Harbor was building a new terminal there, known at the time as Colombo Port City. Along with that deal came roughly 50 acres, solely held by the Chinese company, where Sri Lanka had no sovereignty.

That was dramatically demonstrated toward the end of Rajapaksa’s term, in 2014. Chinese submarines docked at the harbor the same day that Prime Minister Shinzo Abe of Japan was visiting Colombo, in what was seen across the region as a menacing signal from Beijing.

When the new Sri Lankan government came to office, it sought assurances that the port would never again welcome Chinese submarines — of particular concern because they are difficult to detect and often used for intelligence gathering. But Sri Lankan officials had little real control.

Now, the handover of Hambantota to the Chinese has kept alive concerns about possible military use — particularly as China has continued to militarize island holdings around the South China Sea despite earlier pledges not to.

Sri Lankan officials are quick to point out that the agreement explicitly rules out China’s military use of the site. But others also note that Sri Lanka’s government, still heavily indebted to China, could be pressured to allow it.

And, as de Silva put it, “Governments can change.”
Behind on payments to China, Sri Lanka coughed up territory instead
 

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India voices concern over housing project
India has voiced concern to Sri Lankan authorities over a housing project in the island’s Tamil-majority north and east, to be executed by a Chinese company, citing the Resettlement Ministry’s “lack of transparency” in choosing the builder.

According to a recent report in Sri Lankan newspaperSunday Times, Indian officials have questioned the government’s decision to award a huge contract — to build 40,000 homes — to a Chinese company, reportedly without a fair tendering process. In May, Sri Lanka’s Resettlement Ministry obtained Cabinet clearance for the project, which involves China Railway Beijing Engineering Group Co. Ltd and its local representative.

The Indian mission has not commented on the issue formally, but sources in Colombo confirmed that top officials had flagged the issue. They particularly raised the “opaque” manner in which the Ministry finalised the project, apparently “excluding” experienced companies from India that would have been interested.

India’s owner-driven scheme of 46,000 homes across the north and east is nearly complete. Additionally, it is building 14,000 houses in the central highlands. The projects are being executed with a grant totalling nearly $400 million.

Source of funding

In a statement, D.M. Swaminathan, the Resettlement Minister, said on Monday that the Cabinet-cleared project came with a 100% financing option from the company, and was likely to be completed fast, in two years. The project, according to an earlierSunday Times report, will be funded through private commercial loans at a base price of LKR 1.28 million per house.

According to official data, as many as 1,65,000 houses are required in the north and east. Locals have sought brick-and-mortar housing that are suitable for their warm climatic conditions, and have been pushing for initiatives that will generate local employment.
https://www.thehindu.com/todays-pap...cern-over-housing-project/article24257711.ece
 

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India will always be Colombo's 1st choice, says Sri Lankan foreign minister
Sri Lankan Foreign Minister Sarath Amunugama dispelled concerns of China "taking over" a strategic port located on the southern part of the island nation and of Colombo drifting into Beijing's sphere of influence. India will "always" be Sri Lanka's first choice, Amunugama said while speaking to India Today in Colombo. Amunugama underlined that Sri Lanka does not want to be "dragged into military and strategic interests of any country" and that "Sri Lanka will protect its sovereignty".

Amunugama spoke about the Hambantota port, which has been leased out to a Chinese company, and called it a completely "Lankan operation". "No Chinese submarines can dock here... Just because we take loan from China, it does not mean we will subscribe to their strategic interests," Amunugama told India Today.

Amunugama also spoke about the recent political crisis that rocked the island nation. Political developments in Sri Lanka are being closely watched after Sri Lankan president Maithripala Sirisena ousted PM Ranil Wickramsinghe and appointed Mahinda Rajapaksa as the new prime minister. The Sri Lankan parliament will soon be reconvened and a trust vote will be held. The date of the trust vote has not been decided yet.

Here is are the excerpts from India Today's wide-ranging interview with Sarath Amunugama:

ON CONTINUUM IN FOREIGN POLICY
Sri Lanka is a very small country. India and Sri Lanka have been friends from time immemorial. Sri Lanka has always had and has to have good relations with India as part of its foreign policy. That is followed by every government in Sri Lanka. There might be slight nuances but on the basic thrust and trajectory there cannot be any differences.

ON COUNTRIES REACHING OUT AMID POLITICAL CRISIS IN SRI LANKA
Early on, I asked SAARC ambassadors to come to Sri Lanka. We held discussions with them. We must start with our neighbours. Sri Lanka is the only country in SAARC that has no dispute with any other country in the region. Other SAARC countries have tensions between them. We are, in fact, a meeting point for all the countries in the region.
There is a lot of attempt globally to put China and India against each other. There is no such thing.​
- Foreign Minister Sarath Amunugama

ON DELAY IN CONVENING OF PARLIAMENT
November 14 is an advanced [date] from November 16. It [parliament's reconvening] is not a sinister move. Earlier, we were to present the budget on November 5. Under the constitution, the President can prorogue [discontinue] the parliament for two months.

If the President was worried about numbers then he could have delayed it further. But that is not the case. Change in the administration is the reason behind the change [of dates of parliament's reconvening]. A decision has to be taken as to whether the budget is to be presented or should there be a vote [on November 14].

ON ALLEGATIONS OF HORSE TRADING
The political authorities wanted to hold the trust vote on November 7 itself because it is good optics and the world would have confidence but when it [the proposal to have the trust vote on November 7] was moved to the finance ministry, the officials said it was not possible to present the budget.
Just because we take loans from China, it does not mean we will subscribe to their strategic interests.​
- Sri Lankan Foreign Minister Sarath Amunugama

ON HOW CONFIDENT IS HE OF HAVING THE NUMBERS ON NOVEMBER 14
We are very confident. When we meet and parliament is summoned, there will be no vote on that day. Parliament procedure is very clear. Can't have a vote just like that... You have to pass an order and the paper [calling for a trust vote] has to be submitted in parliament 24 hours in advance. There is a procedure.

ON EAST COAST TERMINAL. WILL INDIA GET IT OR NOT?
The port is very vital for Sri Lanka because it is a trans-shipment port and most of the traffic goes to India. India is also developing its own ports, so we have to take a futuristic view of how to develop this port. Three parts of it are developed. The next two are the east and the west terminals that are due for construction.

East terminal is crucial because it is a deep water port. We all agree and the President has intimated that to Prime Minister [Narendra] Modi himself that the west terminal can certainly be developed by India. Sri Lanka is looking at developing the east terminal on its own.
Nobody should infringe on the sovereignty of Sri Lanka. We are grateful to India for respecting that.​
- Foreign Minister Sarath Amunugama
[Ousted Sri Lankan PM] Ranil Wickremesinghe absolutely had no business to go to India or any country and give assurances regarding this port. That is not how it works. It has to be passed by parliament. It was under discussion but was not signed and sealed. We will have to heed the opinion of the workers and the trade unions that it [developing the east terminal] has to be a Sri Lankan operation.

ON CHINESE PRESENCE AND INFLUENCE IN LANKA
There is a lot of attempt globally to put China and India against each other. There is no such thing. Sri Lanka needs infrastructural development and that is the mantra for development. For that we go to IMF [International Monetary Fund], ADB [Asian Development Bank], etc... the global formula today is that developing countries must invest in infrastructure.

The way out of the poverty trap is to have investment and infrastructure. It requires money. It [Sri Lankan infrastructure projects] is not financed completely by China. Most are multilateral projects that involve consortiums. Japan is a bigger donor than China.
Not a single ship can enter Hambantota unless it is guided by the harbour guards who come under Sri Lankan Navy​
- Foreign Minister Sarath Amunugama

While we speak of debt traps, China was able to tap into so many countries at an early stage and at a faster pace. All other countries would've taken double the time, including India.
China markets their projects and their financing. They were quick on the draw. There are 20-30 countries that are in this alleged trap. Find out why.

ON CHINESE DEBT TRAP
We cannot compromise [on] our sovereignty. These are commercial operations carried out on the basis of detailed feasibility study. We are glad that we did it ten years ago because projects today cost much more. It is a win-win situation.

It cannot be seen as an attack on our sovereignty. Take Hambantota port for example. It is clearly a Lankan operation.
We don't want to be dragged into the military and strategic interests of any country.​
- Sri Lankan Foreign Minister

Not a single ship can enter Hambantota unless it is guided by the harbour guards who come under Sri Lankan Navy.

No Chinese submarines can dock here. Sri Lanka will protect its sovereignty. Just because we take loans from China, it does not mean we will subscribe to their strategic interests.

ON ECONOMIC AND STRATEGIC RELATIONS
Sri Lanka has economic relations with China and wants more [expansion of ties] with India. Our first choice is always India.

We don't want to be dragged into the military and strategic interests of any country.

Nobody should infringe on the sovereignty of Sri Lanka. We are grateful to India for respecting that. There might be some differences but largely it is a strong relationship.

ON THE ASSASSINATION PLOT
There was no such thing [as a plot hatched by India's external intelligence agency to assassinate Sri Lankan President Sirisena]. The guy who made the initial complaint said there was an Indian guy involved.

Indeed there was an Indian guy but the Indian embassy stated that though the man was there without proper visa or documentation, he was mentally unstable. It was part of the official statement of the Indian mission.
Enquiries are on. Let the matter be investigated. Sri Lanka is not accusing India of any underhand job.

The Indian came [to Sri Lanka] for three months to work as a tuition teacher. [He] found employment illegally.
Exclusive: India will always be Colombo's 1st choice, says Sri Lankan foreign minister
 

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Two Indian Coast Guard Ships to visit SL
Two Indian Coast Guard Ships, CGS Samar and Aryaman, would arrive in Sri Lanka on Saturday furthering the cooperation between the two Coast Guards of India and Sri Lanka, the Indian High Commission said yesterday (30).

In a statement, the High Commission said the ships would arrive in Colombo after participating in the India-Sri Lanka-Maldives Tri-Lateral Coast Guard Exercise ‘Dosti’ that was conducted from November 25-29 in the Maldives.

“Two junior Sri Lanka Coast Guard Officers have also been onboard the ships since their departure from India on November 23 to provide them with valuable sea experience and first hand insight into Coast Guard operations. During their stay in Sri Lanka, the ships would also be visiting Galle. The visit is aimed at furthering the level of cooperation and interoperability that exists between Coast Guards of both the nations and to assist in capacity building of the Sri Lanka Coast Guard,” it said.

It said the interaction between the two coast guards has seen a steady increase over the years with a number of high level delegations and four ship visits undertaken by the Indian Coast Guard to Sri Lanka since last year.

During their visit, the Indian Coast Guard ships will undertake training on aspects such as search and rescue, vessel search procedures, documentation and pollution control.

In addition, a series of professional exchanges and sports fixtures have been also been planned ashore between the ships’ crew and the Sri Lanka Coast Guard personnel in Colombo and Galle as well.
Two Indian Coast Guard Ships to visit SL
 

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Sri Lanka’s Court of Appeal restrains Mahinda Rajapaksa from functioning as PM
Sri Lanka’s Court of Appeal on Monday temporarily restrained controversially installed Prime Minister Mahinda Rajapaksa and his purported Cabinet of Ministers from functioning in their respective offices.

The interim order follows a quo warranto petition filed by 122 MPs on November 23, challenging Mr. Rajapaksa’s continuance in office, after losing two trust votes in Parliament on November 14 and 16.

Mr. Rajapaksa has decided to appeal in the Supreme Court on Tuesday, as he is “not in agreement with the interim order.”

‘On whose authority?’
The appeal court has asked the former President and his Ministers to explain, on whose authority they continued in office despite the legislature voting them out twice.

“The damage that may be caused by temporarily restraining a lawful Cabinet from functioning would in all probability be outweighed by the damage caused by allowing a set of persons not entitled in law to function as Prime Ministers or Ministers,” observed Justice Preethi Padman Surasena.

Over the last month, Mr. Rajapaksa and his team of ‘Ministers’ have taken key decisions on commodity pricing and have signed foreign deals.





‘Breach of procedure’
Mr. Rajapaksa and President Maithripala Sirisena, who appointed him in place of incumbent Prime Minister Ranil Wickremesinghe in a widely criticised move, are yet to recognise the outcome of the votes in Parliament, citing “breach of procedure.”

MPs opposed to Mr. Rajapaksa’s appointment have shown a majority in the House as many as six times in the last three weeks.

While their manoeuvre in the legislature proved inadequate to oust Mr. Rajapaksa’s disputed government, Monday’s appeal court order delivered a legal blow to the legitimacy that the Rajapaksa camp claims.

The interim order is the second major setback for President Sirisena since October 26, the day he abruptly replaced Mr. Wickremesinghe with Mr. Rajapaksa. On November 13, the Supreme Court stayed Mr. Sirisena's dissolution of Parliament and restrained the Election Commission from preparing for snap polls. Hearing on the case resumes on Tuesday.

However, Mr. Sirisena is unwilling to back down from his earlier refusal to work with Mr. Wickremesinghe, despite his front unanimously nominating him for the post of Prime Minister.

“The meeting was inconclusive,” MP and All Ceylon Makkal Congress Rishad Bathiudeen told The Hindu. “The President told us he is yet to see the full text of today’s [Monday’s] interim order and that he would take a call on it tomorrow,” he said, minutes after a delegation — of leaders representing Mr. Wickremesinghe’s front — met Mr. Sirisena.

Political prisoners
Meanwhile, in a meeting with Tamil National Alliance (TNA) legislators earlier on Monday, President Sirisena had reportedly observed there was “no Prime Minister or government in the country”, in the wake of the appeal court order. He assured he would take “necessary action within 24 hours”, according to TNA MP Dharmalingam Sithadthan, who attended the meeting.

The meeting had been scheduled for a discussion on the possible release of political prisoners held under Sri Lanka’s draconian Prevention of Terrorism Act. “Officials from the Attorney General’s department went through a list of political prisoners and the status of their cases. Mr. Sampanthan urged the President not to take a purely legalistic view of the matter as it was a political issue,” TNA MP M.A. Sumanthiran said.
Sri Lanka’s Court of Appeal restrains Mahinda Rajapaksa from functioning as PM
 

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Sri Lanka expects 2-fold growth in Indian tourist arrivals this year
Sri Lanka is expecting over two folds growth in the number of Indian tourist arrivals to the island nation this year, banking on the Ramayana Circuit and other common cultural heritage sites.

The country expects total Indian tourist arrivals to cross one million mark in 2019, Sri Lanka Minister of Tourism Development John A E Amaratunga said. In 2018, around 450,000 Indian tourists visited Sri Lanka.

Sri Lanka, has developed the Ramayana circuit to woo Indian tourists by identifying several places connected with the ancient Indian epic.

“We have rediscovered the Ramayana circuit. We have identified several spots and we are coming out with the authentic documentaries,” said Amaratunga.

“Now we are targeting almost up to one million (10 lakh) arrivals with all the publicity which we are doing all what which we have to offer,” he added.

Sri Lanka is also well-connected as there are around 27 daily flights from India to the island nation, he said.

He assured Indian tourists that his country is safe for them and bad times are over now.

“Now they are coming for weeding and conventions also,” he said while addressing the media here at Business & Luxury Travel Mart (BLTM) 2019.

In the BLTM, Sri Lanka is having the largest pavilion here.

In BLTM 2019, 11 countries including Sri Lanka, Bangladesh, Taiwan, Spain, the Philippines, Egypt and Dubai are participating.

Besides, 15 Indian states are also participating.
Sri Lanka expects 2-fold growth in Indian tourist arrivals this year
 

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Sri Lanka seeks enhanced military training from India
Sri Lanka has sought enhanced military training from India, according to President Maithripala Sirisena’s office.

Visiting Indian Defence Secretary Sanjay Mitra called on Mr. Sirisena on Monday, and wide-ranging matters, including bilateral defence cooperation between the neighbouring countries and regional security, were discussed, officials said.

“India and Sri Lanka agreed to increase cooperation in security and defence spheres in several areas, including regional security, curbing drug smuggling and human trafficking and training of members of the security forces,” a statement from the presidential media unit said.

Thanking India for its partnership, Mr. Sirisena requested to increase the number of personnel trained by India. The Indian Defence Secretary agreed to look into the possibility of enhancing training facilities, the statement further said.

Currently, over 60% of Sri Lanka’s military personnel pursue their young officers’ course, junior and senior command courses in India, according to defence sources in Colombo.

Meanwhile, ‘Exercise Mitra Shakti’, the sixth edition of the joint military training exercise between the Indian Army and the Sri Lankan Army, concluded in Badulla district, in Sri Lanka’s Central Province, on Monday.

Contingents from the two countries jointly planned and executed a series of “well-coordinated tactical operations based on scenarios that are likely to be encountered in rural and urban environment”, a press release from the Indian Ministry of Defence said. The two-week programme is part of an initiative that began in 2013 as part of military diplomacy between India and Sri Lanka.
Sri Lanka seeks enhanced military training from India