FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» Stocks on the Radar at CSE
by Rare Yesterday at 2:13 pm

» Global Rice prices drops
by Rare Thu Oct 03, 2024 1:07 pm

» Post-election winners.
by Rare Thu Oct 03, 2024 1:01 pm

» Construction Giant's IPO - Access Engineering
by shiraz latiff Thu Oct 03, 2024 12:43 pm

» ACCESS Engineering,my target Rs. 26/-
by shiraz latiff Thu Oct 03, 2024 12:41 pm

» Access Engineering awarded two more contract packages at Colombo Port
by shiraz latiff Thu Oct 03, 2024 12:39 pm

» Asha Securities and Asia Securities Target AEL (Access Enginnering PLC )
by nilantha suranga Thu Oct 03, 2024 12:36 pm

» ACCESS ENGINEERING PLC (AEL) Will pass IPO Price of Rs 25 ?????
by Anushka Perz Wed Oct 02, 2024 10:33 am

» History Repeat Access Engineering PLC
by sakuni Wed Oct 02, 2024 10:31 am

» Asian stocks drift higher amid rate cut speculation; Japan lags
by Rare Mon Sep 30, 2024 1:29 pm

» Sri Lanka: Light Rail Transport (LRT) at what opportunity cost?
by God Father Mon Sep 30, 2024 7:52 am

» Sri Lankan companies with small market cap
by Rare Sat Sep 28, 2024 4:41 am

» Large cap Sri Lankan companies
by Rare Sat Sep 28, 2024 4:36 am

» Gold, copper, iron and aluminum no more bargain
by Rare Sat Sep 28, 2024 4:25 am

» Reinstatement of SLT-Mobitel's ETA System for Streamlined Visa Processing
by pramu perera Fri Sep 27, 2024 8:49 pm

» Oil prices fall further
by Rare Fri Sep 27, 2024 12:20 pm

» Sri Lanka rupee closes at 275/290 to the US dollar
by Rare Thu Sep 26, 2024 11:58 am

» Bullish about a sustainable turnaround - CSE Chairman
by Rare Wed Sep 25, 2024 1:51 pm

» Can NPP secure majority in Parliament?
by God Father Wed Sep 25, 2024 9:41 am

» Growing superstar LVEF 14+
by ddrperera Wed Sep 25, 2024 8:53 am

» Why Central Bank Governor Nandalal Weerasinghe should Resign?
by God Father Tue Sep 24, 2024 2:22 pm

» Can AKD win the upcoming Parliamentary Election ???
by pramu perera Mon Sep 23, 2024 10:46 pm

» Colombo Stock Market: Where are we heading?
by Rare Fri Sep 20, 2024 12:40 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube


You are not connected. Please login or register

China, India tussle for influence as Sri Lanka seeks investment

Go down  Message [Page 1 of 1]

VALUEPICK

VALUEPICK
Expert
Expert

http://www.cnbc.com/2016/04/24/global-opportunities-china-india-tussle-for-influence-as-sri-lanka-develops.html


Gauri Bhatia | Special to CNBC
Sunday, 24 Apr 2016 | 6:32 PM

Situated almost in the middle of the Indian Ocean, there is no escaping Sri Lanka's centrality.


The country lies just a few nautical miles away from the super-busy east-west shipping route, through which an estimated 60,000 ships pass every year, carrying two-thirds of the world's oil and half of all container shipments.
Now, with Asia's economic rise, experts say Sri Lanka's location has become even more alluring. Not only are three Asian powers - China, Japan and India - playing dominant roles in the global economy at the same time for the first time, there are also increasingly attractive markets and trade opportunities in Asia.
"Sri Lanka is the pivotal point for a global grand strategy," R. Hariharan, a retired Indian army colonel and specialist in South Asian geopolitics, told CNBC. "Sri Lanka's geography gives it an advantage disproportionate to its size."
The small island nation with a population of 22 million has been rediscovering its strategic location for the past few years as it comes out of a 26-year civil war that depleted government resources and held back development. As Sri Lanka looks for assistance to reboot its economy, a largely two-way tussle for influence in the country and, in turn, the region is on.


China, India tussle


China, India tussle for influence as Sri Lanka seeks investment 103573972-GettyImages-465163248.530x298
Ishara S. Kodikara | Getty Images


Activists demonstrate in Colombo in March 2015 over the $1.4B Chinese-funded Port City project, which began construction in 2014 despite claims of the sea reclamation process would cause environmental damage.


China has identified the tear-dropped shaped island as a key point on the Maritime Silk Road, as it plans to build infrastructure along this ancient trade route that extends from China to Africa.


Sri Lanka also holds an attraction for both India and groups that would like access to India. Asia's third largest economy is within "artillery range" of Sri Lanka, situated some 30 kilometers (19 miles) to the north of the island.
"We are at the doorstep of a dynamic market," Anushka Wijesinha, chief economist at Ceylon Chamber of Commerce, said. "The Indian middle class market alone is set to be 10 times our entire population. Imagine the opportunities there."


A tricky balancing act


India and China are Sri Lanka's biggest import markets, count among the top three in terms of tourist inflows and provide significant share of the country's foreign investment.


"Sri Lanka needs to develop its economy using both Indian and Chinese help. We need both markets," Shiran Fernando, lead economist at Frontier Research, told CNBC.


But China and India have not always been open to sharing influence, with both trying to leverage their "special relationship" with the island.


"The challenge is to find a balance between these two large countries and not take to one bloc," said Nishan de Mel, executive director at Verite Research. "The pendulum is swinging but should end up in the middle."


China's early lead


China, India tussle for influence as Sri Lanka seeks investment 103573970-GettyImages-492821684.530x298
Buddhika Weerasinghe | Getty Images


Cranes stand still at sunset in October 2015, on the site of a new, Chinese-built hotel in Colombo. A new Sri Lankan government suspended support for a number of Chinese projects in 2015, including the capital's Port City mega-development.


After the civil war ended in 2009, China led the rebuilding of Sri Lanka's infrastructure, as India and the West shied away. The West was concerned over alleged human rights violations during the war against insurgent Tamils in the north of the island, while India was politically constrained owing to its ethnic ties with the Tamils.


In this vacuum, China landed contracts to build highways, ports and an airport in the south of the island, from a Sri Lankan government that was at the time open to Chinese expertise and money. India provided assistance in the war torn areas of the north, rebuilding homes and railway tracks, but China was by far the dominant partner.


Among the big-ticket Chinese projects was a port in Hambantota at Sri Lanka's southern tip, built at a cost of around $360 million, with 85 percent funding from China's Export-Import Bank. Another key project, a $1.4 billion port city in Colombo, was initiated by then-president Mahinda Rajapaksa's government in 2014.


Funded by Chinese state-owned company, China Communications Construction, the port city project was due to be the single largest foreign investment in Sri Lanka - a multi-development project with a marina, malls, golf courses and even a Formula 1 track.


But development stalled amid controversy over the tender procedures and on concerns the project, to be built on reclaimed land, would damage the island's beaches, and it was left in limbo when Rajapaksa's government was voted out in early 2015, amid promises by the then-opposition, led by Maithripala Sirisena, to scrap the deal entirely.


The pendulum swings


China, India tussle for influence as Sri Lanka seeks investment Sri-Lanka_data-vis_01c-01
With a new government, headed by President Sirisena, came a more pro-India stance. Sirisena visited India on his first overseas trip and Indian Prime Minister Narendra Modi reciprocated within a month, using the trip to Sri Lanka to invoke the two countries' cultural and religious links. He also promised India would develop an oil tank "farm," offered $318 million in credit for rail works and a $1.5 billion currency swap between the central banks of the two nations, according to reports.


But within a year Sri Lanka was back wooing Chinese investments. The government has revived the port city, and followed up with a visit to China by Prime Minister Ranil Wickremesinghe in April.


The trip was widely read as being aimed at mending relations as well as negotiating better terms on the port city for Sri Lanka, including a reduction in the $125 million penalty it received for previously suspending work on the mega-project.


Wickremesinghe also requested an equity swap on some of Sri Lanka's $8 billion worth of Chinese loans.


"The government has done a U-turn on the port city project because reality set in," the Chamber of Commerce's Wijesinha told CNBC. "If we are to boost investment, we have to look at whoever brings in the investment and clearly China has the money."
Some commentators maintain that Sri Lanka has cleverly managed its courtship with both India and China.


"At the end of the day, we don't have a U.S. base on our shores, nor are the Chinese investments a de facto base and neither are we an annexure of India," said a Colombo-based analyst, implying that the small island state had done well to maintain its sovereignty while balancing diplomatic and trade relations.


The next Singapore?


China, India tussle for influence as Sri Lanka seeks investment 103546976-GettyImages-102365357.80x60
[size=14][size=20]Check out Asia's secret surfers' paradise
[/size][/size]

But much of Sri Lanka's infrastructure built by the Chinese, including the Hambantota port and the airport, is under-utilized and the existing Colombo port in fact owes most of its business to India. Trans-shipments from India make up 75 percent of its volumes.
"We need to harness these investments, need major players to start using it. Strained relations with China also did not help," said Frontier's Fernando, adding that now that the prime minister had visited China, Chinese companies may start using the infrastructure they helped build.

Sri Lanka is also set to receive a $1.5 billion foreign reserve-boosting loan from the International Monetary Fund, which should help bolster investor confidence in the $80 billion economy, which already comes with the benefits of high levels of literacy and a vibrant democracy.


The loan is designed to help Sri Lanka avoid a balance-of-payments crisis as occurred at the end of the civil war in 2009 – a crisis that required a $2.6 billion IMF bailout. According to Reuters, Sri Lanka's foreign reserves have fallen by a third from an October 2014 peak to $6.3 billion in January, mainly due to $1.3 billion in outflows from government bonds in 2015.


Sri Lanka has already taken one investment rating hit; Fitch Ratings downgraded the country's long-term foreign and local currency issuer default ratings to B+ from BB-, citing increasing financing risks, significant debt maturities in 2016, the decline in forex reserves and weaker public finances as a result of low revenues.


The decisions made now are key, as Harsha de Silva, the country's deputy minister of foreign affairs, told CNBC: "If we manage our policies right, we will become the next or even better Singapore or Dubai."

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum