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China-backed ‘white elephant’ projects in Sri Lanka dent investor confidence amid calls for policy revamp
- The mega projects could be thrown a lifeline through a China-Sri Lanka free trade agreement and joint ventures, economists say
- A turnaround for the projects is crucial as Sri Lanka is still seeking IMF-led restructuring of its heavy debts
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For years, several China-linked projects in Sri Lanka have come under fire for being “white elephants” that have failed to contribute significantly to its economy, but a free-trade agreement between both countries, policy revamp and more involvement by joint ventures could turn the tide, analysts say.
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Among the underperforming projects are the Mattala Rajapaksa International Airport (MRIA), built with US$191 million financing from the Exim Bank of China; Hambantota International Port (HIP) built by China Harbour Engineering Company (CHEC) with US$1.3 billion of credit from China; and the Port City Colombo (PCC), a US$1.4 billion project also built by CHEC.
All three projects are part of the Belt and Road Initiative, a China-led initiative aimed at improving trade and economic integration across Asia, Europe and Africa.
Recent initiatives have been unveiled to turn things around for the mega projects.
Former British prime minister David Cameron flew to the Middle East in September to speak at two events in a bid to lure investments in the PCC. Agreements to set up a commercial dispute resolution centre and introduce tax holidays for investors in the port have also been signed in the past year.
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