New Sri Lankan Trade Zone Runs Into Local Opposition, by Marex

The port at Hambantota (file image)

By MarEx 2017-01-02 18:23:14

Officials in charge of finding land for a new Chinese industrial zone at Hambantota, Sri Lanka have run into difficulties with the current tenants. Rice farmers in Medilla, Hambantota say that development officials have been surveying the area without their permission, and that residents have forced the authorities to leave. 

“All the residents in Hambantota banded together to protest against this land grab. Unfortunately, the politicians are lying to us on this issue,” said villager H.E. Yasaratne, speak to Sri Lanka’s Sunday Leader. 

A spokesman for a residents’ organization said that after deducting land that had been set aside already for housing projects, conservation and other uses, only villages and farmland were left for officials to take for the 15,000 acre free trade zone. Residents told the paper that they would not relocate under any circumstances. 

Under a recently agreed deal with China Merchants Port Holdings Company, the Sri Lankan government has agreed to a debt-for-equity swap which will give the Chinese firm an 80 percent stake in the port at Hambantota for 99 years – an unheard-of duration for a port operations lease – plus all revenues from port operations until the facility reaches “a mutually-agreed level of performance.” Sri Lankan media report that the Chinese also requested the massive 15,000 acre industrial park. In return for these concessions, China Merchants will convert more than $1 billion in government debt into equity. Sri Lanka is set to sign the final agreement on January 7. 

Opposition gathers steam

The protest at Medilla was not the first linked to the port deal. In mid-December, dockworkers went on strike to protest the lease agreement and to call for employment guarantees from the port’s new management. Longshoremen reportedly interfered with the departure of two vessels, and the Navy intervened to break up the demonstration. Naval servicemembers filled in to provide linehandling and longshore assistance to keep port operations running. 

The opposition party, led by former president Mahinda Rajapaksa, has threatened continued public unrest if the industrial park goes forward. “These are people’s agricultural lands. We are not against Chinese or Indians or Americans coming here for investment. But we are against the land being given to them and the privatisation they are doing,” Rajapaksa told the Foreign Correspondents’ Association at his official residence in Colombo.

The warning represents a reversal of Rajapaksa’s position: during his tenure, he began the Chinese partnership behind the port and the related infrastructure projects in Hambantota. These projects have put Sri Lanka heavily in debt, which is the primary reason for the government’s agreement with China Merchants. “If we don’t convert the loan into investment there is no alternative to handle the debt we have taken,” trade minister Malik Samarawickrama told Pakistan Press last month.