The Hambantota Port Debate: Common Sense from the Sideline

The momentous issues arising from the development of Hambantota port and its associated ancillaries has now generated some commentary from Sri Lankan patriots on the sidelines …. And, in some cases, far afield in UK and Australia. It is a measure of the common sense and intelligence reposing in personnel we could frame as “Citizens Perera or Silva” that these comments have been deemed worthy of airing in the pages of Thuppahi. While Michael Obeyesekere happens to be related to one of my brothers-in-law (now deceased), Gus Mathews is a recent email contact (via the brothers Rajeewa — alas no more with us–and Sanjeewa Jayaweera) and Prithi Perera is a total stranger…. A Note from The Editor, Thuppahi, 20 Septmber 2021

 Gus Mathews in London, UK

Click on the link below. This report is dedicated to all the naysayers and the load of negative comments regarding the construction of the Hambantota Harbour…… https://www.pressreader.com/sri-lanka/sunday-times-sri-lanka/20210905/281509344295022

HERE: “China-owned ports report Rs 1b dividend to Sri Lanka Ports Authority,”.….. By Kapila Bandara

China Merchants Port Holdings (CMPH) has declared a dividend of Rs. 1.05 billion to the Sri Lanka Port Authority (SLPA), while announcing in the past week that its first half net profit had shot up by 204.7% to HK$4.71 billion (Rs 120.61 billion), from HK$1.54 billion in 2020.
It is not clear when the payout to SLPA is being made. The Chinese government company CMPH, operates four container berths in Colombo’s International Container Terminals, and four multi-purpose berths, two oil berths and four container berths in Hambantota’s International Port Group (HIPG).
The improved financial results for the six months ended June 30, 2021, comes at a time when global container and dry bulk cargo shipping costs are continuing to rise. CMPH reported on Monday, August 30, that interim revenue increased by 38.9% from the year before to HK$5.66 billion and out of this, HK$5.31 billion was generated from terminal handling charges at port terminals, stevedoring, and the auxiliary services.
The company said Colombo International Container Terminals, (CICT) moved 1.50 million containers, or twenty-foot equivalent units, in the six months to June, up by 8.7% year-on-year, largely transshipment cargo.
For the first half of 2021, Hong Kong-listed China Merchants Port Holdings, said that Hambantota International Port Group handled 790,000 tonnes of bulk cargo, largely as a result of rising cement volumes. Bulk cargo volume vaulted by 338.9% from the year before.
China Merchants Port Holdings, said the roll-on/roll-off terminal handled 281,000 vehicles in the first half, up by 56.2% year-on-year. This was also mainly transshipments.
The HIPG Industrial Park has signed up 27 enterprises, the company said. It is also gearing up to become a fully-functional multi-purpose port next year.
In July, China’s state news agency Xinhua, cited HIPG General Manager, Commercial and Marketing, Lance Zuo as saying: “As Hambantota Port is working towards being a fully-functional multi-purpose port by next year, we are gearing at all levels, which includes continuous training and testing our systems for optimum efficiency.”
Cargo volume has risen to more than 1.20 million metric tonnes in the first six months, from 420,421 MT at end June, 2020, Xinhua said, citing HIP. Roll-on/roll-off volume increased to 413,005 MT from 239,827 MT the year before.
As it reported interim earnings, CMPH said also that CICT launched a ‘Hope Village’ with a Rs 17 million community centre for Pannila, near Horana.
It donated US$21,600 to the Government of Sri Lanka to build coronavirus isolation centres and gave eight 20-foot containers to a hospital in Gampaha District, to be fitted out for use as nucleic acid testing labs. It gave US$4,500 worth of anti-pandemic supplies (5,000 N95 respirator masks) to a hospital in Hambantota; US$10,000 to Hambantota Zonal Education Office and a hospital, and an additional US$75,000 worth of PCR testing machinery to a hospital Hambantota, the company said.
In April, CICT and HIPG jointly launched the second ‘Hope Village’ project in a village in Hambantota.
China’s port projects in Sri Lanka have become intertwined with national debt and corrupt domestic politics and business.

Michael Obeyesekere in Queensland Australia

Many thanks Gus for your explanatory reply. Well-researched with undisputed facts. However, any Chinese involvement with the Rajapakse government is seen by Western alliance as a threat to their colonial monopoly of the world.

One mustn’t forget that this same Western alliance has been RESPONSIBLE for many illegal regime changes throughout the world, creating absolute havoc by large scale wars that destroyed economies, millions of innocent civilian deaths. Not forgetting the use of chemical weapons (agent Orange, Napalm). From 1963 to 1973 388 thousand TONNES were used to create victory in Vietnam.  However [that war] was another unceremonious defeat.

Why do people continue to forget these horrific events and more recently Afghanistan and slander the Chinese? When was China last involved in a Invasion? My only conclusion is that most migrants living in the west are either BRAINWASHED by the false propaganda of the Western Media  or  are complicit in supporting these Western tyrants talking absolute control of developing nations for their financial benefit.

Regards, Michael Obeyesekere.

Prithi Perera now in Sri Lanka

Gus. I do not think you have provided any response to what I said in a previous email regarding Hambantota. I shall repeat these views in brief;

  1. Whilst it is understood that it is the prerogative of the SLPA to decide on traffic, which is a GOSL understanding, some of the traffic is diverted to Magampura, in order to mainly provide more business there. A glaring example is vehicle imports, where the ultimate destination is Colombo, yet they are diverted to Hambantota and transported all the way back to Colombo. Absolutely illogical !
  2. The same applies to the Mattala Airport, where tourists and Nationals have to trek all the way back to Colombo, which is more of a central destination.  Over 40% of the country’s population is in the Western Province.
  3. No one disputes the need for more Ports and Airports. But it is the manner and timing which is in dispute, being laden with unbridled corruption. The timing for the second phase in Hambantota is majorly the reason for Sri Lanka being unable to meet its debt commitments to China and Hambantota had to be handed over to the Chinese for a 99-year lease. Most examples quoted in Africa, South America and Asia have resulted in the Chinese first giving loans and then acquiring the assets when the countries default.
  4. The East and West Terminals in the Colombo Port have become big power games between the Chinese, Indians and the Japanese, with those at the helm of GOSL having a ball, minting money by milking the peoples’ assets.  Earlier, it was the loaned capital that was used to rob and now with the debt crisis, it is done through the sale of the country’s assets.
  5. The lower growth -rate between 2015-2019 as compared to 2010-2015 can be explained thus;
  6. a) The 2010-2015 period grew immediately postwar and was exponentially high as compared to lower growth rates during the war years.
  7. b) By the time 2015-2019 came, the country’s borrowing % during the said period was around 51% of total loans, as compared to over 100% or more of the total loans balance during the 2010-2015 period. It is obvious who borrowed more during their periods in government, be it sovereign bonds, western loans or Chinese and contributed to the current debt crisis, including the inability to pay back the Chinese Loans in Hambantota that resulted in the handover of the Port to the Chinese for 99 years.
  8. c) Exports dropped to 12% in the 2010-2014 period and picked up to around 18% during the 2015-2019 period.

The points presented above will speak for the trajectories the Lankan Economy has taken during the respective periods.

As concerns western hegemony, alliances and regime changes et cetera, I certainly do not agree or support the war economies and thereby the dominance of countries by the US and the Western Alliances, who have wrought havoc the world over. But, the Chinese also will do likewise, once they fight for their spheres of influence, as happening in Hongkong, Taiwan and Tibet. Vietnam is weary of them and India has the usual border skirmishes. There are certainly no freebies in big power games and overtures.

As a dual citizen now resident in our beautiful motherland after over 30 years of living and travelling overseas, I do not belong to any political party, but merely wish that those in power deliver what is expected of them for our sake and that of our future generations. Our beautiful country is in shambles right now, with untimely and non-evidence based decisions, inefficiencies and unbridled corruption becoming the order of the day.!!

Bst.  Prithi

IN THE FACE — Gus Mathews meets Prithi Perera Head-On, 20 Septmber 2021

Prithi,

 Your Point 1
Hambantota is more suited to vehicle imports as it is a new port with modern facilities unlike Colombo port that was a legacy of our colonial masters and was suited for the export of coffee initially and later tea. Marine logistics is a complicated field and it is time that amateurs do not play the experts in that field and espouse solutions that are above their pay grade.
 
Mattala airport is a contingency airport currently and eventually will reach capacity. Just imagine if some mishap were to befall Bandaranaike airport and Mattala was not built, all long haul flights will have to fly into Chennai – a foreign country that is not necessarily a friend to Sri Lanka.
 
Your Point 2
Corruption in Sri Lanka does not depend on the build of the Hambantota port as whether Hambantota was built or not, corruption will continue and it has continued since Independence.
 
Hambantota was leased to the Chinese company not because of debts to China but debts to Western banking interests. The Yahapalanaya GoSL of RW and My3 were unable to pay the maturing Sovereign bonds due to drop in growth and they saw an opportunity to utilise an asset (Hambantota Port) to pay a different liability (Sovereign bond debt to Western banks). Essentially if it wasn’t for the asset of Hambantota the Yahapalanaya GoSL of RW and My3 would have defaulted on the Sovereign Bond debt with various consequences and ramifications for Sri Lanka raising future funds in the International markets. 
 
I am afraid that you are echoing the American propaganda about Chinese loans to Africa and South America. This is not true. Unfortunately the uninformed will lap it up like no tomorrow. It is false that Sri Lanka is hamstrung by Chinese loans – please watch the video below from a reliable source to learn about the intricacies of Sri Lankan debt to China.
 
 
Your Point 3
 
Unfortunately International geo-politics plays a part in the construction of the East container ports in Colombo. However the corruption will continue irrespective, and it is not dependent on the contract awarded to a particular country. 
 
I disagree with your statement that it is the sale of the country’s assets. Leasing is not a sale as the assets are still held by the country. The Chinese were forced to lease Hong Kong to Imperial Britain for 150 years and once the lease terms expired it was returned lock, stock and barrel to China in 1999.
 
Your Point 4
 
a) Growth continued right throughout the Civil War and was continuing and rose still further after the war ended.
 
b) Borrowing even if it is high it  is amenable to the economy as long as there is growth. American debt to GDP for 2017 was 105 percent. Japan’s debt to GDP ratio in 2018 was 232 percent. So in essence percentage debt is not an indication of a country’s economy. It is the dynamic of economic activity that matters.
 
Once again your are erroneously echoing the American propaganda mantra that it was the bulk of Chinese loans that prompted the Yahapalanaya GoSL of RW and My3 to lease Hambantota to the Chinese company for 99 years.
This is an outright lie. Please re-read point 2, as a lie often repeated takes on a semblance of truth to the uninformed but it is still a lie. 
   ******************

Prithi Perera in Lanka responds to Gus Mathews Sharply but Amiably, 21 September 2021

Dear Gus,

Your Point 1: I guess since you are living overseas and commenting on Sri Lanka, you may not have realized that the Colombo Port has been periodically and continuously upgraded to handle modern day trade and not just the traditional tea, rubber, coconut, coffee etc.. and is a very profitable Port. But, both Hambantota and East Terminal of Colombo are now Chinese owned. I believe a marine logistics expert like you will surely be knowing better to explain why Vehicle Imports, a majority of which are destined for Colombo, are off loaded in Hambantota and transported by Road all the way to Colombo, the central ultimate destination ….

As for Mattala, now deemed a contingency airport by you, (not by the rulers who built it), is being considered for a Maintenance, Repair and Overhaul facility too. (MRO). As for emergency landings, traditionally Sri Lanka used Chennai, Kerala Airports without any problems being just 45 minutes away. During

my 12-year stint in Delhi, if I happened to be visiting either of the destinations, I often made it a point to fly down to Colombo for a day or two. First time that I hear India is not necessarily a friend to Sri Lanka. I wonder why the present GOSL has given Cabinet Rank to its High Commissioner in New Delhi and has a sub mission in Chennai and thousands of devotees [who] flock to Bodhgaya (Dambadiva) each year????

Your Point 2:

The global corruption Index will show at which point in history, mother Lanka has been ranked at its worst, showing which regime has been and is most corrupt. Our present standing is 99. FYI It is just not Hambantota alone.!!!

Can’t understand your logic as to how other debts with Western governments against their respective investments were the cause for giving up Hambantota and not Magampura Port itself which had no ROI at the time.

I had clearly explained in my last email that the % of debts contracted to total debts outstanding during the respective periods of rule, viz; 2010-2014 and 2015-2019 was much higher during the former period of 2010-2014.  Also explained was that the growth % from a lower base which was prevalent during the war period, easily becomes exponentially higher during post-war periods, particularly with immediate influxes in tourism.

Some of the major disruptions during the MS RW period which also hampered the country’s progress were the illegal, unlawful and failed Constitutional Coup in Oct-December 2018 by the Sira/Paksa combine and followed not long after by the easily preventable Easter Bombing on 21 April 2019, which put the nail on the Coffin for the then government and ruined our country’s progress, socially, culturally and economically.

As citizens who live in Mother Lanka, we do not talk with blindfolds towards the Chinese or towards the US or towards the West, but with the sole aim of protecting our motherland for our own sake and for that of our future generations .

Your Point 3: 

It is unbelievable that you consider a lease of 99 years to be not of ownership when all profits belong to the lessee and they are able to exploit our country’s assets to their advantage. The very fact that your mention of the ownership of Hong Kong for 150 years  by Imperial Britain, the country of your allegiance and citizenship, has  totally debased your logic. Thank you for providing good humor to this thread . If there was no ownership involved, what was there to return to UK lock, stock and barrel in 1999 ?????

Your Point 4.

  1. a) Of course. there is growth during war times too, fuelled also by arms trade in war economies, but that is not sustainable. Naturally, continuation and even exponential growth is possible, immediately after wars, as happens most times, particularly through tourism. That is no Rocket Science!!
  2. b) Borrowings by developed countries with strong economies are justifiable because they have strong internal production and even exports to enable payback. In our case, we had neither. We were mostly borrowing and robbing. We are now selling our assets to rob. Hence our predicament.
  3. c) I totally disagree with your assumption that Hambantota was given away because of the inability to pay back other loans. It is only logical that if an asset is not returning on its investment, the banks and creditors will have its first line on that particular asset. Please, read, re-read and re-read the basic economics of lending. It is no Rocket Science!

Last but not the least, please remind yourself of the “fruits of virtue and of knowledge” that you may have gathered in that great and hallowed institution by the the Beira Lake.

 

6 Comments

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6 responses to “The Hambantota Port Debate: Common Sense from the Sideline

  1. Response to Michael Obeyesekere:

    Please count me in the neutral column, in this pro-China and anti-China debate, relating to the Hambantota port.

    First, Michael shouldn’t expose his ignorance by asking in the last paragraph, ‘When was China last involved in a Invasion?’ How about, China’s aggression in Tibet, Sino-India border conflicts since 1962, and Sino-Vietnamese border war (Feb-Mar 1979)?

  2. K. K. de Silva

    A balanced post for any discerning person to form his own views.

  3. We should let Chinese to migrate to balance the Indian colonists who came as partners of the British invaders. British the absentee landlords are gone but Indians of all sorts stayed. It is the problem for Indian colonies from Fiji to Guyana.

  4. Pingback:  Momentous Issue: The Hambantota Port Project under Scrutiny in Thuppahi | Thuppahi's Blog

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