Sri Lanka warned to be careful about China; diversify relations
ECONOMYNEXT – Sri Lanka should be careful about using easy Chinese money and diversify relations with other key countries, head of KPMG India, Arun Kumar, who is a former Obama administration official said.
"Historically, Sri Lanka has had close relations with China stretching over two millennia and seeking to renew those connections would seem to be the natural thing to do," Kumar told an economic forum organized by the Ceylon Chamber of Commerce in Colombo.
"The recent expansion of China’s economic and military reach has caught international interest – given China’s principle of active defence and history of acting in self-interest.
"Sri Lanka should be fully conscious of this.
"Given that large economies in Asia such as India and Japan cannot fund Sri Lanka’s large infrastructure funding needs fully, Sri Lanka has looked to cooperate more closely with China.
"But several times, this easy money which is offered across the table comes with disturbing strings attached – unsustainable debt, decreased transparency, restrictions on market economics and a loss of control over natural resources. "
Sri Lanka is jointly running a port in Hambantota with China and a connected industrial park.
"Access to an industrial park in Sri Lanka and management of the Hambantota Deep Sea Port and International Airport are recent signs of China asserting itself at the international high table," Kumar said.
"It is also an indication of Chinese designs to buy influence by creating logistics bases globally and alongside, lock up access to strategic resources. "
A sea reclamation called the Port City is also underway with foreign direct investment. Sri Lanka hopes set up a financial centre there.
"Port City Colombo, financed by China, promises to be a game-changer for Sri Lanka, and the government hopes its development will help Colombo become an enhanced trading hub between Europe, Africa, the Middle East and Asia," Kumar said.
The port will also be a finance centre accessing the Indian subcontinent’s rapidly developing markets, hopefully attracting overseas investors and increasing employment.
"Internationally, the Bridge and Road Initiative, into the designs of which Sri Lanka falls, has been viewed with suspicions 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 countries," Kumar said.
"It is important in this context for Sri Lanka to take a well-informed approach to also engage withthe rest of the economies in the region.
"The Sri Lankan government’s turn towards broader engagement with East Asia recognizes the country’s pivotal position as a strategic asset to both India and China.
"Asia and the world will have a better future when the large economies work together, being sensitive to each other’s interests." (Colombo/Sept13/2018)