European investment in Sri Lanka seen balancing off mini-China image

ECONOMYNEXT – Sri Lanka should attract diverse sources of investments, mainly from European countries, to prevent the formation of a ‘mini-China’ in the country, an economist said

"We got to ensure that Chinese state-owned companies don’t make this a mini-China," said Ganeshan Wignaraja at a forum on ‘Brexit and its implications’ organized by Ceylon Chamber of Commerce.

China has become a big investor in Sri Lanka, mainly in the infrastructure sector.

In 2018, China contributed 26.4 percent out of 1,353.5 million US dollars of total foreign loans and grants disbursed.

The Hambantota port was leased to a Chinese state-owned company for 99 years given anticipated difficulties in repaying loans taken from China to build it after it failed to attract
business initially.

"We got to try to attract UK financial, legal and creative services to the Port City,” said Wignaraja, executive director of the Lakshman Kadirgamar Institute of International Relations
and Strategic Studies.

“Port city is a 15-year project and we see it coming up every year. We opened this up in very simple terms and that’s what we got to do because we need to have diversified sources of FDIs into Sri Lanka."

With the uncertainty of Brexit and the escalating US-China trade war, there’s a lot of pressure on Sri Lanka to find new sources of trade and investments.

"We got to try and get into European Union’s master plan for infrastructure. EU has a new plan to connect Asia to EU which is worth billions of dollars…it is on the drawing board still but we better start watching that space so we might get some FDI," said Wignaraja.

"There’s some discussion of the European investment bank being involved in that so it will definitely be on better terms than China’s."
(COLOMBO, 04 June 2019)

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