Colombo Port City Plan: In Asia New Dubai or China's New Outpost ?
Authorities in Colombo, the capital of Sri Lanka, are describing the Colombo Port City project as an economic game changer.
Close to Colombo's business district, the city is becoming a 'technology hub' on the beach. The sand-built coastal city will also have an offshore international financial center, a residential area and a marina, which is why Colombo Port City is being compared to cities such as Dubai, Hong Kong and Monaco.
According to Saliya Vikramasuria, a member of the Colombo Port City Economic Commission, the construction of this new city on the coast gives Sri Lanka a rare opportunity to redesign and build a world-class city like Dubai or Sanga. Pur will be able to compete.
But critics question whether the plan will really be an economic game changer for Sri Lanka.
Sri Lanka needed a 1.4 billion$ investment from China's Harbor Engineering Company (CHE) to build the 665-acre site. In response, the Chinese company leased 43% of the project for 99 years.
After many years of excavation, the construction work here is gaining momentum and the shape of a new city is emerging.
Under the supervision of Chinese engineers, large cranes are moving concrete blocks while trucks are being filled with sand.
A canal has already been dug through this land, allowing access for small boats.
According to officials, this will be the first project of its kind in South Asia to take about 25 years to complete.
Sri Lanka has said that the entire area, including the share given to the Chinese company, will be leased to multinational companies, banks and other companies. The government can also collect taxes on their income.
About 80,000 people are expected to live in the new city, where businesses will be given special tax breaks. Transactions in this special economic zone, including salaries, will be in US dollars.
The plan for the coastal city was announced during Chinese President Xi Jinping's visit to Colombo in 2014. A year earlier, China had launched its Belt and Road project: a project that would include roads, railways and maritime infrastructure to boost trade between Asia and Europe.
Sri Lanka turned to China for financial assistance in 2009 to end a long war with Tamil separatists. Western nations have already expressed concern over human rights abuses during the war in Sri Lanka.
Mahinda Rajapaksa was Sri Lanka's president at the time of Xi Jinping's visit, but he lost the election a year later, largely because voters had in mind the Chinese debt for the vast port south of Hambantota. There were concerns.
Eight years later, Rajapaksa is back in power as prime minister, with his younger brother Gotabia as president.
But the port of Hambantota is no longemr in Sri Lanka's hands. In 2017, the Sri Lankan government extradited Chinese firms to China for failing to repay their loans, while some of the money from the port was allegedly used to pay off other debts.
So it is perhaps not surprising that not everyone in Sri Lanka shares the enthusiasm of the Port City authorities about this project.
There are many concerns about this project, one of which is the environmental impact of such a large project.
Some fear that the development of the project will not benefit the country as much as the proponents claim.
"One of the possible downsides of Port City is that it includes tax breaks," says economist Deshell Demel. For some investors, tax breaks are possible for up to 40 years.
"Such a huge tax cut will not increase Sri Lanka's gross domestic product," he said.
This tax system has created other problems as well. The United States has warned that the area could become a haven for money launderers due to a slowdown in trade, but Sri Lankan Justice Minister Muhammad Ali Sabre disagrees.
He told that this was not possible because the general criminal law applies here. "Our Money Laundering Law and Financial Intelligence Unit is operational. In the presence of all these things, it is impossible for anyone to survive. "
Globally, China's growing aggression also raises concerns about its long-term strategic intentions.
In 2020, the Asian country of Laos sold part of its energy grid to China to avoid bankruptcy in order to provide funds for a railway connecting the two countries.
So, like Hambantota, will Colombo Port City eventually become a Chinese outpost?
Sri Lankan opposition MP Rajitha Sinarthan told the BBC that "the way the government has now agreed with the Chinese, China has gained more control over Port City."
He added,''In fact, one day Sri Lanka will have no control over this project''.
Chinese intellectual Zhao Bo disagrees, saying it will benefit both countries.
China's growing influence in Sri Lanka is also a source of concern for India. Port City also aims to attract multinationals and investors in India, which could reduce investment and employment opportunities there.
But some believe the Colombo Port City project also threatens Sri Lanka.
''China does not intend to trap many countries in debt,'' he addded
Sri Lankan officials have a similar view. "The whole area is under the control of the Sri Lankan government," said Saliya Vikramasuria, a member of the Port City Economic Commission. The Sri Lankan government has patrols, police, immigration and other national security responsibilities.
He told,''China's Belt and Road project is not a charity''. We also want mutual benefit. That means we also want our investment to have economic benefits. "
But Sri Lanka, which is currently facing a severe economic crisis, has very few options.
Corona's global epidemic has devastated its lucrative tourism sector, while reducing foreign employment and foreign exchange reserves.
The country's external debt has risen to 45 billion$, of which 8 billion$ is owed to China alone.
Sri Lanka has asked visiting Chinese Foreign Minister Wang Yi a few days ago to restructure Beijing's debt settlement.
But with repeated downturns by international rating agencies, Colombo seems unlikely to reach out to international investors for more loans.
Only China has both long-term goals and capital. Some believe that a Hong Kong-style city in Sri Lanka could help China step into this part of Asia in the years to come.