Port City, Sinophobia and cutting the nose to spite the face

This may be an unpopular opinion, but the Port City Economic Commission Bill that was passed last week is perhaps the only noticeable piece of work of the current government, so far.  The Bill envisaged to provide substantial tax concessions and loosen the regulatory red tape for the businesses that would be set up in the Special Economic Zone in the 269 hectares of Chinese-built Colombo Port City. 

Earlier the Supreme Court ruled that multiple provisions in the Bill were against the Constitution and, therefore required to be passed with a 2/3 majority in Parliament and approved by a referendum.  The Court also proposed amendments to the Bill so that it could be passed with a simple majority. 

Those revolved around the oversight of Parliament, regulatory authorities- such as the Monetary Board of the Central Bank of Sri Lanka, the Registrar General of Companies, the Director-General of the Central Environmental Authority, the Controller of Immigration and Emigration, the Director General of Customs and tax concessions that were proposed for businesses operating outside the economic zone. 

Last week, the Bill was passed with 149 votes in favour and 58 against it after the amendments were added to the Bill during the committee stage. 

Like it or not, the Bill is a watershed as much as the JR Jayawardene’s economic liberalization or the setting up of free trade zones under the Greater Colombo Economic Commission. However like the latter, how much of the lofty ambitions of the Colombo Port City would be realized – and how much would wither away,  would be known only in the decades to come.

Like it or not, the Bill is a watershed as much as the JR Jayawardene’s economic liberalization or the setting up of free trade zones under the Greater Colombo Economic Commission. However like the latter, how much of the lofty ambitions of the Colombo Port City would be realized – and how much would wither away,  would be known only in the decades to come.

The Bill was opposed by the generally reform-minded Main Opposition of Samagi Jana Balavegaya (SJB). It was also met with a rather subdued whimper from the nationalist fellow travellers of the ruling Sri Lanka Podujana Peramuna (SLPP). SJB MP Harsha de Silva proposed amendments to the Bill, including amendments to incorporate anti-terrorist financing and anti-money laundering regulations. The government objected. Perhaps the rationale was if Sri Lanka’s proposed tax haven is laden with regulatory strings that are absent, say for instance, in Caymen Islands or Dubai, why on earth the prospective investors choose here over other places to park their money? Tax havens around the world are designed to exploit the existing loopholes in global monetary regimes. Tighten the strings, the investors flee to other more lenient destinations.

On the other end of the extreme of the campaign was a group of monks led by Ven. Elle Gunawansha Thera who urged the President not to proceed with the Bill, citing sovereignty concerns, which like most other previous banters of the nationalist camp were overblown. It was a similar humbuggery that fueled their opposition to America’s Millennium Challenge Corporation Grant.

 Elsewhere, critics have warned that the Port City Bill would effectively create a Chinese colony.  That does not appear so in the text though. A new clause (Clause 74) in the Bill that was proposed by the Supreme Court states: “ Nothing in this Act shall, unless otherwise specifically provided for in this Act, be deemed to restrict in any way the powers, duties and functions vested in such Regulatory Authority by any written law in relation to the Area of Authority of the Colombo Port City.”

The recent debate over the Colombo Port City and the enlarging Chinese economic footprints in the country has unleashed another self-destructive genie among the opposition camp. The discourse on China is getting increasingly Sinophobic, toxic and racist.  These groups, which are generally supposed to be liberal and cosmopolitan, are now mimicking their nemesis of archaic nationalists. Also, there is a hefty dose of Sinophobia churned out in the local social media recently, and sometimes, distributed by the paid social media managers. 
 The political opposition itself is committing a cardinal mistake, which they are guilty of making in the past as well. They are using China as a convenient target to vent their anti-government anger. That has a rational, yet self-serving logic. A perceived external enemy stealthily taking over the country has a far more potent effect of mass mobilization than as it has appeared lately genuine concerns of erosion of democracy and checks and balances of the governance. The SLPP and its fellow travellers have mastered this. The SJB and the political opposition should not emulate them. 

 China and the Rajapaksas are not synonymous. The UNP committed the same mistake in the 2015 election campaign when it projected Chinese development projects as an extension of the Rajapaksas. They suspended most of the Chinese funded development projects, including the Port City - and some Indian ones too -  after they were elected to power. Later when the gravity of the folly sank in, those projects were allowed to resume and the UNP government compensated the Porty city builders by permitting them to reclaim additional two hectares of land.

China’s own gaffes have partly contributed to the recent controversy. The nameboards and plaques that had omitted the Tamil language in contravention to the official language policy – but add Mandarin instead, have been a source of anger among some quarters. 

The Rajapaksa government’s dependency on Beijing, which itself is a result of its growing isolation from the rest of the world, has also made it tempting to take a swipe at China, hoping it would hit the regime leaders in Colombo as well. 

No doubt that the hurried passage of the Port City Bill might have been prompted by the Chinese prodding. Also one might wonder whether the Chinese influenced the government’s snub to the Millenium Challenge Grant or the trade union protests against the plans for the joint development of the Colombo Eastern Terminal with India. No doubt the Chinese largess has made life easier for the current government. 

However, the governments come and go.  So would the Rajapaksa administration. However, given the unfolding power transition in the international system, and the realities of pandemic times and later, Sri Lanka is well placed to benefit from its relationship with China. Beijing is the most likely, and also realiable source for vaccines for Sri Lanka if the country is to complete the vaccination within this year. Without a financial lifeline from Beijing, Sri Lanka would have to default on its sovereign debt sooner or later. The Port City Bill increases the prospect of a much larger inflow of China’s outbound foreign direct investments to Sri Lanka. None of that benefits the current government leaders exclusively. They serve the national interest too.

 Therefore,  spewing Sinophobia to undermine the current administration is a self-harming folly.

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