27 April 2021 12:05 am Views - 2644
Excerpts of the interview:
QLet me start off by asking you if the Port City project something that Sri Lanka really needs?
Well, there are two items. One is Port City. That is really off the CESMA Plan, which we got in 2004 to have a new central business district for Colombo, because Fort was getting filled up. So that’s a real estate development area. What the then government added was Formula One night racing track.
Thirdly, we told the Chinese, look, we are not here to have these racing tracks inside the city and we took it off. So that’s the first part.
The other was having a regional hub where we will develop our ports, airports, and get financial services and offshore services. On the other hand, we are looking at a digital economy and a green economy. So, then this concept of one centre, which can be developed for these services came along.
But it is not something that can be done in one year. It takes anything like 10 to 15 years. And firstly, your economy had to be stable and we had just got that in 2017. So we had to carry that on. But in the meantime, we could have passed the laws and got the other offshore services developed.
You know, we were on the money laundering grey list and we had to get off that. So we started looking at this to run parallel to our development in transport logistics as a part of the hub of the Indian Ocean. That is what we were looking at. And it’s a long term project.
QBut, you know, when this project came up initially, there were concerns raised by our neighbour, India. I believe even America also raised some concerns that this might be misused by the Chinese. Is that something that you had addressed or discussed at your time?
No, it was really a question of real estate. The issue raised by some security agencies was whether those buildings would dominate the Port. That was the only one. And I mentioned it to China Harbour. I thought we could come up with some solution to it at that time. The concern was if it will be used to monitor the Colombo Port. We also didn’t want the port monitored.
QBut with the concerns still remaining on the environment and on security and all of that, wasn’t there an alternative that Sri Lanka could have looked at as opposed to going for a project like this with the Chinese?
Well, it was already filled by the
time we came.
QBut in your opinion do you think that we could have gone for something else?
No. We needed to have the Colombo Central Business District (by creating a Port City). So they decided on China Harbour and China Harbour had filled more than half of it. So we couldn’t stop it there. The best was to fill the rest of it. The question of buildings coming up would have come up whether it was built by the Chinese or others.
We thought if we are going to be a hub for the Indian Subcontinent with transshipment going to India, then we will look at services that we can use in South Asia. In the meantime, as you stabilize the banking will also come in. So, we were looking at things like insurance which was completely untapped, legal services and arbitration which would have given us a better reputation to go in for banking. We spoke to the UK, EU and China. We spoke with the Reserve Bank of India and the IMF and the Pakistan Bangladeshi and Maldives banks.
QBut when consecutive governments tend to change policies, do you think investors will also lose hope?
The investors will lose hope. If we have this controversy, no one will come in. They think all this will get changed next time. Also, we have to look at the whole issue of taking away the powers of Parliament and by Cabinet and the Judiciary (through the Port City Commission Bill).
QSo let’s go into that Bill, What is your main concern about the Bill?
We were also creating a law. It was going to be a framework law. If you were going to have any Offshore Laws Parliament was going to pass them. Also, it would be judged by the Supreme Court.
The other is public finance. Public finance is a part of Parliament powers. Richard Musgrave’s Theory of Public Finance is that it includes economic stabilization. Parliament is responsible for economic stabilization. But if you are going to Balkanize the Finance Ministry and the Central Bank, then what control will the Parliament have over this? Because this body (Port City Commission) doesn’t answer anyone.
The Minister of Finance and the Central Bank do not have any powers. So, you have basically Balkanized your controlling authorities. Then you lose control and this Commission can go into debt, which the rest of the country has to pay.
Secondly, in that situation, how can the government and the Parliament react to a Minsky Moment? You know, Hyman Minsky said stability breeds instability. Like in 2009. With this Bill, you cannot react to a 2009 situation for the simple reason that part of it is under another authority, who can do what they want. So just imagine, you lose control of the economy and no one would come into a country that cannot control its own economy.
QAnd there is also a concern that this would lead to a situation where foreigners can also come and be part of this Commission.
Why should a foreigner come into this? What is he bringing in? We have Sri Lankans who left the country who can come in.
QWhat if this will help bring in more knowledge and expertise?
For knowledge, you can bring in an advisor. We had a whole lot of advisors. They have to make clear why they want foreigners-people who are not Sri Lankans. And that links up to why we are having a consolidated fund with a contribution from outside.
When we met with China Harbour they were willing to help us. So we said we will put the money into the general treasury and the treasury will disburse the funds. So we don’t understand that area. So this is basically having an agency that is outside the legislature, outside the judiciary, outside the Cabinet.
This is the only country in the world where the authority for offshore matters, as well as gambling, is in the same authority. In all the countries, whether it is Hong Kong, Shanghai, Tokyo or Singapore, it’s all done by the Central Bank. They don’t have a separate authority as England had a Financial Services Authority. They knocked it off after 2009.
So why do you want this agency? And then why are you having gambling? Hong Kong doesn’t have gambling. Shanghai doesn’t have gambling. Why are you doing it then? You will later have money laundering. Then immediately you get hit. We were already on the grey list in 2010. The whole economy is at risk. So that is why we are asking, why don’t we use the Central Bank and other people you have appointed there? We have rules and regulations here for good order and civil government. We need a financial centre and we should have the legislation made by Parliament.
No one is going to block a good piece of legislation. Then we should have judges review it before it is enacted and the Cabinet finally must be responsible. But that is not the case here. So this is the big issue. One is a constitutional issue. You can also bring all the contraband into this place. And it’s a gated community. We never had a gated community.
QHow will this affect investments from other countries?
If you do not conform to the standards you have set down you get isolated as a tax haven that is non-compliant with the rules and also for money laundering.
QSome are saying that this might lead to Port City becoming a Chinese colony. Do you think that is an exaggeration?
I don’t know-how. I have heard this being said about a Chinese colony, but what it can be is an area that will have more power than the area that Prabhakaran ran during the war. And I’m surprised the people who said one country one law are having two laws for the same country.
QNational security is something that this government has been focusing a lot on. Will this Bill pose a threat to national security?
You can do anything you want as long as the Commission approves. We still get criticized by a lot of governments.
QHow will this affect Sri Lanka’s overall relations with its neighbours and other countries?
Geopolitics wise it will affect us. What we are saying is to come the proper way. Get everyone involved, China, India, Japan. But we are just busting it up. Why are they in such a hurry? I think some of the ministers have been misled.
QLet’s talk about our overall relationship with China. I mean, I know when you were in office, you all looked at maintaining a balanced relationship with all countries. It looks like that is now shifting. We are becoming pro-China again. How do you see that?
What I see now is that we are fighting with certain countries like Japan and India, fighting with the West. So that bad. You need all of them. We are just picking a fight with everyone.
QIs it because China is the first to always comes and help us while the others don’t?
China has helped us. But then China didn’t tell us to make a statement in Geneva recognizing North Korea. So that’s the problem. Problem is that you can’t be angry with India. You can’t be angry with Japan.
China, India, Japan are the three key players. ASEAN is also needed. We need Bangladesh and Pakistan. Our relationship with Pakistan is good. But you also need the EU, you need the UK, the fifth-largest economy. They are looking at us to come and park themselves. You need the US too. I can’t understand how this foreign policy is being done.
QFinally, let’s talk about the UNP, what are your plans? What are you going to do to ensure that the government is on track?
As the UNP we will carry on our campaign. We are redoing the party completely. And we are looking at the present situation, using the new tools available. But we have to only make the people aware of what’s happening.
QAnd there are a lot of calls for you to bring your knowledge into Parliament. Are you going to
accept that?
Well, people have asked me.
Just left it at that.